![]() ª Thebank # for the new # economyº #### Here for good #### Annual Report 2021 ![]() Strategicreport 02Who we are and what we do 04Where we operate 06Group Chairman’s statement 10Group Chief Executive’s review 14Market environment 18Business model 22Our strategy 24Our Stands 26Client segmentreviews 28Regional reviews 32Group Chief Financal Officer’s review 41Group Chief Risk Officer’s review 50Stakeholders andresponsiblites 78Non-financalinformaton statement 80Underlying versus statutoryresults 85Alternative performance measures 86Viablity statement 88 Directors’ report 141 Directors’ remuneration report 192 Risk review and Capital review 294 Financal statements 438 Supplementaryinformaton Contents 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 ofone USdollar. All disclosures in theStrategic 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 thepurposes of thisdocument only, excludes Hong Kong Special Adminstrative Region (Hong Kong), Macau Special Adminstrative Region (Macau) and Taiwan. ‘Korea’ or ‘South Korea’ refers to theRepublic 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) includesAngola, 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nthe tables in thisreport, blank spaces indcate that the number is not disclosed, dashes indcate that the number is zero and nm stands for notmeaningful. StandardChartered PLC is incorporated inEngland andWales with limted liablity,and is headquartered inLondon. The Group’shead office providesguidance on governanceand regulatorystandards. Standard Chartered PLC. Stock codes are: LSE STAN.LN and HKSE02888. #### 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 growth. We are at the frontline of today’s biggest challenges and are taking a stand on key issues such as climate change, economic particpation and globalisaton. Our collaborative approach to innovaton and drive to be diverse and inclusve means we can do more, better and faster. Our Purpose is to drive commerce and prosperity through our unique diversty, and our heritage and values are expressed in our brand promise, Here for good. @StanChart linkedn.com/company/standard-chartered-bank facebook.com/standardchartered About thisreport Sustainablity reporting We adopt anintegrated approach to corporate reporting, embedding non-financal informaton throughout ourannual report. Whilenot complying in full, in preparing this report, we have given consideraton tothe princples of theGlobal Reporting Initativeand the Sustainablity Accounting StandardsBoard. Further detailon these framework alignmentswill be available in our ESG report, to be published in Q1 2022 at sc.com/ESGreport Alternative performance measures The Group uses anumber of alternativeperformance measures in thediscussonof its performance. These measures excludecertainitems which management believesare not representative of theunderlying performance ofthe business andwhich distort period-on-period comparison. Theyprovidethe reader with insght into howmanagementmeasures the performance ofthebusiness. For moreinformaton please vistsc.com #### Throughout this report, we use these icons to represent the different #### stakeholder groups for whom we create value. Clients Regulators and governments Investors Suppliers Society Employees Stakeholders Strategic report Read more on page 21 and pages 52 to 59 ![]() 01 Standard Chartered – Annual Report 2021 Strategicreport #### 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 (see pages 22 and 23). As highlghted in last year’s report, we refreshed our 2019 strategy into four strategic priorties and three enablers focused on our aim to become a leader in global finance. In light of the pandemic, we have reviewed our strategy and are confident that it remains as relevant as ever 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, as well as client KPIs, some of which can be found on pages 26 and 27. 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 to the UN Sustainable Development Goals (page 61), provide tangible targets to drive sustainable business 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. To learn more about our Stands, see pages 24 and 25. Financal KPIs 1 Return on tangible equity . % 300bps Underlying basis . % 390bps Statutory basis Common Equity Tier 1 ratio . % 28bps Above our target range of 13–14% Total shareholder return (.) % Non-financalKPIs 2 Diversty and incluson: women in senior roles . % 1.3ppt Sustainablity Aspiratons met or on track . % 4.5ppt Other financal measures 1 Operating income $ m Underlying basis $ m Statutory basis Profit before tax $ m 55% Underlying basis $ m 108% Statutory basis Earningsper share . #### cents 40.1 cents Underlying basis . #### cents 50.9cents Statutory basis 1Reconcilations from underlying to statutory and defintions of alternative performance measures (APMs) can be found on pages 80 – 85 2For more informaton on our culture of incluson see page 58, and for more on our sustainablity aspiratons see page 61 ![]() 02 Standard Chartered – Annual Report 2021 Strategic report Group at a glance 1. 2. 3. 1. 2. 3. #### Who we are #### and what we do Our Purpose is to drive commerce and prosperity through our unique diversty. We serve two client segments in three regions, supported by nine global functions. Total operating income $m Underlying basis $m Statutory basis Our client segments #### Consumer, Private #### and Business Banking Consumer, Private and Business Banking serves more than 9millon indviduals and small businesses, with a focus on the affluent and emergingaffluent in many of the world’s fastest- growing cites. Corporate, Commercial and #### Institutonal Banking Corporate, Commercialand Institutonal Banking supports clients with their transaction banking, financalmarkets, corporate finance and borrowing needs across 49 markets, providng solutions to more than 22,000 clients in some of theworld’s fastest- growingeconomies and most activetrade corridors. Operating income $m Underlying basis $m Statutory basis Operating income $m Underlying basis $m Statutory basis 2. 1. Global functions Guidng and supporting our businesses HumanResources Maximses the value of investment in peoplethrough recruitment, development andemployee engagement. Legal Enablessustainable businessand protects the Group from legal- related risk. Technology &Innovation Responsible fortheGroup’s systems development andtechnology infrastructure. Risk Responsible fortheoverall secondline of defence responsiblitesrelated to risk management, which involves oversight and challengeof risk management actions of the first line. Operations Responsible forall client operations and ensures the needs of our clients are at the centre of our operational framework. The function’s strategy is supported by consistent performance metrics, standards and practices that are aligned to client outcomes. Group Chief Financal Officer Comprises seven support functions: Finance,Treasury,Strategy, Investor Relations, Corporate Development, Supply Chain Management and Property. The leaders of these functions report directly to the Group Chief Financal Officer. Corporate Affairs, Brand and Marketing Manages the Group’s communicatons and engagement with stakeholders in order to protect and promote the Group’s reputation, brand and services. Group Internal Audit An independent function whose primary role is to help the Board and Executive Management to protect the assets, reputation and sustainablity of the Group. Conduct, FinancalCrime and Compliance Deliverng the right outcomes for the Bank, its clients and communites by partnering internally and externally to achieve the highest standards in conduct andcompliance in order to enable sustainable business and fight financal crime. Our client-facing businesses are supported by our global functions, which work together to ensure the Group’s operations run smoothly and consistently. 3. Centraland other items Operating income $m Underlying basis $m Statutory basis ![]() 03 Standard Chartered – Annual Report 2021 Strategicreport 1. 2. 3. 1. 2. 3. Valued behaviours Our regions Total operating income $m Underlying basis $m Statutory basis #### Better together Do the right thingNever settle • Continuously improve andinnovate • Simplfy • Learn fromyour successes and failures • See more in others • “How can I help?” • Build for the long term • Live with integrty • Think client • Be brave, be the change Africa and #### Middle East Present in 25 markets, of which the most sizeable by income are the United Arab Emirates (UAE), Nigera and Kenya. #### Asia We are present in 21 markets across Asia, includng some of theworld’s fastest-growing economies. Hong Kong and Singapore are thehighest income contributors. Europe and #### the Americas Centred in London, with a growing presence across continental Europe, and New York, with presencein both North Americaand several markets in Latin America. A key income generator for the Group. Operating income $m Underlying basis $m Statutory basis Operating income $m Underlying basis $m Statutory basis Operating income $m Underlying basis $m Statutory basis 2. 1. 3. Guidng and supporting our businesses Our valued behaviours ensure that we do things differently in order for us to succeed. Only then will we realise our potential and truly be Here for good. 4. Central & other items Operating income $()m Underlying basis $()m Statutory basis ![]() 04 Standard Chartered – Annual Report 2021 Strategic report Group at a glance Our unique footprint connects emerging andhigh-growthmarkets with more established economies, allowing us to channel capital where it’s needed most. These are the markets we call home. For over 160 years, we’ve used the power of ournetwork to help people and businesses 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, culturesand networks. ª We are present #### in 59 markets #### and serve clients #### in a further º We have a long-standing and deep franchise across some of the world’s fastest-growing economies in Asia with the region generating two-thirds of our income. The two markets contributng the highest income are Hong Kong and Singapore. Australia Bangladesh Brunei Cambodia India Indonesia Laos Malaysia Myanmar Nepal Philppines Singapore Sri Lanka Thailand Vietnam Mainland China Hong Kong Japan Korea Macau Taiwan Case study Asia #### Innovative #### ESG financng We have worked with the Baring Private Equity Asia to create the region’s first environmental, social and governance (ESG)-linked subscripton facilty with a carbon-offsetmechanism, and gender diversty KPIs. #### Asia Read more on page 28 #### Where we #### operate ![]() 05 Standard Chartered – Annual Report 2021 Strategicreport Case study Europe & Americas #### Buildng #### railways in #### Turkey Case study Africa & Middle East #### Growing our #### digtal #### presence We support clients in Europe and the Americas through hubs in London and New York and also have a strong presence in several European and Latin American markets. Argentina Brazil Colombia Falkland Islands France Germany Ireland Jersey Poland Sweden Turkey UK US We have a deep-rooted heritage in Africa and the Middle East and have been present in the region for 160 years. We are present in the largest number of sub-Saharan African markets of any internatonal banking group. As part of an ongoing online banking push, and in response to growing demand for innovatve banking services, customers in Africa and the Middle East opened almost 900,000 digtal accounts in 2021. We led on a major green financng deal for a new 200km high-speed railway line in Turkey, linkng the cites of Bandirma and Osmaneli in the North, passing through Bursa and Yenişehr. 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 UAE Uganda Zambia Zimbabwe #### Europe and the AmericasAfrica and the Middle East Read more on page 30 Read more on page 29 ![]() 06 Standard Chartered – Annual Report 2021 Strategic report GroupChairman’sstatement #### Group Chairman’s #### statement Dr JoséViñals Group Chairman 2021 was another year of extraordinary global turbulence, with recovery from COVID-19 a mixed picture across the globe. Many of our colleagues were adversely impacted in their personal or work lives. Even now, we continue to see new COVID-19 variants emerging and we have had to adapt to a constantly changing landscape. Throughout this period, our colleagues around the world – led by our Group Chief Executive Bill Winters and the Management Team – have continued to focus on protecting the interests of shareholders, while ensuring the wellbeing of colleagues and supporting our customers, clients and communites. The spirt our colleagues haveshown throughout, despite the often diffcult circumstances, has been exemplary and I am extremely proud of how we have all come out of 2021. Our financal performance is improvng Later in this report, Bill and Andy Halford, our Group Chief Financal Officer, will set out more detail on our financal performance as we navigated the second year of the pandemic. Overall, our results show evidence of resilence, with performance improvng against a diffcult backdrop. Our underlying profit before tax at $3.9 billon, grew 61 per cent on a constant currency basis. This was supported by low levels of imparment, a return to positve income momentum in the second half of 2021 and cost control. We have continued to invest in the future of the Group, includng steppingup our innovatonand technology investment, and we now have an excitng set of transformative business development opportunites and partnerships, many of which we showcased at our investor event in October. ª Resilencesupporting #### sustainable growthº ![]() 07 Standard Chartered – Annual Report 2021 Strategicreport Totalshareholder return (TSR) % Financal KPIs 1 Aim Deliver sustainable improvementin the Group’s profitablity as a percentage of the value of shareholders’ tangible equity. Analysis Underlying RoTE of 6.0 per cent in 2021 was a 300bps improvement on 3.0 per cent in 2020. The underlying profitattributable to ordinary shareholders expressed as a percentageof average ordinary shareholders’tangible equity Underlying return on tangible equity (RoTE) % +300 #### bps Aim Deliver a positve return on shareholders’ investment through share price appreciaton and divdends paid. Analysis Our TSR in the full year 2021 was negative 2.0 per cent, compared with negative 34.6 per cent in 2020. Combines simple shareprice appreciaton with divdends paid to show the total return to the shareholder and isexpressedasa percentage total return toshareholders +32.6 % Aim Maintan a strong capital base and Common Equity Tier 1 (CET1) ratio. Analysis Our CET1 ratio was 14.1 per cent, above our 13-14 per cent target range. The components of the Group’s capital are summarised on page288 Common Equity Tier 1 ratio % -28 #### bps The Group is highly liqud and well capitalsed with a Common Equity Tier 1 (‘CET1’) ratio of 14.1 per cent. The Board has recommended a final divdend of 9 cents per share, or $277 millon, with the full year divdend an increase of one- third from 2020. We have also announced a share buy-back programme and will shortly start purchasing and then cancelling up to $750 millon of ordinary shares. The Board is committed to operating withn the 13 to 14 per cent CET1 ratio range and we are very clear that capital not needed to fund growth will be returned to shareholders. We have returned $2.6 billon of capital to shareholders over the last three years through a mix of divdends and share buy-backs. This included paying out the maximum amount we were authorised to in 2020 when the emerging pandemic resulted in asuspensionof distrbutions. We are deliverng against our strategic priorties While the pandemic brought about considerable challenges and, as a result, the turnaround is taking longer than previously anticpated, it is clear to us that the refreshed strategic priorties we set out at the start of 2021 are right. Our ambiton of deliverng 10 per cent return on tangible equity remains as resolute as ever and we are working to accelerate its achievement by 2024. In Bill’s report the actions we are targeting are outlined, which includes active management of the Group’s capital, with a target to return in excess of $5 billon in the next three years. Our strategy brings the dynamism of our markets to life in our business. Our focus is now on executing against the priorties at pace, and we are making progress on each of them. Our Network and Affluent businesses remain key competitve differentators, both strong generators of high-quality and higher-returning ‘capital-lite’income streams. We are transforming our abilty to onboard, serve and exceed the expectations of our Mass Retail customers, which will help to feed our higher-margin Affluent business, as well as being a signficant source of income. Sustainablity is a moral imperatve and an opportunity. Our Sustainable Finance capabilties are not only making a difference where it matters the most, but also representing a growing source of income. We are accelerating our pathway to net zero We have long recognised climate change as one of the greatest challenges of our time, given its widespread and provenimpact on the physicalenvironment and human health, as well as its potential to hamper economic growth. The complextrade-offs which come with climate actions mean there are no simple answers. We announced our net zero roadmap in October, followingextensive engagement with shareholders, clients and NGOs. The approach was reviewed and approved by the Board and included interm targets to reduce financed emissons and mobilse $300 billon in green and transiton finance by 2030. Our approach emphasises the need for a just transiton to net zero: the impacts of climate change are felt most severely in our footprint, and if we do not meet climate objectves in a way that recognises the need for markets across Asia, Africa and the Middle East to grow and prosper, we will fail. 6.0% 2021 3.0% 2020 6.4% 2019 (2.0)% 2021 (34.6)% 2020 20.2% 2019 14.1% 2021 14.4% 2020 13.8% 2019 1Reconcilations from underlying to statutory and defintions of alternative performance measures (APMs) can be found on pages 80-85 ![]() 08 Standard Chartered – Annual Report 2021 Strategic report GroupChairman’sstatement We continue to enhance our governance and culture While the Board has been unable to meet in a number of key markets in person this year, we have stayed engaged virtually. Members of the Board attended a number of subsidary board and committee meetings and held virtual Board-workforceengagementsessions across ourregions during the course of the year. The Board hopes to be able to once againengage colleagues in person during 2022 aspart of its market vists. We recently announced several changes to our Board Committee compositon, details of which can be found in the Directors’ report on pages 90 to 191. During the year, we refocused our Brand, Values and Conduct Committee to Culture and Sustainablity. This Committee, chaired by Jasmine Whitbread, has been actively involved in supporting the Board and the business in relation to our net zero approach. The Board was also heavily involved in the key decisons ahead of endorsing the Group’s net zero white paper, published in October ahead of COP26. We are taking ambitous Stands The Group has built a unique footprint in the world’s most dynamic markets, serving the people and businesses that are the engines of their growth. As the bank for the new economy, we will ensure we continue to shape our business to drive their success – and ours – for the future. We have a huge opportunity to build a better future with our customers and communites. We believe that we can fulfil our Purpose – to drive commerce and prosperity through our unique diversty – without people being left behind, without the planetbeing negatively impacted, andwithout creating divsions that dimnishoursense ofcommunity. We’re taking a set of Stands to help solve some of the world’s most critcal problems – liftng economic particpation, helping emerging markets reduce carbon emissons, and supporting a fairermodel forglobalisaton. As wellas addressingsocietal challenges, we believe these long-term ambitons will stretch and motivate the Group to deliver our strategy faster and better. We’ve ralliedtogether forour communites, reaching more than 300,000 young people through our Futuremakers programme to support education, employabilty, and entrepreneurship across our markets during the year. All these achievements, and more, speak to the heart and mettle of who we are. They are a testament to our valued behaviours of being Better Together, endeavouring to Do the Right Thing, and putting our best foot forward to Never Settle. These attributes, along with the resilence and adaptabilty of our colleagues, are critcal for us. We must continue to buildon our culture of excellence, which is client-centric, diverse and inclusve, to deliver on our aspiratonsto be trulyhigh-performing. Our outlook is bright despite an uncertain environment Whilst uncertaintes persist in relation to COVID-19 and the geopolitcal landscape,we see plentyof opportunitesthat are compelling. Global growth is expected to continue in 2022 albeit somewhat slower after the sharp recovery we saw in 2021. Asia, our largest region, is poised to remain the fastest- growing area in the world. We expect policy support to scale back, as a number of central banks tighten policy to counter inflaton leading to risng interest rates, and fiscal programmes are eased. We continueto see accelerated change across theglobal business ecosystem, from the digtal space, to trade flows and supply chain shifts, and these are just some of the reasons why we are excited at the prospects of the Group. The Board will continue to oversee the task of strikng the right balance between the opportunites and risks that we see. I am confident that, with the actions we have outlined to continue drivng and indeed accelerating our strategic priorties, we will create long-term and sustainable value for our stakeholders. Dr José Viñals Group Chairman 17 February 2022 #### Group Chairman’s #### statement continued ![]() ª Providng ## financal servicesto ## Bukalapak ## customers º We have partnered with Indonesian e-commerce giant Bukalapak to offer digtal financal services to 17.1 millon micro and SME partners, and more than 110 millon indvidual users – many of whom don’t have access to banking services. The aim of the partnership is to boost financal incluson in Indonesia and further support the country’s digtal economic growth. Read more online at www.sc.com/bukalapak #### Liftng Particpation Strategicreport 09 Standard Chartered – Annual Report 2021 Strategicreport ![]() 10 Standard Chartered – Annual Report 2021 Strategic report Group Chief Executive’s review #### Group Chief #### Executive’s review ª Back to growth and #### improvng returnsº Our performance in the second half of 2021, and into this year, gives us confidence that we are on track to achieve our strategic and financal objectves. We saw a return to income growth, which we believe signals the start of a sustainable recovery, and we finshed the year with good business momentum inFinancal Markets, Trade and Wealth Management. Good cost discpline allowed us to generate positve income-to-cost jaws in the second half of the year. Continued low levels of credit imparment have helped us increase profit by 61 per cent on a constant currency basis to $3.9 billon and deliver a return on tangible equity (RoTE) of 6 per cent. Confidence in our overall asset quality and earnings trajectory allows us to return signficant capital to shareholders: we are announcing today a $750 millon share buy-back, starting immnently, together with a 12 cents per share full-year divdend, up a third on 2020. We are also committng to deliver substantial returns to investors over the next few years while managing our Common Equity Tier 1 (CET1) ratio dynamically withn our 13 to 14 per cent range. We remain liqud, well capitalsed and soundly positoned for the year ahead. Confidence in our purpose and strategy The places Standard Chartered call home are the world’s most dynamic markets, setting the pace for global growth. The people and businesses we serve, connect and partner with are the engines of the new economy of trade and innovaton, and central to the transiton to a fair and sustainable future. Our Purpose isto drive commerce and prosperity through our unique diversty. This infuses everything we do, connecting our strategy with opportunites to drive growth and deliver our societal ambitons. Bill Winters Group Chief Executive ![]() 11 Standard Chartered – Annual Report 2021 Strategicreport $. bn 19% Network income $. bn 3% Number of active Affluent Clients . #### millon 7% Cash investment To help us deliver our Purpose, we have defined three ‘Stands’, areas where we have long-term ambitons: Accelerating Zero, Liftng Particpation and Resetting Globalisaton. Representing some of the main societal challenges of our time, these are not separate from our strategy, but integral to deliverng and accelerating it: stretching our thinkng, action and leadership. We have managed seismc changes over the last two years and theseexternalchallenges havehelped us understand how we can accelerate our progress. Our strategy is as relevant now as it was pre-pandemic: • The growth of the Affluent segment in our markets has continued apace and remains one of our greatest opportunites. Since 2018, the number of clients has increased by around 400,000 and assets under management are up $52 billon. We see opportunites to accelerate this growth through further digtisaton, partnerships and investment • The trade flows across our Network remain as vibrant as ever and our unique physical footprint enables us to serve clients as they continue to trade and expand across borders. Network income has grown by around 6 per cent annually since 2018, excluding the impact of interest rate headwinds • The pandemic stress-tested our Mass Retail business and we have fared well. This segment is back on track, and we see opportunites to develop it further with our range of proven digtal capabilties and growing list of excitng partnerships. In 2021, our Credit Cards and Personal Loans business returned toprofitablity with a strong improvement in the cost-to-income ratio • Our Sustainablity agenda and thought and action leadership remains a key priorty as the world continues to face signficant environmental and climate challenges. We see this as both an imperatve and an opportunity. We are determined to deliver on our plans – to reach net zero in our operations by 2025 and in our financed emissons by 2050. This year we announced interm targets to reduce financed emissons by 2030 in the most carbon- intensve sectors. To provide transparency and support collective learning, wepublisheda detailedwhite paper outlinng our methodology and approach. We are also focused on accelerating growth in Sustainable Finance , with plans to mobilse $300 billon in green and transiton finance by 2030 and weare strengthening our sustainablity capabilties in our Consumer, Private and Business Banking (CPBB) business The long-term fundamentals of the markets in which we operate have not changed. Thesemarkets, notably Chinaand other markets in Asia, will drive future global economic growth over the coming decades. We are confident we have the right strategy to capture the opportunites that will arise from those trends, and we can see evidence that it is working. Taking action to simplfy, focus and accelerate our path to 10 per cent RoTE When we presented the Group’s refreshed strategy to the market in February 2019, we set out our plan to deliver 10 per cent RoTE by 2021. In the year that followed we grew income and RoTE. But COVID-19 triggered an economic downturn and relatedreduction in interest rates, inevtably squeezing our margins and reducing income and returns sharply. Against this backdrop, we have not achieved the returns we seek for investors. With this in mind, we have conducted a comprehensive review of our business model and strategy. There are many areas where we have made good progress in recent years despite the pandemic, includng returning CPBB to profitablity in China and Korea, almost trebling the cumulative operatingprofit from our four large optimsation markets and releasing around $15 billon of RWA through exits, includng the sale of our Permata jont venture. But we concluded that we must make changes to accelerate our path to 10 per cent RoTE by 2024. We will accelerate our execution and are implementng plans to simplfy our business and sharpen our focus on where we are most differentated. By 2024 we are targeting: • About a 160-basis point improvement in Corporate, Commercial and Institutonal Banking (CCIB) income return on risk-weighted assets (RWA) through optimsation and mix changes, enabled by a $22 billon reduction in RWA from exits and efficencies combinng to hold CCIB RWA at 31 December 2021 levels • A cost-to-income ratio in CPBB around 60 per cent, down from 76 per cent in 2021, achieved by growing income and executing a $500 millon business expense reduction programme • A $300 millon investment into our China-related businesses to capture theopportunity from China’s continued opening and doubling its profit contributon. Our positoning in China has never been better and the opportunites for us never moreattractive • $1.3 billon of gross cost efficencies to help offset inflaton, create room for continued investment andmaintan positve jaws of 2 per cent per year on average, excluding interest rate rises • Active management of the Group’s capital positon with a cumulative capital return in excess of $5 billon equating to a fifth of our current market capitalsation and more than double the amount of the previous three years ![]() 12 Standard Chartered – Annual Report 2021 Strategic report Group Chief Executive’s review As well as these five measures, we have an overarching objectve to improve returns in markets and business lines which are not meeting our financal objectves and to continue to simplfy the management of the Group. We review these questions regularly and willtake actions asappropriate. For example, we recently announced the merger of the Technology and Operations functions into one global organisaton, simplfying thestructureand drivng synergies. Our actions are designed to amplify the positve impact of the improvng outlook The macro-economic environmentremains important to the delivery of our financal ambitons. By the end of 2021 falling rates over the last two years have driven a greater than $2 billon reduction in net interest income which we have been working hard to replace. With the interest-rate cycle showing signs of turning, and given our positve gearing to US-dollar rates, we should recover this lostincome. We have said that we expect the Group’s metabolic rate of income growth to be 5-7 per cent. This reflects our strong and improvng market positoning and average GDP growth across our footprint where Asia is expected to outpace growth in the rest of the world by around 2 per cent over the next threeyears. The specifc asset and revenue pools that we are targeting with our strategy are also growing. By 2025, Asia Affluent assets and the Asia, Africa and Middle East Mass Retail revenue pool are expected to grow annually by 9 per cent and 7 per cent, respectively, compared to 6 per cent and 5 per cent, respectively, for the rest of the world. In additon to our metabolic income growth rate, we expect that interest rate rises could add about a further 3 per cent, drivng average income growth rates of 8-10 per cent to 2024, acceleratingthe achievement of our returns aspiratons. The improvements in external conditons, however, are not guaranteed and substantial uncertaintes persist, inparticular regarding geopolitcal tensions and the evolution of inflaton and interest rates. As such, we are fully committed to taking the operational actions outlined above to underpin attainment ofdouble-digtRoTE. Confident in the future We are confident we can deliver our strategy, buildng on the signficant progress we have made over the past several years and the momentum we have coming into 2022. Whilst uncertainty persists in relation to COVID-19, we also see signficant opportunitesemerging: • Government and Central Bankpolices arein transiton, creating volatilty that can benefit our capital-lite Financal Markets and Wealth Management businesses • Accelerated trade flows and supply chain shifts across our footprint markets are increasng the demand for Trade solutions • Sustainablity is critcal and an increasng priorty for both clients and governments – and we are uniquely positoned to support them • Our clients are accelerating their pivot to digtal with increasng willngness and desire for digtal-first banking • China isopening up atan accelerating pace,supporting the opportunites for which we have positoned for the past decade • Expected interest rate rises could add signficant further upside to our income growth rate Outlook The Group remains in great shape and in an enviable positon. We exit the second year of the pandemic rooted in markets with strong growth prospects. We have the right strategy, business model and ambiton to deliver on this potential. We have shown a resilent financal performance in 2021 and have set out clear actions to achieve a RoTE of 10 per cent by 2024. Finally, I would like to highlght the remarkable efforts of our 82,000 colleagues again this year. Their commitment and endurance inchallenging circumstances has delivered a seamless service to ourcustomers andcommunites that we serve. Bill Winters Group Chief Executive 17 February 2022 #### Group Chief Executive’s #### review continued ![]() 13 Standard Chartered –Annual Report 2021 Strategicreport Management Team 1.BillWinters Group Chief Executive 2.AndyHalford Group Chief Financal Officer 3.SimonCooper CEO, Corporate, Commercial & Institutonal Banking and Europe & Americas 4.ClaireDixon Group Head, Corporate Affairs, Brand and Marketing 5.DavidFein Group General Counsel 6.Dr Michael Gorriz Group Chief Information Officer 7.JudyHsu CEO, Consumer, Private and Business Banking 8.BenjamnHung CEO, Asia 9.TanujKapilashram Group Head, Human Resources 10.SunilKaushal CEO, Africa & Middle East 11.RoelLouwhoff Chief Digtal, Technology & Innovation Officer 12.TraceyMcDermott, CBE Group Head, Conduct, Financal Crime and Compliance 13.MarkSmith Group Chief Risk Officer 14.DavidWhiteng Group Chief Operating Officer 15.AlisonMcFadyen\* Group Head, Internal Audit 16.MaryHuen\*\* CEO, Hong Kong and Cluster CEO for Hong Kong, Taiwan and Macau \*Alison represents Group Internal Audit as an invtee at ManagementTeam meetings \*\*Mary is not a person dischargng managerial responsiblitesunder the UK Market AbuseRegulation 15. 1. 2. 8. 7. 10. 11. 13. 16. 14. 3. 4. 5. 6. 9. 12. ![]() 14 Standard Chartered – Annual Report 2021 Strategic report Market environment #### Market environment #### Macroeconomic factors #### affecting the global landscape Global macro trends • 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 • Among the majors, the US recorded growth of 5.7 per cent helped by signficant fiscal stimulus. The UK recorded the strongest growth (likely 7.5percent), following anear-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; economic activty was constrained in Q1 as COVID-19 cases were elevated, but improved into Q2 and Q3 as the vaccine roll-out picked up momentum, allowing restrictons to be eased • Policymakers continued to provide signficant emergency support, butrisng inflatonacross the world asa result of supplychain disruptons and energy shortages hasprompted some central banks tobegin tightenngpolicy and others to acceleratetheir timetables Legacy of COVID-19 • Bettervaccineaccess has helped developed markets recover faster than emerging markets. As the pace of vaccinatons improves in emerging markets, allowing greaterresumption 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 more limted central bank tightenng than markets are currently pricng in • 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 chainconcentration risks. Companies are likely tocontinue to accelerate the shortening and simplfying of supply chains • As companies aimto reduce concentration risks, they may diversfy production away from China,theworld’s mega-trader. However, global research surveys of firms in the Greater Bay area indcate that China remains a preferred destinatonfor most, followed by Associaton of Southeast Asian Nations (ASEAN) economies 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 antidote to economic scarring concerns. Withnemerging markets, countries in Asia are best placed to takeadvantage of digtalisaton • Long-term growth inthe developed worldis constrained by ageing populations and high levels of debt, exacerbated by the policy response to COVID-19 • Relatively younger populations, aswell asthe adoption of digtal technology, will allow emerging markets to become increasngly important to global growth • Risngnationalsm, anti-globalisaton and protectionsm are a threat to long-term growth prospects in emerging markets • 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 • Among 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 mostdeveloped 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ngfurther delays tothe roll-outof COVID-19 vaccines inemerging 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 #### Trends in 1 #### Outlook for 2 Medium- #### and long-term view ![]() 15 Standard Chartered – Annual Report 2021 Strategicreport #### Asia Actual and projected growth by market in 2021 and 2022 % 2022 2022 2022 India Singapore Indonesia 2021 2021 2021 See our regional performance on page 28 Regional outlook China’s economy staged a V-shaped recovery from COVID-19 due to relatively effective virus control and policy support Actual and projected growth by market in 2021 and 2022 % 2022 2022 2022 China Korea Hong Kong 2021 2021 2021 5.3% 2.3% 2.9% 8.1% 3.9% 6.3% 8.0% 4.8% 4.1% 9.5% 7.0% 3.6% • 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 anddownside risk from prolonged weak housing demand amid expectations of a price correction • While innovaton, decarbonisaton andcommon prosperity rank highon 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 tobefinetunedto 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, whiledomestic consumption looks to face further headwinds givenlingerng local COVID disruptons. We expect South Korea’s economy to grow 2.9 per cent in 2022 supported by economicreopening 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 immunty levels, forexample, Indonesiaand the Philppines • We expect inflaton in ASEAN to remain manageable for most regional economiesalthough upside risk comesfromprolonged supply-side disruptons and as demand recovers in the region through 2022. This should allow monetary policy to remain accommodative inH1 2022 • India is likely to clock two successive years of high-single-digt growth buoyed by favourable base effects and recovering economic activty. We expect FY23 GDP at 8 per cent as more contact-intensve sectors revert to normalised activtywith increased vaccinaton coverage, continuedfiscal 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 ![]() 16 Standard Chartered – Annual Report 2021 Strategic report Market environment #### Market environment #### continued #### Africa and the Middle East Europe and the Americas Regional outlook continued • 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 owing to higher food and fuel prices, we expect monetary policy in the region to remain largely accommodative,with modest normalisatonmeasuresin 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 International Monetary Fund (IMF) programmes is meant to send a signal on the intent to pursue fiscal consolidaton in order to stabilse debt ratios. Reform in markets like Ghana and Nigera, with high debt service-to-revenue ratios, will be closely followed • 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 roll-out proved more rapid among oil exporters, with countries like the UAE leading the charge. The strong outlook for hydrocarbon prices and expected relaxationof targets forOPECmembers areset 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 US dollar currency pegs • Growth in Europe and the 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 economiesand banks • The Fed is likely to begin hikng rates by Q1 2022, and raise rates four times in 2022- taking the Fed Funds rate higher by 100 bps. 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 theirasset 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 normalises, whileexports areexpectedto remain strong amid high commodity prices and improved supply-side constraints A gradual recovery in sub-Saharan Africa was recorded in 2021 Growth in Europe and the Americas strengthened in 2021 as vaccinaton programmes rolled out Actual and projected growth by market in 2021 and 2022 % Actual and projected growth by market in 2021 and 2022 % 2022 2022 Nigera UAE 2021 2021 2022 2022 UK US 2021 2021 3.1% 3.0% 2.5% 2.5% 5.0% 3.4% 7.5% 5.7% See our regional performance on page 29 See our regional performance on page 30 ![]() ª Directaccess ## to relationshp ## managers ## with My RM º To give our Singapore-based affluent clients the service they want, when they need it, we launched the My RM app. The app allows clients to interact with their relationshp managers via text messages or audio calls, as well as authorisng investment transactions. The tool is one part of a wider upscaling of our Affluent business in Singapore, where there are plans to double the current number of relationshp managers. Read more online at www.sc.com/sg/myrm 17 Standard Chartered – Annual Report 2021 Strategicreport ![]() 18 Standard Chartered – Annual Report 2021 Strategic report Business model #### Business model 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. #### We help internatonal companies #### connect across our global network #### and help indviduals and local #### businesses grow their wealth #### Starting Q1 2022, we will be disclosng SC Ventures and related entites as a separate client segment. Income • Net interest income • Fee income • Trading income Profits • Income gainedfrom providng our products and services minus expenses and imparments Return on tangible equity • Profit generated relative to tangible equity invested Howwe 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. Our products and services Financal Markets • Project and transportation finance • Debt capital markets and leveragedfinance • Macro, commodites and credit trading • Financng and securites services • Sales and structuring Transaction Banking • Cash management • Trade finance • Working capital Wealth Management • Investments • Insurance • Wealth advice • Portfolio management RetailProducts • Deposits • Mortgages • Credit cards • Personal loans ![]() 19 Standard Chartered – Annual Report 2021 Strategicreport 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 CCIB segment, integratng our Corporate Finance and Financal Markets businesses. Theintegrat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talised 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 remain competitve against peers. Going forward, we aim to deliver a Return on Tangible Equity (RoTE) of around 10 per cent by 2024, by focusing on drivng improved returns in CCIB, transforming profitablity in CPBB, seizng opportunites in China, improvng efficency throughcreating operational leverageand deliverng sustainable shareholder distrbutions. We are committng resources to grow our franchise in the large and high- returns markets, and sustainng and accelerating progress in the four optimsation markets announced in February 2019 (India, Korea, UAE, Indonesia). We have also stepped up our reviews of each of our client segments, markets, and products and services. #### Distnct propositon Our understanding of our markets and our extensiveinternatonal network allow us to offer a tailored propositon toour clients, combinng global expertise and local knowledge. Sustainable and #### responsible business We are committed to sustainable social and economicdevelopment across our business, operations and communites. #### Client focus Our clients are our business. We buildlong-term relationshps throughtrustedadvice, expertise and best-in-class capabilties. 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 (see pages 24–25 for more), challenge us to use our unique positon to help. #### Robust risk #### management We are here for the long term. Effective risk management allows us to grow a sustainable business. ![]() 20 StandardChartered – Annual Report 2021 Strategic report Business model The sources of value we rely on We aim to use our resources in a sustainable way, #### to achieve the goals of our strategy How we are enhancing our resources • Morethan 18,000 colleagues havecompleted learning courses in 2021 to build the future skills that we need – includng analytics, data, digtal, cyber security and sustainable finance. • We continue to create a work environment that supports resilence, innovaton and incluson, with ongoing focus onmental, physical, social and financal wellbeing. This includes rolling out hybrid working across our markets. • We continue to invest in transforming our core business into aleadingdigtal-first anddata-driven platform, positoning us todeliver 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 andwe continue toleverage our network to drive growth in Trade corridors and FinancalMarkets solutions for ourclients. • We continue to support small and medium businesses (SMEs), providng them with much-needed funding to restart andgrow their businessesamid the reopening of economies. Overall, we granted over $3 billon in new loans to SMEs in 2021. • We increased our focus on SMEs particpating in the New Economy, in particular those that are part of e-commerce ecosystems. • Stronger capital and a much more resilent balance sheet with growth in high-quality deposits • CET1 ratio at 14.1 per cent, above the Group target range of 13–14 per cent CET1 capital #### Financal strength With $828 billon in assets on our balance sheet, we are a strong, trustedpartner for our clients. $ bn • Wevalue engineerng excellence.Over10,000 engineers globally are creating abest-in-class and scalable technology stack, to support quick turnaround ofideas into service. • We are accelerating our move to cloud, migratng key applicatons, e.g. our core banking system and new digtal ventures. • Weadopt next-generation technologiesto better serve our customers, improve efficencies and deliver new business opportunites. Consumer 1 client satisfacton metric . % 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. #### Business model #### continued #### Technology We possess leading technological capabilties to enable best-in-class customer experience, operations and risk management. #### 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. #### Human capital Diversty differentates us. Deliverng our Purpose and Stands rests on how we continue to invest in our people, the employeeexperience we further enhance and the culture we strengthen. #### Local expertise 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. • In 2021 we became a digtal-first brand, reflecting the innovaton drivngour business forward. Ourrefreshed identty is modern and agile, demonstrating our commitment to staying relevant to our clients’ evolving needs. • We have been successful in leveraging our 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. 1Excludes CCIB, private bank and business banking clients ![]() 21 Standard Chartered – Annual Report 2021 Strategicreport Read moreon stakeholder engagement on pages51–59 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 with a great digtal client experience. We enable indviduals to grow and protect their wealth; we help businesses trade, transact, invest and expand. We also help a variety of financal insttutions, includng banks, public sector and development organisatons, with their banking needs. #### Suppliers We engage diverse suppliers, locally and globally, to provide efficent and sustainable goods and services for our business. Taxes paid in 2021 $. bn 2020: $971m #### Regulators and governments We engage withpublic authorites toplayour part in supporting the effective functionng ofthe financal system and the broader economy. #### 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. Total spent in 2021 $. bn 2020: $3.8bn Active suppliers 12,100 2020: 12,900 Totalactive indvidual clients Total CCIB and business banking clients . m 2020: 9.6m  2020: 255,000 Senior appointments which are internal  % 2020: 62% Employees committed to our success  % 2020: 97% Divdends declared in 2021 $ m 2020: $284m #### Investors We aim to deliver robust returns and long-term sustainable value for our investors. #### Society We strive to operate as a sustainable and responsible company, working with local partners to promote social and economicdevelopment. Community investment $. m 2020: $95.7m ![]() 22 Standard Chartered – Annual Report 2021 Strategic report Strategy Strategic priorties #### Wholesale Network business 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 Sustainable Finance. We are one of the leadinginternatonal Wholesale banks in our emerging markets footprint through: • Taking leading positons in high-returning, high-growth sectors • Deliverng amarket-leading digtalplatform by continung to invest in coredigtal capabilties • Drivng capital-lite products while buildng a Sustainable Finance franchise andexpandingour orignation anddistrbution ecosystem e.g.,accelerating our Financal Markets growth • Speeding up growth in large marketswhile expanding in growing markets and corridors e.g., intra-Asia and East–West Over the past year, we have conducted a bottom-up review of our strategy. While there are areas we identfied that we will particularly focus on in the future, such as faster tackling of low-returning risk-weighted assets (RWA) in Corporate, Commercial and Institutonal Banking (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 achieve our ambitons by 2025: • To be the number one Wholesale digtal banking platform • To be among the top three Affluent brands • To double our Mass presence • To become a market leader in Sustainablity We will continue to increase focus on: • Four strategic priorties: Wholesale Network business, Affluent client business, Mass Retail business, and Sustainablity • Three critcal enablers: People and Culture, New Ways of Working, and Innovation We are anchoring our strategic priorties and enablers in our three Stands: Accelerating Zero, Liftng Particpation and Resetting Globalisaton. Throughout this section, we will highlght the linkages between our strategic priorties and our Stands. More details on our Stands can be found on pages 24 and25. ### To become ### a leader in ### global finance #### Our strategy CCIB network income Percentage ofCCIB transactions digtally intiated $. bn 2020: $4.4bn  % 2020: 41% #### 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 of Accelerating Zero. As a leading internatonal wealth manager in Asia across the Affluent continuum with $250 billon AUM, 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 bya strong focus on developingHong Kong and Singaporeas 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 Affluent clientincome Affluent activeclients $. bn 2020: $3.5bn . m 2020: 2.0m ![]() 23 Standard Chartered – Annual Report 2021 Strategicreport Strategic priorties Critcal enablers #### Innovation We have a three-pronged innovaton approach to transform the Bank, to achieve our goal of 50 per cent income from new businesses 2 . • Transform our coreviadigtisat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vegrowth #### People and Culture 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 andincluson. This includes: • Expanding hybrid working across our footprint, with 73 per cent of colleagues across 28 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 • Increasing re-skillng and upskillngopportunitestowards future roles that are aligned with the business strategy and indviduals’ aspiratons • Focusing on wellbeing to enhance indvidual resilence, productivty andperformance #### New Ways of Working We continue tobe client-centric, improve our operating rhythm in organisat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on-making and delivery, as a key source of competitve advantage. Women insenior roles Consumer 1 client satisfacton metric Culture of incluson score Average timetaken from approval to technology go-live Percentage ofrevenue fromnew businesses 2 . % 2020: 81.67% . #### weeks 2020: 12.0 weeks ~ % 2020: N.A. #### 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, supporting our Stand of Liftng Particpation of communites across our network. We support companies in improvng environmental, social and governance standards, in line with our Stand of Resetting Globalisaton. Our goal is to become the world’s most sustainable and responsible bank and the leading private sector catalyser of finance for the UN Sustainable Development Goals (SDGs) where it matters most – in Asia, Africa and the Middle East. We are: • Leveraging climate risk managementtosupport clients in managing climaterisk and identfying transiton opportunites, e.g., mobilse green and transiton finance • Integrating Sustainable Finance as a core component of our customer value propositon and deliverng Sustainable Finance solutions • Continung to promoteeconomicincluson and totackle inequalty in our footprint through Futuremakers by Standard Chartered • Targeting net zero carbon emissons from our operations by 2025, and from our financng by 2050 Reduction in carbon footprint from previous year Sustainablity Aspiratons achieved or on track . % 2020: 78.4%  % 2020: 37% . % 2020: 29.5% . % 2020: 29.5% #### Mass Retail business We help our clients prosper and deliver everydaybanking 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 • Growing the share of our Mass Retail client income from new innovatve businessmodels Mass market active clients Percentage of digtal sales for Retail Products . m 2020: 7.6m  % 2020: 69% 1Excludes CCIB, private bank and business banking clients 2Income from digtal intiatves, innovaton and transformation of the core, the majorty of which will come from new and upgraded platforms and partnerships,supplemented selectivelyby new business ventures ![]() We’rehelpingemerging marketsin 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 financeandpartnerships, and accelerate new solutions. #### Accelerating #### Zero • 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ve sectors. 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 (see page 466 for defintion) of 63 per cent for power, 33 per cent respectivelyfor steeland minng (excluding thermal coal minng) and 30 per cent for oil and gas • We aim to catalyse finance and partnerships to scale impact, capital and climate solutions towhere they are needed most, includng a plan to mobilse $300 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ngsectors, and launch sustainable products • We aim to reach net zero carbon emissons from our own operations by 2025 ª Stand up #### to climate #### changeº #### Our Stands The severe impacts of climate change, stark inequalty and unfair aspects of globalisaton impact everyone. 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 challengesand opportunites of our time • Each of these Stands impacts how we engage with our clients and define the future of our societes • We have already made signficant progress and we will be setting long-term goals as we deliver near-term change • 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 Left José Viñals Group Chairman Right Bill Winters Group Chief Executive More informaton see page 31 24 Standard Chartered – Annual Report 2021 Strategic report Our Stands ![]() It’s our goal to support 500,000 companies to improve workingand environmental standards and give everyonethe chance to particpate in the world economy, so growth becomes fairer and more balanced. We stand for a new model of globalisatonbased on transparency, inclusonand dialogue. Globalisaton has lifted millons out of poverty, but too many peoplehave 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 increasepartic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vemodelof globalisatonbased on transparency and fairness, buildng trust,and promoting the exchange of views and innovaton to solve the world’stoughest problems. As a leading trade bank, we can connect the capital, expertiseand ideasneeded to drive new standards and create innovatve solutions for more equitableand sustainable growth. Specifcally, we aim to: • Increase transparency across supply chains to enable consumer choice and driveresponsible 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 private and public sector • Makeglobal trade more equitable by improvng access to finance for smaller suppliers that often lack adequate financng #### Resetting #### Globalisaton We’re determined to improve the lives of 1 billon people and their communitesby unleashing the financal potential of women and small businesses in our core markets. • Inequality, along with gaps in economicinclusonin our key markets, means that manyyoung people, women and small businesses struggle to gain access tothe financal system to save for their futures and grow their businesses. We want to democratisewealth management and make it easily accessibleto the mass segment at a low cost • Throughpartnerships and technology, we can expand the reach and scale of financal services – drivng accessible banking atscale 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onsmore people #### Liftng #### Particpation ª Stand up for #### equal access #### to financal #### support #### for women #### and small #### businessesº ª We stand for a new model of #### globalisaton #### based on transparency, inclusonand #### dialogueº More informaton see page 9 More informaton see page 49 25 Standard Chartered – Annual Report 2021 Strategicreport ![]() 26 Standard Chartered – Annual Report 2021 Strategic report Clientsegment reviews Segment overview Corporate, Commercial and Institutonal Banking supports clients with their transaction banking, financal markets, corporate finance and borrowing needs across 49 markets. We provide solutions to more than 22,000 clients in some of the world’s fastest-growing economies and most active trade corridors. Our clients include governments, banks, investors, andlocal and large corporations operating or investng mainly in Asia, Africa and the Middle East. Our strong and deep local presence enables us to help co-create bespoke financng solutions and connectour clients multilaterally 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 and 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on to increase support and funding for financal products and services that have a positve impact on our communites andthe environment and support sustainable economic growth. Strategic priorties • Deliver sustainable growth for clients by leveraging our network to faciltate trade, capital and investment flows across our footprint markets • Generate high-quality returns by improvng funding quality and income mix, growing capital-lite 3 income and drivngbalance sheet velocity while maintaning discplined risk management • Be the leading digtal banking platform, providng integrated solutions to cater to our clients’ needs and enhance client experience, and partnering with third parties to expand capabilties and access new clients • Accelerate our sustainable finance offering to our clientsthrough product innovaton and enabling transiton to a low-carbon future Progress • Our underlying income driven by diversfied product suite and expanded client solutions despite the low interest rate environment. Our network income currently contributes to 54 per cent of total CCIB income • Improved balance sheet quality with investment-grade net exposures representing 64 per cent of total corporate net exposures (2020: 51 per cent) and high-quality operating account balances stable at 63 per cent of Transaction Banking and Securites Services customer balances (2020: 64 per cent) • Migrated more than 65,000 client entites to our S2B 5 NextGen platform and increased S2B cashpayment transactionvolumes by 17 per cent • We are one-third of the way towards developing our $1 billon income sustainable finance franchise Performance highlghts • Underlying profit before tax of $3,124 millon up 57 per cent, primarly driven by credit imparment releases, partially offset by lower income and higher expenses • Underlying operating income of $8,407 millon down 1 per cent mainly due to lower Cash Management income impacted by a low interest rate environment and lower Macro Trading income on the back of lower market volatilty and tighter spreads, partially offset by strong performance in Credit Market and Trade • Good balance sheet momentum with total assets up 5 per cent, of which loans and advances were up 11 per cent • Underlying RoTE increased from 5.9 per cent to 9.6 per cent Corporate, Commercialand #### Institutonal Banking KPIs Profit before taxation 1 $m 57% underlying basis Risk-weighted assets (RWA) $bn $2bn $m 70% statutory basis .% 410bps statutory basis Return on tangible equity (RoTE) 1 .% 370bps underlying basis Proportion oflow-returning client RWA 17.8% ofRWA Capital-lite 3 income as a share of total income 42% share of total income 4 Aim: Reduce perennial sub-optimal RWA 2 and bring down the proportion of low-returning client RWA. Analysis: Our perennialsub-optimal RWA has reduced 49.6 per cent year-on-year. The proportionof low-returning client RWA decreased from 19.5 per cent in 2020 to 17.8 per cent in Nov 2021, driven by RWA optimsation efforts undertaken. \*Not meaningful due to segments integraton Aim: Reshape the income mix towards capital-lite income. Analysis: Share of capital-liteincome decreased slightly to 42 per cent in 2021 due to the low interest rate environment, mitgated by strong growth in liablites. 1Reconcilationsfromunderlyingto statutory anddefintions ofAPMs can befoundon pages 80–85 2Perennial sub-optimal clients are clients who have returned below 3 per cent RoRWA for the past three years 3Capital-lite income refers to products with low RWA consumption or of a non-funded nature. This mainly includes Cash Management and FX products 4Prior periods KPIs have been restated following a reorganisaton of certain clients across client segments 5Our next-generation TransactionBanking digtalplatform 2021 2020 2019 17.8% 19.5% nm\* 2021 2020 2019 42% 45% 50% ª New digtal portal #### launch with Demica º In October, we partnered withfintech specialst Demica to transform access to the Bank’s supplier finance programmes, allowing easier enrolment for thousands of suppliers through an online portal. The portal helps suppliers enrol in supply chain finance programmes by using a digtal front-end while providng our team the abilty to reach out to a larger supplier base. This is the first phase of a strategic partnership between Standard Chartered and Demica and we are looking for new ways to use technology to transform our working capitalsolutions. ![]() 27 Standard Chartered – Annual Report 2021 Strategicreport Segment overview Consumer, Private and Business Banking serves more than 9millonindviduals andsmall businesses, with a focus on the 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. 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 also support our clients with their business bankingneeds. We are closely integrated with the Group’s other client segments;for example, we offer employee banking services to Corporate, Commercial and 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talisaton and cost-efficencies, and simplfying processes. Strategic priorties • Leading internatonal Affluentfranchise knownfor outstanding personalised wealth advice and exceptional client experience across our top 10 markets • Asingle wealth continuum platform withdistnctive segment value propositons tomaximse clientrelationshps • Profitable Personal Banking franchise enabled bypartnerships, data and digtal infrastructure • Digtal-led, personalised and contextual clientengagement augmented byseamlessomnichannel experience • New ways of working as standard approach, for faster, better, more agileexecution • Strategicand transformative investment decisons deliverng synergies and consistent client experience, aligned across markets Progress • Launched Wealth Management Connect tocapture northbound and southbound transactions for Greater Bay Area investors • Introduction of the Standard Chartered-INSEAD Wealth Academy, which aimsto upskill the knowledge ofall relationshpmanagers and wealth specialsts • Increase in digtal sales, up over 12 per cent driven by investments priortised to grow digtal sales in Personal • Personal‘scale through automation’ transformation accelerated by acquirng customers from partnerships, engaging and cross-selling digtally, and servicng themthrough low-cost channels • Launch of new partnerships with Home Credit in Vietnam and Kredivo in Indonesia. Our Atome partnership went live in Indonesia and will go live across our footprint in 2022 Performance highlghts • Underlying profit before tax of $1,071 millon was up 51 per cent driven by higher income and lower credit imparments • Expenses were up 3 per cent (up 2 per cent constant currency) or well-managedand broadly flat constant currency excluding our investments in ventures • Underlying operating income of $5,733 millon was up 1 per cent (flat constant currency). Asia was up 1 per cent and Africa and the Middle East was up 2per cent • Strongincome momentum growth fromMortgages up38percent and credit cards and personal loans up 5 per cent with improved margins and balance sheet growth and 12per cent growth in Wealth Management. These were offset by Deposit margin compression, impacted bya lower interestrate environment • Underlying RoTE increased from 6.9 per cent to 10.2 per cent #### Consumer, Private #### and Business Banking KPIs Profit before taxation 1 $m 51% underlying basis Risk-weighted assets (RWA) $bn $2bn $m 29% statutory basis .% 160bps statutory basis Return on tangible equity (RoTE) 1 .% 330bps underlying basis Affluent assets under management 6% Digtal adoption 63% of clients Aim: Align the Group’s service to how clients wantto interactand increase efficency by reducing the amount of manual processing. Analysis: Online applicatons have continued togrow with theproportion of Retail Banking clients that are digtal-active up from 60 per cent in 2020 to 63 per cent at the end of 2021. Aim: Affluentassets under management –grow and deepen client relationshps,improve investmentpenetrationand attract new clients Analysis: Assets under management stand at $250 billon in 2021, deliverng growth of 6 per cent 2021 2020 2019 63% 61% 54% 2021 2020 2019 6% 7% 11% ª Partnering with #### Kredivo on digtal #### loans º We partnered with Indonesian credit platform Kredivo to offer digtal cash loans and ‘buy now, pay later’ to aid financal incluson. The loans, which are available for Mass Retail, do not need to be verifed face-to-face and make use of Kredivo’s AI-driven credit scoring. The partnership faciltatesaccess to credit and supports the growth of e-commerce as well as offline retailers. 1Reconcilations from underlying to statutory and defintions of APMs can be found onpages 80–85 ![]() 28 Standard Chartered – Annual Report 2021 Strategic report Regional reviews 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 regiongenerates over two-thirds of the Group’s income from its extensive network of 21 markets. Of these, Hong Kong and Singapore contributed the highest income, 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ngopeningup of China’s economy. The region is benefitng from risng trade flows, includng activty generated from the Belt and 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. Strategic priorties • Leverage our network strength to serve the inbound and outbound cross-border trade and investment needs of our clients, particularly across high-growth corridors e.g. China–ASEAN • Captureopportunitesarisng from China’s opening, includng the Greater Bay Area (GBA), Renminb, Belt and Road intiatve, onshore capital markets andmainland wealth • Strengthen our market positon in Hong Kong and Singapore, and reshapeour Korea,India andIndonesia franchisesto improve returns • Turbocharge ourAffluentand Wealth Managementbusinesses through differentated propositons andservice • Continue to invest intechnology,digtal capabilties and partnerships to enhance client experience and build scale efficently • Support clients intheir sustainable finance and transiton needs Progress • China business has grown signficantly, almost doubling underlying operating profit, driven by Wealth Management, Financal Markets, Trade and unsecured products. The income we have booked from clients based in China has grown 9 per cent and China remainstheGroup’s largest network incomeorignator • Hong Kong and Singapore, the highest income contributors in our region, have delivered strong underlying income growth driven by Wealth Management, mainly from Affluent clients and Financal Markets, partly offset by continued margin compression. Our digtal agendas have progressed; and our virtual bank Mox currently has a 25 per cent market share of deposits among virtual banks in Hong Kong. Singapore is currently exploringa digtal bankventure, which will allow us to expand our reach and touchpoints in the country. We have successfully created an ASEAN hub in Singapore, consolidatng our subsidaries in Malaysia, Thailand and Vietnam • We continue to invest in the GBA. We are among the first batch of banks to launchWealthManagement Connect, we successfully completed our GBA Centre to better support CCIB and CPBB clients, and we are progressing with our sustainable finance platform build • Korea and India have delivered strong growth in underlying profit before tax of 12 per cent and 53 per cent, driven by progress in CPBB and continued focus on branch optimsation and productivty Performance highlghts • Underlying profit before tax of $3,116 millon was up 11 per cent, mainly due to lower credit imparment charges, partially offset by higher expenses as we continue to invest in our strategic intiatves • Underlying operating income of $10,448 millon was up 1 per cent (down 1 per cent constant currency). Strong Financal Markets, Lending, Mortgages and Wealth Management growth, partly offset by lower trading income from lower market volatilty • Loans and advances to customers were up 11 per cent mainly from strong growth in Mortgagesand Corporate Lending. Customer accounts were up 6 per cent, with strong growth in retail current and savings accounts and Transaction Banking cash balances • RWA decreased by $4 billon from continued focus on RWA optimsation and partly from a model change benefit in Korea #### Asia Profit before taxation $m 11% underlying basis Risk-weighted assets (RWA) $bn $4bn $m 7 % statutory basis ª Breaking boundaries #### with the Baring Asia #### Private Equity Fund º In 2021, we worked with the Baring Asia Private Equity Fund to create the region’s first ESG-linked subscripton facilty with acarbon-offset mechanism, worth upto $3.2 billon. Under the terms, any investments made must meet ESG-linked critera; if the critera are not met, the client will purchase carbon offsets. The deal is also the first of its kind to include gender diversty KPIs as part of its investment critera. Loans and advances to customers Asia 72% of Group Income split by key markets Hong Kong 33% Korea 11% Singapore 15% Others 41% ![]() 29 Standard Chartered – Annual Report 2021 Strategicreport 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 anda 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 elementof global tradeand investment corridors, includng those on China’s Belt and Road intiatve, and we are well placed to faciltate these flows. Positvemacro-trends (oil, commodity and UAE property prices)are drivng market opportunites, but challenges and uncertaintes exist in the near term. 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 Strategic priorties • Provide best-in-class structuring and financngsolutions and drive creation through client intiatves • Investto accelerate growth indifferentatedinternatonalnetwork and Affluentclient businesses • Invest in market-leadingdigtisaton intiatves in CPBB to protect and grow market share in core markets, continue with our transformation agendato recalibrate ournetwork and streamline structures • Be an industry leader in the transiton to net zero across the region Progress • We have strengthened our footprint with a new branch in Saudi Arabia in 2021 • Ourrole leading several marquee transactions across theregion reflects our strong client franchise. We continue to be the market leader in bondissuanceand Islamic Sukuk and achieved our highest-ever debtcapital marketsnotional volumes • Our Project and Export Finance team closed more than $2 billon in sustainablefinance dealsin the region,which includesone of the largest waste to energy projects globally and one of the largest single-site solar projects in the world • Our digtal transformation intiatves in Africa are bearing fruit: 98 per cent of client acquistions and 80 per cent servicng is done digtally. Digtal bank customer deposits grew 43 per cent to $189 millon, and through cross-selling theyare increasngly taking up other wealth, insurance and lending products. A major milestone was achieved with the first phase of the digtal bank launched in Pakistan in December 2021 • Strong FinancalMarkets andWealth Management momentum; Financal Markets income was up 9 per cent and was at the highest level in five years; and Wealth Management income grew 23 per cent and was at the highest level since 2015 • Continung cost discpline has allowed investments to continue through the cycle. The number of branches decreased by 20 per cent and headcount was 12 per cent lower Performance highlghts • Underlying profit before tax of $856 millon was the highest since 2015 and was driven by reduced credit imparment, higher income and lower expenses • Signficant turnaround in UAE with a return to profitablity in 2021 • Underlying operating income of $2,446 millon was up 3 per cent (up 5 per cent constant currency) mainly due to growth in Financal Markets and Wealth Management. Income was up 7 per cent (up 9 per cent constant currency) in Africa, while it was flat across Middle East, North Africa and Pakistan • Loans and advances to customers were down 6 per cent and customer accounts were up8 per cent Africa and the #### Middle East Profit before taxation $ m $843 m underlying basis Risk-weighted assets (RWA) $bn $2bn $831m $906m statutory basis ª Digtalbanking #### grows across Africa #### and the Middle East º Our digtal banking intiatves in Africa continued to grow in 2021 as we gained 860,000 customers, almost doubling ourexistng base acrossthecontinent.Our digtal bank customer deposits grew 43 per cent to $189 millon and we launched digtal banking in Pakistan – bringng the number of markets where we offer our services to 10. Loans and advances to customers Africa & Middle East 7% of Group Income split by key markets Kenya 10% Pakistan 10% UAE 22% Others 58% ![]() 30 Standard Chartered – Annual Report 2021 Strategic report Regional reviews Loans and advances to customers Europe & Americas 21% of Group Income split by key markets Others 14% 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. Clients based in Europe & Americas make up around one-third of the Group’s CCIB income, with three-quarters of client income booked elsewhere in the network generating above- average returns. In additon to being a key orignation centre for CCIB, the region offers local, on-the-groundexpertise andsolutions 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 with more than 80 per cent of the region’s income orignating from Financal Markets and Transaction Banking products. Our Private Banking business focuses on serving clients with links to our footprint markets. Strategic priorties • Leverage our network capabilties to connect new and existng Corporate and Financal Institutons clients in the west to the fastest-growing and highest-potential economiesacross our footprint • Grow the business we capture from inbound trade flows from our footprint markets • Increase the capital base of our Frankfurt hub to continue growing business with our continental European clients • Furtherdevelopour sustainable financeproduct offering and risk management capabilties • Enhance capital efficency, maintanstrong risk oversight and further improve the quality of our funding base • Expand assets under management in Private Banking and continue to strengthen thefranchise Progress • Strong growth of 7 per cent in global cross-border business with Europe and the Americas CCIB clients • Signficantly expanded our domestic Cash Managementoffering to faciltate growth opportunites acrossour globalfootprint • SCB AG entity fully operational as our continental Europe hub with the capital base doubled in 2021, providng financal solutions for the EU27 market and with strong income growth from both Corporate and Financal Institutons clients in Europe • Signficant growthin income from sustainable finance products and expansionof our sustainable productoffering • Signficant increase in high-qualityliablites diversfying the region’s funding base Performance highlghts • Underlying profit before tax of $644 millon improved 67 per cent driven by higher income and lower imparments • Underlying operating income of $2,003 millon was up 4 per cent largely due to growth in Trade and Lending with a resilent performance in FinancalMarkets. Treasury Markets income was lower due to signficant realisaton gains in the prior year. Cash Management income decreased due tolower interest margins albeit largely mitgated by signficant growth in volumes • Expenses increased by 7 per cent largely due to the normalisaton of performance-related pay, increased investment andtechnology expense, and US dollar depreciaton • Loans and advances to customers grew 13 per cent and customer accounts grew 21 per cent Europe and the #### Americas Profit before taxation $m 67% underlying basis Risk-weighted assets (RWA) $bn $5bn $m 69% statutory basis ª Helping build #### high-speed railways #### in Turkey º In December 2021, we led on a landmark €1.24 billon green financng package todevelop a new high-speed railway line in Turkey. The 200km-long railway track will link the cites of Bandırma and Osmaneli in the northwest of the country, passing through Bursa and Yenişehr. Thistransaction,undertakenfor the Minstry of Treasury and Finance in Turkey, is the first of its kind for the client. UK 45% US 41% ![]() ª Settingoutour ## stall for 2050 º In October, we announced plans to reach net zero carbon emissons from the activties we finance by 2050. Our plans include interm targets for our most carbon-intensve sectors, mobilsing $300 billon in green and transiton financng, and enabling a just transiton through the deployment of a Transiton Acceleration Team. The team will launch sustainable products and help our clients reach their net zero targets. We aim to be net zero from our own operations by2025. Read more online at www.sc.com/netzero #### Accelerating Zero 31 Standard Chartered – Annual Report 2021 Strategicreport ![]() 32 StandardChartered – Annual Report 2021 Strategic report Group Chief Financal Officer’s review #### Group Chief Financal #### Officer’s review Andy Halford Group Chief Financal Officer Summary of financal performance The Group delivered a resilent performance in 2021, returning to top-line growth in the second half of the year. In conditons that remained challengingthe Group deliveredstrong underlying profit growth of 61 per cent on a constant currency basis, and 300 basis points increase to return on tangible equity (RoTE) to 6 per cent, benefitng from signficantly lower credit imparment. Income was broadly flat to 2020 and was down 1 per cent on a constant currency basis, reflecting the $0.7 billon income lost in 2021 due to the low interest rate environment. After declinng 6 per cent in the first half of the year on a constant currency basis excluding the impact of the debit valuation adjustment (DVA), the Group delivered 4 per cent income growth in the second half. The Group grew loans and advances to customers by 6 per cent and delivered a record level of assets under management withn Wealth Management. Expenses were up 3per cent on a constant currency basis as performance-related pay normalised after an abnormally low 2020 and as the Group continues to increase investment in strategic intiatves. Credit imparments reduced by $2 billon reflecting the non-repeat of prior year stage 3 charges and an improvng economic backdrop as markets began an uneven recovery from the effects of COVID-19. The Group remains well capitalsed and highly liqud with a Common Equity Tier 1 (CET1) ratio of 14.1 per cent, which translates to a pro forma 13.5% as at 1 January 2022 incorporating upcomingregulatory changes, enabling the Board to announce a further $750 millon share buy-back programme to start immnently. All commentary that follows is on an underlying basis and comparisons are made to the equivalent period in 2020 on a reported currency basis, unless otherwise stated. • Operating income was broadly flat and was down 1 per cent on a constant currency basis • Net interest income decreased1 per cent with increased volumes more than offset by an 8 per cent or 10 basis point reduction in net interest margin. The decline in the net interest margin was as a result of the low interest rate environment and is equivalent to $0.7 billon of lost income. Net interest income included a positve $171 millon IFRS9 interest income catch-up adjustment inrespectof interest earned on historcally impared assets, increasng the net interest marginby 3 basis points • Other income was flat, with a record performance in Wealth Management and strong fee growth in Transaction Banking offset bylower trading income in Financal Markets and lower realisaton gains in Treasury • Operating expenses excluding the UK bank levy increased 5 per cent but were flat on a constant currency basis after adjustng forthe normalisaton of performance-related pay in spite of a higher inflaton environment. Expenses were held flat as the Group funded continued investment in transformational digtal capabilties through cost efficency actions. The cost-to-income ratio on a constant currency basis (excluding the UK bank levy and DVA) increased 272 basis points to 70 per cent, however in the second half of the year the Group delivered 260 basis points of positve operating leverage. The UK bank levy decreased by $231 millon to $100 millon reflecting a change in the basis of calculation as it is now only chargeable on the Group’s UK balance sheet #### “ A resilent FY’21 performance #### returning to top line growth in #### 2H’21, an increased divdend #### and a buy-back” ![]() 33 Standard Chartered – Annual Report 2021 Strategicreport • Credit imparment was $263 millon, a reduction of $2 billon. Corporate, Commercial & Institutonal Banking imparments declined by $1.6 billon as it recorded a net release of $44 millon. Consumer, Private & Business Banking imparments were $285 millon, primarly stage 3 imparments, down $456 millon. Central & other imparments totalled $22 millon, broadly flat in the year. Total credit imparment of $263 millon represents a loan-loss rate of 7 basis points, a year-on-year reduction of 59 basis points in our cost of risk • Other imparment was $355 millon, an increase of $370 millon. This includes a $300 millon imparment charge relating to the Group’s investment in its associate China Bohai Bank (Bohai) following the announcement of its most recent results. The remainng other imparment primarly relates to aircraft • Profit from associates and jont ventures increased 7 per cent to $176 millon. In 2020, the Group could only recognise its share of the profits of Bohai for ten months due to the timng of its intial public offering in July 2020, after which the Group’s share of Bohai reduced to 16.26 per cent from 19.99 per cent • Charges relatingto restructuring, goodwill imparment and other items reduced by $346 millon to $549 millon, with $125 millon higher restructuring costs more than offset by a non-repeat of $489 millon goodwill imparment primarly relating to India and UAE booked in 2020 • Taxation was $1,034 millon on a statutory basis. Taxation on underlying profits was at an effective rate of 28.8 per cent, a decrease of 8.9 per cent compared to 2020. This reflects a favourable change in the geographic mix of profits, the impact of a lower UK bank levy which is non-deductible andhigher profits dilutngthe impact of non-deductible costs. Taxation on statutory profits was at an effective rate of 30.9 per cent, an increase of 1.9 per cent on the underlying rate due to restructuring costs incurred in low tax jursdictons • Return on tangible equity increased 300 basis points to 6.0 per cent due to the increase in profits • Underlying basic earnings per share (EPS) more than doubled to 76.2 cents and statutory EPS of 61.3 cents increased by 50.9 cents • A final ordinary divdend per share of 9 cents has been proposed along with a share buy-back programme of $750 millon which will start immnently Summary of financal performance 2021 $millon 2020 $millon Change % Constant currency change¹ % Net interest income 6,807 6,882 (1) (2) Other income 7,906 7,883 –– Underlying operating income 14,713 14,765 – (1) Other operating expenses (10,275) (9,811) (5) (3) UK bank levy (100) (331) 70 69 Underlying operating expenses (10,375) (10,142) (2) (1) Underlying operating profitbeforeimparment andtaxation 4,338 4,623 (6) (5) Credit imparment (263) (2,294) 8989 Other imparment (355) 15 nm³nm³ Profit from associates and jont ventures 176 164 77 Underlying profitbeforetaxation 3,896 2,508 55 61 Restructuring (507) (382) (33) (32) Goodwill imparment – (489) 100100 Other items (42) (24) (75) (83) Statutory profitbefore taxation 3,347 1,613 108 119 Taxation (1,034) (862) (20) (19) Profit for the year 2,313 751 nm³nm³ Net interest margin (%) 2 1.21 1.31 (10) Underlying return on tangible equity (%) 2 6.0 3.0 300 Underlying earnings per share (cents) 76.2 36.1 111 1Comparisons presented on the basis of the current period’s transactional currency rate, ensuring like-for-like currency rates between the two periods 2Change is the basis points (bps) difference between the two periods rather than the percentage change 3Not meaningful ![]() 34 Standard Chartered – Annual Report 2021 Strategic report Group Chief Financal Officer’s review Statutory financal performance summary 2021 $millon 2020 $millon Change % Constant currency change¹ % Net interest income 6,798 6,852 (1) (2) Other income 7,903 7,902 –– Statutory operating income 14,701 14,754 – (1) Statutory operating expenses (10,924) (10,380) (5) (3) Statutory operating profitbefore imparment and taxation 3,777 4,374 (14) (12) Credit imparment (254) (2,325) 8989 Goodwill &Other imparment (372) (587) 37 36 Profit from associates and jont ventures 196 151 3030 Statutory profitbefore taxation 3,347 1,613 108 119 Taxation (1,034) (862) (20) (19) Profit for the year 2,313 751 nm³nm³ Statutory return on tangible equity (%) 2 4.8 0.9 390 Statutory earnings per share (cents) 61.3 10.4 nm³ 1Comparisons presented on the basis of the current period’s transactional currency rate, ensuring like-for-like currency rates between the two periods 2Change is the basis points (bps) difference between the two periods rather than the percentage change 3Not meaningful Operating income by product 2021 $millon 2020 (Restated)² $millon Change % Constant currency change¹ % Transaction Banking 2,592 2,838 (9)(9) Trade 1,153 994 1616 Cash Management 1,439 1,844 (22)(22) Financal Markets 4,921 4,912 – (1) Macro Trading 2,216 2,532 (12) (13) Credit Markets 1,823 1,621 1212 Credit Trading 437 404 87 Financng Solutions &Issuance 1,386 1,217 14 13 Structured Finance 480 382 26 25 Financng & Securites Services 387 36465 DVA 15 13 1515 Lending & Portfolio Management 1,008 884 14 13 Wealth Management 2,225 1,990 12 11 Retail Products 3,358 3,566 (6) (7) Credit Cards & Personal Loans & other unsecured lending 1,272 1,211 53 Deposits 860 1,457 (41)(41) Mortgage & Auto 1,036 750 38 35 Other Retail Products 190 148 2828 Treasury 698 635 1010 Other (89) (60) (48) (38) Total underlying operating income 14,713 14,765 – (1) 1Comparisons presented on the basis of the current period’s transactional currency rate, ensuring like-for-like currency rates between the two periods 2Following a reorganisaton of certain clients, there has been a reclassifcation of balances across products ![]() 35 Standard Chartered –Annual Report 2021 Strategicreport Following an organisatonal restructure that came into effect on 1 January 2021, the Group’s Financal Markets business has been expanded andreorganised, withthe Groupintegratng the majorty of its Corporate Finance business withn Financal Markets. The remainng elements of the Group’s Corporate Finance business – primarly M&A Advisory – have been transferred into Lending& Portfolio Management. Transaction Banking income was down 9 per cent. Trade increased 16 per cent reflecting high single-digt growth in trade volumes from a signficant rebound in global trade as economies recover from COVID-19.Cash Management declined 22 per cent with the lowinterest rate environment leading to margin compression despite repricng intiatves. This was partly offset by double-digt growth in volumes and fees. Financal Markets income was flat, or down 2 per cent excluding the impact of a IFRS9 income adjustment, with strong performances in Credit Markets and Structured Finance offsetting a double-digt decline in Macro Trading income which was impacted by a non-repeat of 2020’s exceptional market volatilty.Credit Markets income grew 12 per cent, or 7 per cent excluding the impact of a $94 millon IFRS9 income adjustment, withincreased client demand growing both orignation and distrbution volumes. Structured Finance was up 25 per cent benefitng from increased leasing income due to new deals and profits from the sale of aircraft. Financng & Securites Services income was up 6 per cent with increased Security Services income partly offset by margin compression and lower demand for corporate term deposits. Lending andPortfolio Management income was up 14 per cent, or 8 per cent excluding the impact of a $55 millon IFRS9 income adjustment, with double-digt increase in balances on a constant currency basis and improved margins in Corporate Lending. Wealth Management income grew 12 per cent to a record $2.2 billon reflecting sustained growth in client numbers and double-digt growth in assets under management. There was a particularly strong sales performance in Funds, Structured Notes andWealth Lending. Bancassurance income was up 9 per cent. Retail Products income declined 6 per cent or 7 per cent on a constant currency basis. Deposits income declined 41 per cent as margin compression from the low interest rate environment more than offset increased volumes and improved balance sheet mix. Strong volume growth and improved margins led to Mortgages & Auto income increasng 38 per cent and Other Retail Products income growing 28 per cent. Credit Cards & Personal Loans income was up 5 per cent as balances grew on the back of a recovery in transaction volumes. Treasury income increased 10per cent with higher interest income partly offset by a $224 millon reduction in realisaton gains given movements in yield curves. Profit before tax by client segment and geographic region 2021 $millon 2020 (Restated)² $millon Change % Constant currency change¹ % Corporate, Commercial & Institutonal Banking 3,124 1,994 57 58 Consumer Private & Business Banking 1,071 710 51 55 Central & other items (segment) (299) (196) (53) (22) Underlying profitbeforetaxation 3,896 2,508 55 61 Asia 3,116 2,814 1111 Africa & Middle East 856 13 nm³nm³ Europe & Americas 644 386 67 72 Central & other items (region) (720) (705) (2) 6 Underlying profitbeforetaxation 3,896 2,508 55 61 1Comparisons presented on the basis of the current period’s transactional currency rate, ensuring like-for-like currency rates between the two periods 2Following a reorganisaton of certain clients, there has been a reclassifcation of balances across client segments 3Not meaningful ![]() 36 Standard Chartered – Annual Report 2021 Strategic report Group Chief Financal Officer’s review Following 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 indvidual and business banking clients. From aregional perspective, Greater China & North Asia and ASEAN & South Asia have been combined to form a single Asia region. Corporate, Commercial & InstitutonalBanking(CCIB) profit increased 57 per cent, with a $1.6 billon favourable movement from imparment releases in 2021. Income fell 1 per cent while expenses increased 5 per cent. Consumer, Private & Business Banking (CPBB) profit increased by half, with income growing 1 per cent and imparments reducing by $456 millon. This was partly offset by a 3 per cent increase in expenses. Central & other items (segment) losses increasedby approximately half to $299 millon with a 21 per cent reduction in expenses more than offset by the $300 millon imparment of the Group’s investment in Bohai. Asia profits increased 11 per cent with a $1.1 billon reduction in imparment partly offset by a $410 millon negative movement in other imparment includng the imparment of the Group’s investment in Bohai. Africa & Middle East profits increased from $13 millon to $856 millon primarly due to a $688 millon reduction in imparment. Income was up 3 per cent and 5 per cent on a constant currency basis while expenses decreased 4 per cent. Europe & Americas profit was up 67 per cent, benefitng from imparment releases and 4 per cent income growth partly offset by increased expenses. Central & other items (region) recorded a loss of $720 millon, with income down $281 millon due to lower returns paid to Treasury on the equity provided to the regions in a lower interest rate environment broadly offset by a $231 millon reduction in the UK bank levy and lower other imparment. Adjusted net interest income andmargin 2021 $millon 2020 $millon Change¹ % Adjustednet interest income 2 6,796 6,921 (2) Average interest-earning assets 559,408 526,370 6 Average interest-bearing liablites 515,769 478,051 8 Gross yield (%) 3 1.83 2.34 (51) Rate paid (%) 3 0.67 1.12 (45) Net yield (%) 3 1.16 1.22 (6) Net interest margin (%) 3,4 1.21 1.31 (10) 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 is the basis points (bps) difference between the 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 2 per cent driven by an 8 per cent decline in net interest margin which fell 10 basis points year-on-year, reflecting the continued low interest rate environment following the cut in policy rates which occurred in early 2020. Excluding the $171 millon benefit from IFRS9 income adjustments booked in the second and third quarter, the net interest margin in 2021 would have averaged 118 basis points. In the fourth quarter, the net interest margin averaged 119 basis points, an increase of 3 basis points in the quarter excluding the impact of the IFRS9 income adjustment booked in the third quarter. This reflects the impact of interest rate rises incertain markets and additonal interest income from structural hedging activties withn Treasury Markets. Average interest-earning assets increased 6 per cent driven by an increase in loans and advances to customers and higher investment securites balances. Gross yields declined 51 basis points compared to the average in 2020 predominantly reflecting the impact of continued compression of key interest rates. Excluding the impact of the IFRS9 income adjustment, gross yields declined 54 basis points. Average interest-bearing liablites increased 8 per cent driven by growth in customer accounts. The rate paid on liablites decreasedby 45 basis pointsyear-on-yearreflectinginterest rate movements. This was partly offset by a shift of customer accounts from higher-paying time deposits to lower-rate current and savings accounts. ![]() 37 Standard Chartered – Annual Report 2021 Strategicreport Credit risk summary Income statement 2021 $millon 2020 $millon Change 1 % Total credit imparment 263 2,294 (89) Of which stage 1 and 2 78 827 (91) Of which stage 3 185 1,467 (87) 1Variance is increase/(decrease) comparing current reporting period to prior reporting periods Balance sheet 2021 $millon 2020 $millon Change 1 % Gross loans and advances to customers 2 304,122 288,312 5 Of which stage 1 279,178 256,437 9 Of which stage 2 16,849 22,661 (26) Of which stage 3 8,095 9,214 (12) Expected credit lossprovisons (5,654) (6,613) (15) Of which stage 1 (473) (534) (11) Of which stage 2 (524) (738) (29) Of which stage 3 (4,657) (5,341) (13) Net loansand advances to customers 298,468 281,699 6 Of which stage 1 278,705 255,903 9 Of which stage 2 16,325 21,923 (26) Of which stage 3 3,438 3,873 (11) Cover ratio of stage 3 before/after collateral (%) 3 58 / 75 58 / 760 / (1) Credit grade 12 accounts ($millon) 1,730 2,164 (20) Early alerts ($millon) 5,534 10,692 (48) Investment grade corporate exposures (%) 3 69 62 7 1Variance is increase/(decrease) comparing current reporting period to prior reporting period 2Includes reverse repurchase agreements and other simlar secured lending held at amortised cost of $7,331 millon at 31 December 2021 and $2,919 millon at 31 December 2020 3Change is the percentage points difference between the two points rather than the percentage change The solid risk-managementfoundations thatthe Group has built over time has allowed the Group to focus on emerging strongly from the COVID-19 pandemic, despite the uneven recovery across some markets and industres. In spite of the challenging conditons that remain, the Group has seen improvement in a number of credit metrics with the stock of high-risk assets reducing over 6 consecutive quarters and a $2 billon reduction in credit imparment year-on-year. The Group is wellpositoned to support our clients as economies recover but continues to remain viglant to the continued impact of COVID-19 and to sectors such as China commercial real estate that are under particular idosyncratic pressures. Credit imparment totalled $263 millon, a reduction of $2 billon, representing a loan loss rate of 7 basis points demonstrating the resilence of the overall portfolio. Stage 1 and 2 imparment charge of $78 millon is a decrease of $749 millon, reflecting an improvement in the macroeconomic variablesincorporated into expected credit loss models, additonal collateral and guarantees received on a select number of clients and an improvement in underlying probabilty of defaultmetrics. The management overlay relating to stage 1 and 2 assets totals $323 millon as at 31 December 2021 compared to $353 millon as at 31 December 2020. There was a $125 millon reduction in the COVID-19 element of the overlay, partly offset by a $95 millon overlay booked in the fourth quarter in relation to the China commercial real estate sector. ![]() 38 Standard Chartered – Annual Report 2021 Strategic report Group Chief Financal Officer’s review Stage 3 imparment of $185 millon primarly relates to charge-offs withn CPBB with net releases withn CCIB. There was a $32 millon charge relating to the catch-up of interest earned on historcally impared assets and a $15 millon increase in the management overlay of stage 3 assets in CPBB, which now totals $21 millon. Gross stage 3 loans and advances to customers of $8.1 billon were 12percent lower,primarly dueto repayments, client upgrades and write-offs more than offsetting new inflows. Credit-impared loans represented 2.7 per cent of gross loans and advances, a decrease of 53 basis points. The stage 3 cover ratio of 58 per cent was stable, and the cover ratio post collateral at 75 per cent decreased by 1 percentage point. This reflects new inflows into stage 3 where the Group is confident that we have a low probabilty of a signficant loss as it benefits from guarantees and insurance which are not included as tangible collateral. Credit grade 12 balances have decreased by 20 per cent, with client upgrades, downgrades into stage 3 and re- payments partly offset by a sovereign ratings downgrade and new inflows. Early Alert accounts of $5.5 billon have nearly halved, reflecting thenet impact ofregularisatonsof accounts back into non-high-risk categories, net impactof downgrades into credit grade 12 and exposure reductions. In the fourth quarter, Early Alert accounts decreased by $1.9 billon reflecting improved operating performance in the Aviaton sector. Early Alert accounts are now broadly in line with the level they were at before COVID-19. The Group is continung to monitor its exposures in the Aviaton, Metals & Minng and Oil & Gas sectors particularly carefully, given theunusualstresses caused by the effects of COVID-19, as well as its exposure to Commercial Real Estate, which, with net loans and advances to customers of $19.8 billon is just 7 per cent of the Group’s total net loans and advances to customers. The rises in commodity prices have eased credit pressure for certain sectors. The proportion of investment grade corporate exposures has increased by 7 percentage points to 69 per cent. Restructuring, goodwill imparment and other items 2021 2020 Restructuring $millon Goodwill imparment $millon Other items $millon Restructuring $millon Goodwill imparment $millon Other items $millon Operating income (32) – 20 27 – (38) Operating expenses (487) – (62) (252) – 14 Credit imparment 9–– (31) –– Other imparment (17) –– (113) (489) – Profit from associates and jont ventures 20 –– (13) –– Loss before taxation (507) – (42) (382) (489) (24) The Group’s statutory performance is adjusted for profits or losses of a capital nature, amounts consequent to investment transactions driven bystrategicintent, 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 underlying performance period-by period. A reconcilation of restructuring andother items excluded from underlying results is set out on pages 80 to 84. Restructuring charges of $507 millon for 2021 reflects the impact ofactions to transform the organisatonto improve productivty,primarlyredundancy relatedcharges, the majorty of which, includng an early retirement programme in Korea, were booked in 4Q’21. Other items include a $62 millon financal penalty paid to the PRA and a $20 millon fair-value gain relating to a SC Ventures investment. ![]() 39 Standard Chartered – Annual Report 2021 Strategicreport Balance sheet and liqudity 2021 $millon 2020 $millon Increase/ (Decrease) $millon Increase/ (Decrease) % Assets Loans and advances to banks 44,383 44,347 36– Loans and advances to customers 298,468 281,699 16,769 6 Other assets 484,967 463,004 21,963 5 Totalassets 827,818 789,050 38,768 5 Liablites Deposits by banks 30,041 30,255 (214) (1) Customer accounts 474,570 439,339 35,231 8 Other liablites 270,571 268,727 1,844 1 Total liablites 775,182 738,321 36,861 5 Equity 52,636 50,729 1,907 4 Total equity and liablites 827,818 789,050 38,768 5 Advances-to-deposits ratio (%) 2 59.1% 61.1% Liqudity coverageratio (%) 143% 143% 1Variance is increase/(decrease) comparing current reporting period to prior reporting periods 2The Group now excludes $15,168 millon held with central banks (31.12.20: $14,296 millon) that has been confirmed as repayable at the point of stress The Group’s balance sheet remains strong, liqud and well diversfied. • Loans and advances to customers increased 6 per cent since 31 December 2020 to $298 billon driven mainly by growth in Financal Markets, Mortgages and Corporate Lending. Volumes declined $4 billon in 4Q’21 with a $9 billon reduction in Treasury Markets balances more than offsetting underlying growth in Corporate Lending and Financal Markets. Excluding the reduction in Treasury Markets, loans and advances to customers grew an underlying 2 per cent in 4Q’21 • Customer accounts of $475 billon increased 8 per cent since 31 December 2020 with an increase in operating account balances withn Cash Management and in Retail current and saving accounts partly offset by a reduction in Retail time deposits. Volumes increased $21 billon in 4Q’21 primarly from growth in operating account balances and corporate term deposits • Other assets increased 5 per cent since 31 December 2020 while other liablites were 1 per cent higher. The growth in other assets wasdriven by increased reverse repurchase 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 decreased to 59.1 per cent from 61.1 per cent at 31 December 2020 reflecting the strong growth in customer accounts. The point-in-time liqudity coverage ratio has remained stable at 143 per cent and remains well above the minmum regulatory requirement of 100 per cent. Risk-weighted assets 2021 $millon 2020 $millon Change 1 $millon Change 1 % By risk type Credit risk 219,588 220,441 (853) – Operationalrisk 27,116 26,800 316 1 Market risk 24,529 21,593 2,936 14 TotalRWAs 271,233 268,834 2,399 1 1Variance is increase/(decrease) comparing current reporting period to prior reporting periods Total risk-weighted assets (RWA) increased 1 per cent or $2.4 billon since 31 December 2020 to $271.2 billon. • Credit risk RWA decreased $0.9 billon to $219.6 billon, with an increase of $10.2 billon from underlying asset growth more than offset by the aggregate of $4.4 billon from favourable FX movements, $3.7 billon impact from model enhancements, $2.2 billon from the partial unwind of negative credit migraton and $1.1 billon impact from other RWA efficency actions • Market risk RWA increased by $2.9 billon to $24.5 billon primarly due to the impact of updated PRA guidance with $3.7 billon Structural FX risk now treated as Pillar 1 market risk RWA, partly offset by the benefit of consolidatng market risk RWA following the receipt of a Prudential Regulatory Authority (PRA) permisson to consolidate market risk RWA for SCB Malaysia Berhad, SCB Thai PCL and SCB (Vietnam) Ltd • Operational risk RWA increased by $0.3 billon mainly due to an increase in average income as measured over a rolling three-year time horizon, with higher 2020 income replacing lower 2017 income ![]() 40 StandardChartered – Annual Report 2021 Strategic report Group Chief Financal Officer’s review Capital base and ratios 2021 $millon 2020 $millon Change 1 $millon Change 1 % CET1 capital 38,362 38,779 (417) (1) Additonal Tier 1 capital (AT1) 6,791 5,612 1,179 21 Tier 1 capital 45,153 44,391 762 2 Tier 2 capital 12,491 12,657 (166) (1) Total capital 57,644 57,048 596 1 CET1 capital ratio end point (%) 2 14.1 14.4 (0.3) Total capital ratio transitonal (%) 2 21.3 21.2 0.1 UK leverage ratio (%) 2 4.9 5.2 (0.3) 1Variance is increase/(decrease) comparing current reporting period to prior reporting periods 2Change ispercentagepoints difference between twopointsrather than percentagechange The Group’s CET1 ratio of 14.1 per cent decreased 28 basis points but remains 4 percentage points above the Group’s current regulatory minmum of 10.1 per cent. On a pro forma basis, after the cessation of software relief and other regulatory changesand adjustmentsdetailed below, the CET1 ratio as at 1 January 2022 is 13.5 per cent. The CET1 ratio of 14.1 per cent declined in the period as approximately 90 basis points of profit accretion was more than offset by distrbutions, RWA growth, movements in reserves and an increase in regulatory deductions. An increase in underlying RWAs, excluding the impact of FX, reduced the CET1 ratio by approximately 40 basis points. This included a 20 basis points impact from higher market RWA following a clarifcation of the regulatory treatment of Structural Foreign Exchange risk. Ordinary shareholder distrbutions reduced the CET1 ratio by approximately 30 basis points. These distrbutions included ordinary share buy-backs of $0.5 billon completed in the period which reduced the share count by approximately 2.5 per cent during 2021 and a total 2021 ordinary divdend of 12 cents a share or $370 millon. The total 2021 divdend comprised the interm divdend of 3 cents per share and the Board recommended final divdend of 9 cents per share. Payments due to AT1 andpreference shareholders reduced the CET1 ratio by approximately 20 basis points. The net effect of other movements in the period reduced the CET1 ratio by approximately 30 basis points as higher regulatory deductions, adversemovements in other comprehensive income and reserves offset the reduction in RWA from currency translation effects. There are three policy changes expected to impact the calculation of CET1 and/or RWAs in 2022. Firstly, the PRA has confirmed that software relief will be excluded from CET1 from 1 January 2022 which will reduce CET1 by 32 basis points. Secondly, the recent industry wideregulatory changes to align IRB model performance (the IRB model repair program) will add approximately $4.7 billon of additonal RWA from 1 January 2022. Finally, the introducton of standardised rules for counterpartycredit risk onderivatves and other instruments (SA-CCR) will add approximately $1.6 billon of additonal RWA. The combinaton of the IRB model repair program and SA-CCR are expected to reduce the CET1 ratio by approximately 31 basis points from 1 January 2022. The Board has authorised a share buy-back with a maximum consideraton of $750 millon to start immnently to further reduce the number of ordinary shares in issue bycancelling the repurchased shares. The share buy-back is expected to reduce the CET1 ratio by approximately 30bps. The Group’s UK leverage ratio of 4.9 per cent, reduced by approximately 30 basis points due to an increase in on- balance sheet exposures but remains signficantly above its minmum requirement of3.7 percent. Outlook We have had a solid start to 2022 and we expect income togrow in the 5-7 per cent range with mid-single digt asset growth and an increasng likelhood of some support from interest rates, which should helpsupport margins particularly in the later part of the year. Expenses are expected to grow $0.4 billon includng the impact of inflaton to $10.7 billon, excluding the impact of currency movements. Whilst we remain viglant to the continued uncertainty in the external environment, our loan portfolios are in good shape and, barring major negative events, we would expect imparments to slowly increase from the exceptionally low levels in 2021. Our medium-term cost of risk is now expected to normalise between 30-35 basis points, slightly lower than our previous medium-term guidance of 35-40 basis points. Although regulatory changes will lead to an increase in RWAs at the start of the year we fully intend to operate dynamically withn the 13-14 per cent CET1 range. Looking beyond 2022, the actions we are undertaking and likely trajectory of interest rates puts us on the path to deliver a 10 per cent return on tangible equity by 2024. With the tailwnd of a risng interest rate outlook, we believe we can deliver 8 to 10 per cent income growth per annum between 2022 and 2024, with 5-7 per cent from underlying business growth and a further 3 per cent from risng interest rates. We are embarking on a $1.3 billon gross structural expense reduction programme, funded by $0.5 billon of restructuring charges, which will free up investment capacity and allow us to deliver 2 per cent positve income-to-cost jaws on average per annum before the benefit of risng interest rates. The actions we are taking on RWA optimsation means we expect RWAs to grow at a low single-digt percentage. We have reiterated our intent to operate withn our 13-14% CET1 target range and aim to deliver in excess of $5 billon of shareholder returns over the next three years. Andy Halford Group Chief Financal Officer 17 February 2022 ![]() 41 Standard Chartered – Annual Report 2021 Strategicreport #### Group Chief Risk #### Officer’s review Mark Smith Group Chief Risk Officer 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 tolag. 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 chaindisruptons has in turn contributed toelevated inflaton levels, with many markets seeing a signficant rise in prices. The accumulationof worldwide debt could alsopose furtherrisks to the economic environment. The Group has built a strong foundation with solid risk fundamentals, and weare 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. Assetquality hasimproved, withimprovements in anumber of metrics includng a signficant year-on-year reduction in credit imparments across all stages and an increase in percentage of investment grade corporate exposures (2021: 69 per cent, 2020: 62 per cent), though we remain watchful in the face of ongoing uncertainty. Wecontinue to demonstrate resilence as evidenced by strong capital and liqudity metrics. As a result of the changes ininternal andexternaloperating environment due to the pandemic, non-financal risks areas such as Fraud, Information and Cyber Security, Privacy, and Conduct remain heightened. We continue to enhance our operationalresilenceand defences against these risks, especially as we adapt to more agile ways of working. We are also working to ensure a successful transiton from the Interbank Offered Rate (IBOR) to alternative risk-free rates. Digtalisatonand technological development remain key items on the Group’s agenda. Wecontinue 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onframeworks and sustainable financng solutions. We have integrated Environmental, Social and Governance 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. 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 managementand 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tised 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 “Staying viglant in the #### face of an uneven global #### economic recovery” ![]() 42 Standard Chartered – Annual Report 2021 Strategic report Group Chief Risk Officer’s review welcome digtal-asset-related opportunites and have enhanced our Digtal Asset Risk Management Approach and Policy to ensure that digtal asset activties across the Group are appropriately managed, and withn our Risk Appetite. Read moreabout the consideratonstaken intoaccount forour pathway to net zero on page 66 . Further details on our overall approach to net zero can be found at sc.com/netzero . 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, thesebeing: Strengthening the Group’srisk culture andconduct: We remain committed to promoting a healthy risk culture and drivng thehighest standards in conduct. Bothriskculture and conductare integral components of our Enterprise Risk Management Framework (ERMF). Our ERMF sets out the guidngprincples for our colleagues, enabling us tohave 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 actionto address existng andemerging risks. Senior management across the Group promote a healthy risk culture by rewarding risk-based thinkng (includng in remunerationdecisons), challenging the statusquo, and creating a transparent andsafeenvironment for employees to communicate risk concerns. We strive to uphold the highest standards of conduct through delivery of conduct outcomes, acknowledging thatwhile incdents cannot be entirely avoided, the Group has no appetite for wilful or negligent misconduct. Morebroadly, we are continung to focus on strengthening first-line Conduct Risk ownership, includng helpingto draw enhanced Conduct Risk insghts through the development of better conduct analytics as part of the new Conduct Risk management approach. As part of the 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 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 toimprove oversight andinternal 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 underpinour management and mitgationof ICS Risk and support of our businesses and functions in their adoption of key controls. We planto further enhanceour 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. EmbeddingClimate Riskmanagement: We have continued to embed Climate Risk management, starting with, among others, understanding theimpact of physical andtransiton risks onour credit portfolio and climate-related reputational risks for clients in high transiton sectors. In 2022, we 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. 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 riskidentficatonand deepening client engagement. Climate Risk assessments arenow 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 forthe 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 climaterisk together. As part of ourongoing partnership with Imperial College London, we supported new climate research on the potential for nature-based solutions (actions to protect, restore and enhance ecosystems) to tackle the interlnkages between agriculture, land-use and climate change. Our 2021 Task Force on Climate-related Financal Disclosures Report provides further details on theGroup’s progress in managing climate risks and opportunites, includng the Group’s net zero target by 2050. More details can be found at sc.com/sustainablity and sc.com/tcfd Managing our environmental, social and governance(ESG) risk: The Group remains committed to being the world’s most sustainable and responsible bank. At the start of the year we 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 pacewith the emerging ESG regulatory obligatons across our markets. We have 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 positon statements and supply chain onboardingto ensure that our businesses and supply chains continue to support our sustainablity ambiton. Managing FinancalCrime Risk: External developments continue tocreate newrisks and controlchallenges, 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 ![]() 43 StandardChartered – Annual Report 2021 Strategicreport and our clients. Our Financal Crime Compliance team continues to identfy and prevent fraud and money laundering using next-generation surveillance and financal crime monitornginfrastructure 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 newregulatory and statutoryintiatves, focusingon enhancingthe effectiveness of financal crime compliance and contributng useful informaton to law enforcement. We have made continued progress in resolving long-standingenforcement actions and related remediaton, and continue to work to strengthen compliance and improve customer experience in areas of greater implementaton challenge suchas records management and transaction monitorng. More informaton about the Group’scommitment to fightng financal crime can be found at sc.com/fightngfinancalcrime Innovation – Risk and CFCC infrastructure: We continue to focus on simplfying our approach to enable more effective first-line risk management, supported withSmartBot-enabled self-serviceplatforms. Flexiblestrategic risk reporting with centralised data and advanced analytical capabilties enabled a timely and an agile response to thechallenges of COVID-19. Continued integraton ofour risk aggregation platform with front office data provides near real-time bespoke exposure analysis for financalrisks, decisoningand reporting, and our stress testing scenarios have been expanded to include the impact of the pandemic and Climate Risks. We are implementng an Enterprise GRC (Governance, Risk andCompliance) platform to integrate dataand processes across Operational Risk, polices and standards, compliance and 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 to be utilsed for centralised specialst knowledge and delivery of data visualsation,reporting, changemanagement, model development, validaton and governance, with automation of supporting processes to reduceoperationalrisks. EmbeddingModel Riskmanagement: Model Risk management has seen a notable step forward in 2021. We enhanced our risk management framework earlier in the year to strengthen model issue management and governance framework for artifcial intellgence and machine learning. The Group Model Inventory has undergonemany 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 are also progressing well on rolling out the Model Risk Type Framework across our countries, includng trainng, extension of risk type framework, inventory identficaton and generation ofrisk informaton reports. This will continue to be an area of focus to ensure we effectively embed awareness of Model Risk management at a firm-wide level. Our risk profile and performance in 2021 Despite thechallenges ofthe ongoing pandemic,our solid foundation has helped usto deliver a good performance with a resilent risk profile and improved asset quality. 2021 demonstrates our commitment to strong andsustainable growth, with continued improvements across several metrics reflecting ourrobust 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 49 per cent decrease in early alerts exposure (2021: $5.5 billon, 2020: $10.7 billon), mainly due to reductions in counterparty exposure and clients being removed fromearly alert. While early alertshave 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 decreased to $1.7 billon (2020: $2.2 billon) mainly due to repayments and outflows to non-performing loans, that were partly offset by sovereign rating downgrades. The percentage ofinvestment-grade corporate exposurehas also increased to 69 per cent compared with 62 per cent a year ago, reflecting an increase in repurchase agreement balances and high-quality orignations. The total credit imparment charge signficantly reduced to $0.3 billon (2020: $2.3 billon), with decreases seen across all stages. Stage 3 imparment charge was $185 millon (2020: $1.5 billon), majorty of which was from Corporate, Commercial and Institutonal Banking. Stage 1 and 2 imparment charge decreased by $749 millon to $78 millon, over half of which is due to reduction in Stage 2 exposures from lower levels of early alerts, 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 gross loans and advances to customers decreased from $9.2 billon to $8.1 billon, while stage 3 provisons were lower by $0.7 billon at $4.7 billon (2020: $5.3 billon). The stage 3 cover ratio (excluding collateral) in the total customer loan book was stable at 58 per cent (2020: 58 per cent). Average Group Value at Risk (VaR) in 2021 was 44 per cent lower at $54.8 millon (2020: $97.6 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. There werethree regulatory VaR backtesting negative exceptions in 2021. The results of the Bank of England’s annual solvency stress test exercise in 2021 shows that the Group is resilent under the Bank of England scenario. We have a diverse and liqud balance sheet andtheseresults demonstrate our continued capital strength and resilence to stress, supported by a focus on sustainable returns and actions to improve our portfolio quality. We have re-assessed the methodologyfor calculating the Group liqudity coverage ratio (LCR) in 2021, to better reflect the portabilty of liqudity across the group while still considerng currency convertiblity and regulatory intra-Group limts. The Group LCR remained stable at 143 per cent (2020: 143 per cent). Our Common Equity Tier 1 (CET1) ratio is 14.1 per cent (2020: 14.4per cent).Further details, includng explanation of pro forma changes as at 1 January 2022, can be found in the Capital Review section on Page 288. Details of the Group’s risk performance are set out in the Risk update (pages 196 to 198) and Risk profile (pages 199 to 257) ![]() 44 StandardChartered – Annual Report 2021 Strategic report Group Chief Risk Officer’s review An update on our risk management approach Our Enterprise Risk Management Framework (ERMF) outlines how we manage risk across the Group, as well as at branch and subsidary level 1 . 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 ERMF, 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”. The ERMF 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 ERMF, in additon to Climate Risk. Princpaland Integrated Risk Types Princpal risks are risks inherent in our strategy and business model. These are formally defined in our ERMF which provides a structure for monitorng and controlling these risks through the Board-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 258 to 279 of our 2021 Annual Report. PrincpalRisk Types Howtheseare 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 TradedRisk 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 franchise Treasury Risk The Group should maintan a strongcapital positon, includngthe maintenanceof managementbuffers sufficent to support its strategic aims and hold an adequate buffer of high-quality liqud assets to survive extreme but plausible liqudity stress scenarios for at least 60 days without recourse to extraordinary central bank support Operational and Technology Risk The Group aims to control Operational and Technology Risks to ensure that operational losses (financal or reputational), includngany relatedto conduct ofbusiness matters, do not cause materialdamage to the 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 reputationof the Group Compliance Risk The Group has noappetite for breaches inlaws and regulations relatedto 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 developmentor implementaton ofmodels, while 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 touphold responsible business conduct or lapses in our commitment to do no signficant environmental and social harm IntegratedRisk Types Howtheseare managed ClimateRisk 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 1The Group’s Risk Management Framework and System of Internal Control applies only to wholly controlled subsidaries of the Group, and not to Associates, Joint Ventures or Structured Entites of the Group. ![]() 45 Standard Chartered – Annual Report 2021 Strategicreport Emergingrisks 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 and 2021 Half Year Report. A detailed explanation of the changes to our emerging risks compared with 2020 can be found on page 280. 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. Emergingrisks Risk trend since 2020 1 Key risk trend driversHow these are mitgated Expandingarray of global tensions Relations between China and the West remain fragile and tensions are increasngregarding Russia’spresence on the Ukrainan border. There has alsobeen increasngfrictonbetween historc allies on issues such as the withdrawalfrom 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 Group stress scenarios.These stress tests providevisbilty to keyvulnerabiltiessothatmanagementcan implement timely interventons • Detailed portfolio reviews are conducted on an ongoing basis, most recently regarding increasng tensions around Ukraine, and action is taken where necessary • The Group is 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 • The Group remains viglant in monitorng geopolitcal relationshps. Increased scrutiny is applied when onboarding clients in sensitve industres and in ensuring compliancewith 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 hasincreased tensions between nations as power shifts towards energy exporters, and energy securitydecreases across developedmarkets 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. • As part of our stress tests, an oil shock scenario was developed • Sovereign ratings, outlooks and country risk limts are regularly monitored withperiodc updates to senior stakeholders • The Group is implementng a Climate Risk work plan and aims to embed Climate Risks across all relevant Princpal Risks in2022. This includes scenarioanalysis and stress testing capabiltyto understand financal risks and opportunites from climate change Crystallisatonof inflaton fears Interestrates 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 shortagesof materials and labour, and long-termmonetary stimulus, and there is growing acceptance thattheinflatonary shock will last longer than intially expected. Nevertheless there is still a lack of firm consensuswithnthe industry on some key inflaton questions, as well as other potential scenarios suchas slow economic growth and risng prices leading tostagflation. • As part of our stress tests, a severe stress in the global economy associated with a sharp slowdown was assessed • Both 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 ![]() 46 StandardChartered – Annual Report 2021 Strategic report Group Chief Risk Officer’s review Emergingrisks Risk trend since 2020 1 Key risk trend driversHow these are mitgated Adapting toendemic COVID-19 and a K-shaped recovery 2 Although countries withhigher 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 vaccineroll-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. • As part of our stress tests, a severe stress in the global economy associated with a sharp slow-down was assessed • 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 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 risk-weighted assets 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 EmergingMarkets Sovereignrisk COVID-19 has caused liqudity and potential solvencyissues for some of the world’s poorest countries, with several negative sovereign rating actions observed. Tightenng offinanc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 risk-weighted assets are closely monitored and actively managed • We conduct stress tests and portfolio reviews at a Group, 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ativefor Debt Treatments and theassociated exposure Expanding stakeholder expectations for environmental,social and corporate governance There are risks if the Group is unable to adaptto 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 toset ambitous sustainablity goals. This includes an increase in disclosure requirements. There is fragmentation in the pace and scaleof adoption around the world, whichadds complexity in managinga global business. There is a risk that focus on environmental goals over social and governance concerns, as well as fragmentation inESGtaxonomies, may lead to unintended consequences. • We remain committed to being a responsible bank, minmisng our environmental impact and embedding our values through ourstrengthened Positon Statements for sensitve sectors and a list of prohibted activties that the Group will not finance • The 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 • Detailed portfolio reviews are conducted on an ongoing basis and action is taken where necessary • Stress tests areconducted to testresilence to climate- related risks in line with local regulatory requirements • The Group has released net zero targets and specifc emisson reduction targets forcarbon-sensitvesectors. The 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 forsustainable 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 enablea just transiton • We are developing an approach to further integrate ESG risk management across the ERMF ![]() 47 Standard Chartered – Annual Report 2021 Strategicreport Emergingrisks Risk trend since 2020 1 Key risk trend driversHow these are mitgated Social unrest COVID-19 has restricted the abilty to demonstrate in some markets, althoughthe prolongednature 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 societaldisturbances. Othercauses 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 Human Rights Working Group has developed an approach to monitor, report and escalate human rights issues to ourManagement Team for consideraton with our Group’s strategy • We continue tosupport ouroperationsand communites who are greatly impacted by COVID-19 through various aid programmes and financng • We conduct portfolio reviews at a Group, country, and business level to assess the impact of extreme but plausible geopolitcal events Data and digtal Regulatory requirements and client expectationsrelating to data management, data protection,data sovereignty and privacy are increasng, includng the ethicaluse of data and artifcial intellgence. The Group, as well as the industry, continues to face challenges to keep pace with the volume ofdata-related regulatory change. Rapid adoption andincreased sophistcation ofnew 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 ascloud computing services. • We actively monitor, both in house and through external counsel, regulatory developments inrelation to data management, includngrecords management, data protection and privacy, data sovereignty and artifcial intellgence • The Group has further embedded the existng risk control framework fordata management risks, which has strengthened and streamlined risk oversight • We have established a dedicated Data and Privacy Operations team and mobilsed a Groupwide transformationprogramme to build datamanagement capabilties and expertise across the Group to ensure compliancewith data management regulations Newbusiness structures, channels and competiton There are signficant shifts in customer value propositons. Fintechs are deliverngdig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 andlinked business models are increasngin prominence. These present material opportunites as well as risks. Failure to adapt and harness new technologies and new business models would placebanks at a competitve disadvantage. There is an increasng usage of partnerships and alliances by banks to respond to disruptonand changes in the industry. However, thisexposes 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 • We have developed and implemented a risk management approach to address the specifc risks arisng from digtal asset activties, as well as internal guidanceon howto leverageexistng risk management practices for new activties and nascent risks • Strategic partnerships and alliances are being set up with fintechs to better compete in the markets in which we operate • Third-Party Risk managementpolices, proceduresand governance are being reviewed to ensure adequate coverage across all Group activties ![]() 48 Standard Chartered – Annual Report 2021 Strategic report Group Chief Risk Officer’s review Emergingrisks Risk trend since 2020 1 Key risk trend driversHow these are mitgated Talent pools of the future COVID-19 accelerated the move towards remote working for employees. However this has raised concerns aroundeffectivemitgation and managementof Operational, Information and Cyber Security, Compliance,and Conduct Risks. The extended natureof the COVID-19 pandemic is continung to restrict employees’ abilty to operate in their preferred hybridworking location format (between home and office), causingpotential 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 managepeople-related risks, for example, organisaton,capabilty, conduct andculture, as part of our Group risk management framework and our People Strategy • The 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 in 28markets and over 73 per cent of employees in these locations are now on flexi-working arrangements. • Wellbeing is one of the key pillars of the Group’s diversty and incluson strategy and we have embedded multiple tools andresources to support colleague wellbeing. These includetoolkitsfor managers and employees,a confidental Employee Assistance Program, an online programme tosupport physical wellbeing, increased trainng for Mental Health First Aiders, an on-the-go mobile app and proactive trainng in resilence • We have embarked on a multi-year journey focused on upskillng and re-skillng our workforce by buildng a culture of continuous learningand leveraging technology to enable employees to build future ready skills through contentand cross-functional experiences Risk heightened in 2021 Risk reduced in 2021 Risk remainedconsistent with 2020 levels 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 Summary We remain fully committed to robust risk management, embracing innovaton while ensuring that we achieve the right risk outcomes when adopting new technologies and digtal capabilties. The COVID-19 pandemic dominated the economic climate throughout 2021 and recovery remains uneven. Continued focus on enhancing risk management capabilties and leveraging our technology will help the Group to emerge stronger from the pandemic, as a more sustainable, innovatve, resilent and client- centred bank. Mark Smith Group Chief Risk Officer 17 February 2022 ![]() ª Supporting ## sustainable ## trade º In March 2021, we launched the Sustainable Trade Finance Propositon – an intiatve to help companies implement sustainable practices and develop more resilent supply chains. The propositon, which is aimed at clients in Asia, Africa and the Middle East, Europe and the Americas, will support the financng of sustainable goods, assist sustainable suppliers and help carbon-intensve industres transiton. These products will support global supply chain activties – estimated at $19 trillon by the World Trade Organizaton – to become more sustainable. Read more online at www.sc.com/sustainabletrade #### Resetting Globalisaton 49 Standard Chartered – Annual Report 2021 Strategicreport ![]() 50 Standard Chartered –Annual Report 2021 Strategic report Stakeholders and responsiblites Detailed informaton about how the Board engages directly with stakeholders and shareholders can be found in the Director’s report on pages 110 to 112. Examples of a selectionof the Board’s princpal decisons are includedthroughout thissection. This section also forms our key non-financal disclosures in relation to sections 414CA and 414CB of the Companies Act 2006. Our non-financal informaton statement can be found at the end of this section on page 78. Stakeholders and #### responsiblites As an internatonal bank working in 59markets, stakeholder engagement is crucial in ensuring we understand local, regional and global perspectives and trends which inform how we do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. See the following pages for: • how weengagestakeholders to understand their interests See pages 51 to 55 • how we engage employees and respond to their interests See pages 55 to 59 • how we respond to stakeholder interests through sustainable and responsible business See pages 61 to 77 Our stakeholders Clients Regulators and governments Investors Suppliers Society Employees Case study ª Helping Haron’s #### business growº At the start of the COVID-19 pandemic, Haron owned an informal business in Lira City, Ugandaspecialsing in seedlings for sale. It supported his family and a small workforce of25workers. COVID-19 stalled Haron’s dream to expand his business and keep his workers. With support from Futuremakers, Haron is getting back on track. He acquired new business skills, networked with fellow entrepreneurs and turned his business around. Production quantity and quality are steadily improvng. Haron’s greenhouse (the third largest in Lira) produced 15,000 seedlings a month compared with 20,000 every six months before COVID-19 when he had no greenhouse. Using his new skills, Haron also mentored 100 young entrepreneurs and is now looking at a regional expansion. ![]() Strategicreport 51 Standard Chartered – Annual Report 2021 #### Engaging #### stakeholders Listenng and responding to stakeholder priorties and concerns are 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-onesessionsusing onlinechannels and calls, virtual roundtables,written responses and targeted surveys. Theseconversations, andthe issues thatunderpin them, helpinform our business strategy and enable us to operate asa responsible and sustainable business. Stakeholderfeedback is communicatedinternally to senior management through the relevant forums and governing committees such as the Sustainablity Forum, and to the Board’s Culture and Sustainablity Committee (CSC) which oversees the 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 canbe found inour sustainableand responsible business section on pages 61-77. In CPBB, we take seriously our responsiblity to support our more vulnerable clients. A global framework is inplace to help ensure thefair treatment of vulnerable customers in product development and throughout the whole customer journey. Trainng is provided to frontline 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. 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’s Risk Appetite, to design and offer products and services which meet client needs, regulatory requirements and Group performance targets while contributng to a sustainable and resilent environment. For example, through understanding thechallenges some ofour clients face in balancing their financal management needs with their growing commitments to sustainablity, in 2021 we launched a market-first sustainable trade finance propositon tosupport sustainablesupply 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 sustainabledevelopment, while maintaning daily access to their cash. All new products are subject to acomprehensiveapprovals process totest design effectivenessand robustness of the implementaton process. For investment products soldto indviduals, this includesriskscores whichaid 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 achieve this using a globally consistent methodology that takesinto consideraton local regulatoryrequirements 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 andindustry best practice, and where available, benchmarked against competitors. ForPersonal and Business Banking products, accurate interestrates 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. 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 trade, transact, investand expand; and we also help a variety of financal insttutions, includngbanks, public sectorand 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 CCIB, we strengthened our annual feedback process by capturing how clients feel about what we offer them (such as advice, service,digtal channels) 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 trainour colleagues to obtain andleverage client insghts and respond with enhanced, innovatve propositons. Clients ![]() 52 Standard Chartered – Annual Report 2021 Strategic report Stakeholders and responsiblites Throughout 2021, we also maintaned our sharp focus on improvngclient experience across the Bank. We opened our first Priorty Private Centre in Hong Kong as part of our ongoing efforts to better service clients. Priorty Private offers a dedicated service model, supported by a highly experienced team of banking and financal experts, together with bespoke lifestyleprivleges. In CCIB, we focused on deliverng a consistent global experience for larger clients across our proprietary platforms, includng more than 300digtal and data intiatves across 47markets. Deploying our agile working practices have enabled us to increase our speed of decison-making and changedelivery tomeet client needs faster. We accelerated the launch of our strategic partnership with Atome Financal,which operates Asia’s largest buy-now-pay-later platform, supporting our ambiton to expand our reach and scale withn the mass market segment via a digtal-first approach, underpinned bydigtal acquistion and new partnership models. Refinng our processes also enabled us to elimnate 262 millon hours of client waitng time annually, and our efforts were recognised with aDigtal Transformation and Operational Excellence Award and incluson as a finalst in two further external awards. 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 • Sustainable finance Managing frontline employees and theirincentves We have an insttutional approach to trainng our sales teams who are requiredto complete mandatory trainng and appropriate regulatory licensng requirements before they commence selling products. In CCIB, this also includes appropriate certifcations in Cash, Trade, Securites Services, Financal Markets, Islamic Banking products and Sustainable Finance. We have embeddeda balanced scorecard approach for all frontlineemployees and frontline management employees whichincentvises performance and behaviours aligned to both our financal and non- financal priorties. This ensures a balanced performance assessment of ourpeople and drives appropriate client engagement behaviours. Internal awardsalso provide recognitonfor exemplarydemonstrationof our valued behaviours and going above and beyond to meet and exceed the expectations of our clients. Tohelp ensure the rigour of our sales process and our people’s engagement skills, we periodcally require employees tocomplete refresher trainng and certifcation, and in our CPBB segment we also supplement this with mystery shopping programmes and client call backs. How we create value We engage withpublic authorites toplayour part in supporting the effective functionng ofthe financal system and the broadereconomy. How we serve and engage We activelyengagewithgovernments, regulators and policymakers at a global, regional and national level to share insghts and support the development of best practice and adoption of consistentapproaches across our markets. In 2021, we engaged withregulators, government officals and trade associatons ona broad range of topicsthatincluded recovery from COVID-19, internatonal trade, sustainable finance, data, cyber security, digtal adoption,and innovaton. We also engaged with officals on the financal services regulatory environment, in particular on prudential,financal markets, conduct and financal crime frameworks. In support of this, we have a Group Publicand Regulatory Affairs team responsible for engagement aswell as identfying and analysing relevant polices, legislaton and regulation. This work is overseen by several governance forums withn the Bank, includng the Regulatory Developments Assessments Forum and the Sustainable Finance Regulatory Policy Forum, whichcomprise senior executives representingbusiness and controlfunctions to ensure alignment between advocacy and business strategies. Regulators and governments Clients continued #### Engaging stakeholders continued We also continuously assess our product portfolio for new risksto ensure they remain appropriate for client needs and alignedto emerging regulation. These quantitatve and qualitatveassessments enable a completeview of whether to continue, grow or retire products. ![]() Strategicreport 53 Standard Chartered –Annual Report 2021 We meet all relevant transparency requirements and engage through ongoing dialogue with regulators and governments, submittng responses toformal consultations andby particpating in industry working groups. We arecommitted to complying withlegislaton, rules and other regulatory requirements applicable toour business and operations in the jursdictons withn which we operate. This ensures the Groupmeetsits obligatons and supports the resilence and effective functionng of the broader financal systemand economy. In 2022, we expect to engage on regulationand legislaton associated with the continued recovery from COVID-19, internatonal trade, sustainable finance and climate action, digtal innovaton, data, privacy, artifcial intellgence and cyber security. For moredetails on our engagementwith regulators and governments, aswell as our industry and membership associatonsplease see sc.com/politcalengagement Their interests • Strong capital base and liqudity positon • Robuststandards forconduct and financal crime • Healthy economies and competitve markets • Positvesustainable development • Digtal innovaton in financal services Regulators and governments continued Princpal Board decison – divdends and buy-backs During 2021, the Board decided to approve the payment of a final divdend for the year ended 31 December 2020 of $0.09 per ordinary share and recommence the share buy-back programme, which had been suspended in March 2020 in response to a request from the PRA and as a consequence of theunprecedentedchallenges facing the world due to the COVID-19 pandemic at the time. As part of its decison-making process, the Board took account ofguardrails implemented by the regulator regarding capital distrbution and noted the importance of approving distrbutions withn an appropriately prudent framework. The impact of different methods of returning capital to investors was a key consideraton for the Board, and it recognised that a balance between divdend resumption and recommencing a buy-back programme provided good flexiblity and sustainable returns. The Board continuedits careful consideratonof stakeholder interests during 2021, by approving an interm divdend of $0.03 per ordinary share and a further share buy-back programme up to a maximum consideraton of $250 millon, reinforcng the signficance of balancing a cautious approach to capital management in light of the continued impactof the pandemic against returns to our shareholders. How we create value We aim to deliver robust returns and long-term sustainable value forour investors. How we serve and engage We rely on capital from debt and equity investors to execute our business model. Whether they have short- or long-term investment horizons, weprovide our investors with informaton about all aspects of progress against our strategic and financal frameworks. Our footprint and intent to become the world’s most sustainable andresponsiblebank provide our investors with exposure to opportunites in emerging markets. We believe that our integrated approach to ESG issues, as well as a strong risk andcomplianceculture, is a key differentator. We delivered a resilent financal performance in 2021, reaffirmed our business strategy and have now set out clear actions to accelerate the delivery of our ambiton of double- digtreturn ontangible equity. Regular and transparent engagement with our investors, and the wider market, helps us understand investors’ needs and tailorour public informaton accordingly. In additonto direct engagementfromour Investor Relations team, we communicate through quarterly, half and full-year results, conferences, roadshows, investor days and mediareleases. There was continued adoption of virtual mediums during the year due to the pandemic, albeit we hosted the Innovation and Digtisaton event in a hybrid format in our office in Basinghall Avenue, London in October 2021. Investor feedback, recommendationsand requests are considered by theBoard, whose members keep abreast of current topics of interest. Standard Chartered PLC’s Annual General Meeting (AGM) in May 2021 was open to shareholders through electronicattendance, where they were able to view a live video feed of the meeting, submit voting instructons and ask direct questions to the Board. Simlarly, the Group Chairman, alongside certain other members of the Board, hosted a virtual stewardship event for insttutional investors in November which provided a platform for shareholders to receivean update on, and ask questionson, key issues. Investors ![]() 54 Standard Chartered – Annual Report 2021 Strategic report Stakeholders and responsiblites 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 followa comprehensive and transparent vendorselection process, guided by our Supplier Charter, which sets out our expectations in relation to ethics, human rights, diversty and incluson (D&I), and environmental performance. Our suppliers must recommit to the charter annually, and performance monitorng isbuilt into our contracts, procurement practices and 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 our 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, weengaged our 200 highest-emittng vendors – who together represent three- quarters of our estimated 2020 emissons – to review their environmental goals andemissons disclosure practicesas a pathway for transparent future supply chain emissons measurement.We also began to embed emissons-related clauses into relevant supplier contracts, such as printng services, to reduceourconsumption andmitgate residual emissons. Our Stands have served to further embed our supplier D&I approach. Seventy per cent 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. More than 1,500 employees have been trained internally to build capabilty to deliverour supplier D&Iaims. In additon, weestablished partnerships with multiple local and global non-governmental organisatons (NGOs) to identfyand 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 pilot a facilty in Pakistan which helps indvidual clients track, measure and manage their impact on both carbon emissons and freshwater consumption. The tool provides enriched customer data and automatically calculates the CO 2 footprint basedon the purchasesthey have made, as identfied through their credit transactions. With further global release planned for 2022, the Standard Chartered–Doconomy collaborationhasthepotential to allow millons of consumers over time to learn how their consumption behaviours impact the climate. 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 can be 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 adoptsupplier-driven innovatons • Accurate and on-time payments Suppliers #### Engaging stakeholders continued We continue to respond to growing interest from mainstream investors on ESG matters includng the UN’s SDGs, sustainable finance, human rights and coal, and we ran a dedicated engagement programme on our net zero roadmap. We also work with sustainablity analysts and particpate in sustainablity indces that benchmark our performance, includng the CDP Climate Change survey and Workforce Disclosure Initative. In 2022, we will continue to engage with investors on progress against our strategic priorties and the financal framework we have announced as we progressively advance to our returns target. Their interests • Safe, strong and sustainable financal performance • Faciltation of sustainable finance to meet the UN SDGs • Progress on ESG matters, includng advancing the net zeroagenda Investors continued ![]() Strategicreport 55 Standard Chartered – Annual Report 2021 How we create value We strive to operate as a sustainable and responsible company, working 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 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 thathelps ensure we understand alternative perspectives and that our approach to doing business isunderstood. This includes working with NGOsthat approach us about a specifc client, transaction or policy. In 2021, climate change, our 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esand other organisatonsto promote youth economic incluson through Futuremakers by Standard Chartered, our 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 more than1,000 business leaders, policy experts and clients from 63markets 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. In 2021, our global intiatve Futuremakers by Standard Chartered reached304,369 young people with livelhoodand learning opportunites. Their interests • Positvesocial and economic contributon • COVID-19 longer-term economic recovery support • Climate change and environmental issues Society Employees 2021 SustainablityAspiratons: Employees People Timelne Status Progress Embed an integrated health and wellbeingstrategyto support buildng and re-skillng a future-ready, diverse workforce Jan 2020 – Dec 2021\* Launched Global ‘Buildng Resilence’ learning programme in February 2021. Drove particpation in, and awareness of,the Unmind platform. Continued roll-out of the benefit transformation programme. Launched wellbeing experiments in August 2021. \*Aspiraton has been extended to December 2022 to align with the 3-year wellbeing strategy (2020–2022). Support all employees to develop a personalised growth plan to reflect the future skills needed to respondto the changing and digtised nature ofwork Jan 2020 – Dec 2021 We ended the year at 63% completion rate against a target of 80%. However, evidence shows that the average hours invested by employees in personal development increased by 20%. This demonstrates that the learning habit is continung to grow despite the plateau in Growth Plan completion rates. Increase gender representation: 35%women in senior roles Sept 2016 – Dec 2025 Proportion of women in senior leadership roles has increased to 30.7%. This is an increase from 25% in 2016. Increase our ‘Culture of Inclusion’ score to 84.5% with an interm target: – December 2021: 80% Jan 2020 – Dec 2024 We achieved 80.65% in 2021 consistent with our interm target and are on track for our overall 2024 target. Concluded in the year AchievedNot achieved Ongoing aspiratons On trackNot on track ![]() 56 Standard Chartered – Annual Report 2021 Strategic report Stakeholders and responsiblites How we create value We recognise that our workforce is a signficant source of valuethat drives ourperformance and productivtyand 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 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 ourbusiness strategy, live our valued behaviours and embody our brand promise:Here for good. We proactivelyassess and manage people-related risks, for example, organisaton, capabilty and culture, aspart of our Group risk managementframework. OurPeople Strategy, which was approved by the 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. 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 to employees Frequent feedback from employee surveys helpsus 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ngmechanismsthat capture colleague sentiment more frequently, such as a continuous listenng survey and surveys at moments-that- matter such as at onboarding and at exit. This year our annual My Voice survey was conducted in June and July. 92 per cent of our employees (71,798) took part, which is higher than last year. A further 65 per cent of eligble agency workers (2,568) also particpated. Our key measures of employeesatisfacton indcate that we have continued to improve as a place to work over the duration of deliverng on ourPeople Strategy. Whilekey measures of employee satisfacton fell in 2021, includngthe employee engagement indexand the employee net promoter score (NPS) (which measures how likely employees are to recommend working fortheus), overall employee satisfacton remained on par with or higher than it was in 2019. Employee engagement had signficantly improved in2020 as people had 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 balance out again. We remain encouraged that 96 per cent of employees feel committed to doing what is required to help the Bank succeed, 89 per cent feel proud about working for the Bank and 83 per cent say that the Bank meets or exceeds their expectations. Externally, our Glassdoor rating (out of five) has continued to increase from 3.7 in 2019 to 3.9 in 2021, and 78 per cent would recommend working at the Bank to friends. Our revamped Global Careers website has had over 4 millon unique views. Investments in people leader capabilty and the way in which our people leaders have responded to thepandemichas also translated into a 2 point increase in our manager NPS score in the 2021 My Voice survey, sustainng a trend of ongoing improvement. Buildng leadership capabilty continues to be important as the demands onour people leadersincrease. Employees continued #### Engaging stakeholders continued Group KPI: Employee engagement Employee net promoter score (eNPS) -3.9% eNPS measures the number of promoters (who would recommend the Group as a great place towork) comparedwithdetractors on a scalefrom -100 to +100. This is reflected in the percentage change calculation. Aim: Increase engagement across the Group by creating a better working environment for our employees that should translate into an improved client experience. Analysis: While our eNPS has decreased since 2020, it stays higher than in 2019, and has signficantly increased since 2016 (2.44 in 2016) when we started our culturetransformation. 2021 2020 2019 12.94 17.51 11.51 ![]() Strategicreport 57 Standard Chartered – Annual Report 2021 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have implemented a hybrid working model, combinng virtual and office-based working with greater flexiblity in working patterns and locations. The model is live in 28 of our markets with 73 per cent of employees in these markets on agreed flexi-working arrangements. 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 in other 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 providedto 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 recreate ‘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 programmes 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ngaccess to increased credit facilties and extended medical coverage, in some cases also for extended familes. Teams partnered across our markets to organise emergencymedical support for colleagues and their extended familes, and at locations where permissble, in partnership with government intiatves we organised camps toaccelerate vaccinaton. Further, with our aim to provide employees the skills, tools and motivaton tomanage their wellbeingproactively and to deal with challenges effectively, we continue to drive awareness of our wellbeing resources that are available to all globally. These includea mental healthapp, aphysicalwellbeing online platform, anupgraded 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 andall decison-making. Theseresources and actions are having a positve impact, with fewer employees reporting frequent stress in the annual My Voice survey and 74 per cent of employees saying that they are willng to share their concerns about stress with their people leader. In additon to leveraging inputs fromemployee surveys, theBoard also engages with and listens to the views of colleagues through virtual, interactveengagement sessions. More informaton can be found on pages 113-114 in the Directors’ Report. Read more about our approach to hybrid working at sc.com/hybridworkng 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. Since 2020, the average hours invested by employees in personal development has increased by 20 per cent to 27.7 hours in 2021. Over 74,000 colleagues actively used our online learningplatform diSCover,which we launched in 2020, and which is now accessible via a mobile app as well. Almost 30,000 colleagues used one or more of our Future Skills Academies which includethe Data & Analytics, Digtal, Cyber, Client Advisory, Sustainable Finance and Leadership Academy. We have focused over 2021 on designng and deploying targeted upskillng and re-skillng pilot programmes directed towards critcal ‘future’ roles where our strategic workforce planninganalysis has predicted the increasng needfor talent, includnguniversal banker, data translator, cloud security engineer and cyber security analyst.This approach has united our recruitment,talentmanagement and learning efforts to target, upskill anddeploy employees into newroles. Employees continued Taking care of our leadership health Through an experiment launched in 2021, we have supported over 4,600 employees in flexing their leadership muscles, by providng them with regular, simple and practical ‘missons’ on themes centred around enabling performance, empowering people, drivng vison and continung self-growth. The 60-day leadership treatment journey is drivng a habit of micro-learning and democratisng leadership as a capabilty for everyone. ![]() 58 Standard Chartered – Annual Report 2021 Strategic report Stakeholders and responsiblites Creating a culture ofincluson andinnovaton 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 bea key expectationof our people leaders. With the focus on buildng a culture of incluson, over 21,000 colleagues had undertaken the ‘When we’re all included’ learning programme by the end of 2021, centred on increasng awarenessaround diversty and incluson princples, tackling issues such as unconscious bias and micro behaviours as well as emphasisng the importance of creating an inclusve environment. As we listened toemployee feedback and responded to the need to better develop psychological safety, we alsoreleased aninclusve language guide and continueto review business terms to be more inclusve moving forward. In our annual My Voice survey, 80.65 per cent of employees reported positve sentiments around our culture of incluson. Read ourinclusve languageguide at sc.com/inclusvelanguageguide Our commitment to diversty and incluson (D&I) is now supported by more than 60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 women leaders moving up tomore senior roles. Bythe numbers, women currently represent 31 per cent of the Board, 14 of our markets have women CEOs, and representation of women in senior leadership roles increased to 30.7 per cent at the end of 2021. We are committed to continuous improvement in this area and aspire to 35 per cent representation of women at the senior level by 2025. This aspiraton is further supported by programmes such as our IGNITE Coaching programme, which develops our existng female talent in preparation for future roles. We remain focused on buildng a workforce that is truly representative of our client base and footprint, with 16.4 per cent of our Global Management Team and their direct reports identfying as Black, Asian or minorty ethnic. In the UK, Black representation in senior leadership is 2.4 per cent and Black, Asian and minorty ethnic in senior leadership is 15.2 per cent. Inthe US, Black/African American representation in senior leadership is 2.7 per cent and Hispanc/Latinx in senior leadership is 9.7 per cent. 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onswhich weredefined last year, we continue focus on nurturing local talent in markets across Asia, Africa and the Middle East to ensure we reflect the diversty of our global clients. In 2021, we provided employees, where legally permissble, theabiltyto 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 best practices and committng to take practical steps to 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 Malaysia and Sri Lanka; we’ve 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 (formerlyThomson 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 our Supplier Diversty Programme. In additon to the Group being recognised, six of our colleagues feature onthe HERoes Women Role Models List, three on the Empower Ethnic Minorty Role Models List and two on the OUTstanding LGBTQ+ Role Models Lists. As the Bank continues to transform to achieve our strategic ambitons, we are 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 and development conversations. We willplace 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 aselectfirstadopterpopulationof employees, and will be further embedding the approach across the organisaton in2022. 1International DayAgainst Homophobia,Transphobia and Biphoba,InternationalDayof Persons withDisab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. Employees continued #### Engaging stakeholders continued Creating an internal ‘gig’ economy Our virtual talent marketplace uses artifcial intellgence (AI) to match the skills, experiences and aspiratons of employees across 50 markets to short-term projects and mentoring opportunites, enabling theirupskillng and reskillng towards becoming future-ready. The platform also allows us to rapidly deploy talent to areas where it is most needed to deliver business priorties, unlocking productivty worth over $1.3 millon so far. By the end of 2021, more than 10,000 employees had accessed over 600 cross-functional experiences via the platform, and intiatedover300 mentoringrelationshps. ![]() Strategicreport 59 Standard Chartered – Annual Report 2021 Gender pay gap and equal pay We continue to analyse our gender pay gap for the UK, HongKong, Singapore, UAE and US. The gender pay gap compares the average pay of men and women without accounting for some of the key factors which influence pay, includng different roles, skills, seniorty and market pay rates. Compared with last year, our mean hourly pay gaps have remained flat or reduced across the UK, Singapore and US. Our mean bonus pay gaps have increased slightly except for in Singapore. Our gender pay gaps are caused by there being fewer women in senior roles and in business areas where market rates of pay are the highest. We understand it will take time to see the level of change needed to signficantly reduce our gender pay gaps and we remain committed to our intiatves to supportgender diversty. When the pay of men and women at the same level and in the same business area are compared, our gender pay gaps remain signficantly smaller. The remainng gaps exist due to differences in the market pay level for different types of roles at the same level and in the same business areas, and differences in the relative positoning of the pay of each role holder around the market benchmark. Equal pay is a more detailed measure of pay equality and is a key commitment in our Fair Pay Charter. We analyse equal pay during our annual performance and pay review process to ensure equal pay for equal work. We have been reporting our gender pay gaps for several years and support intiatves that will enable a truly diverse workforce. We responded to the UK Government consultation on ethnicty pay gap reporting and are considerng potential ways to draw from available data to inform ourincluson strategy. Obtainng signficant enough disclosure of ethnicty data remains a challenge and we are taking steps to encourage disclosure, where possible, sowe can develop our approach. Read more about this in our gender pay gap report at sc.com/genderpaygap Employees continued Female representation Female 31 % (2020: 31%) Board 2020 2021 Female 30.7 % (2020: 29.5%) Senior leadership (Managing directors and band 4) 2020 2021 Female 45.5 % (2020: 45.4%) All employees 2020 2021 Female 28.4 % (2020: 31.8%) Management Team and their direct reports 2020 2021 Female  Male  Female ,99 Male ,20 Female 33 Male 83 Undisclosed 8 Female 37,281 Male 44,045 Undisclosed 631 2021 Gender pay gap UK Hong Kong Singapore UAE US Mean hourly pay gap 27% 21% 33% 31% 23% Meanbonuspay gap 52% 42% 44% 58% 46% ![]() ª Partneringwith Doconomyto ## cut carbon º We’ve partnered with Doconomy, a Sweden- based impact tech company, to pilot a tool that helps our clients manage their everyday climate impact. Our clients in Pakistan can now calculate the carbon emissons of any goods and services purchased on their credit cards and track their carbon footprint using our online banking service. Read more online at www.sc.com/doconomy Strategic report Stakeholders and responsiblites 60 Standard Chartered – Annual Report 2021 ![]() Strategicreport 61 Standard Chartered – Annual Report 2021 Sustainableand #### 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 need for sustainable economic growth. 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 andresponsiblebank, committed to sustainable social and economic development through our business, operations and communites. Business CommunitesOperations 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 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. See pages 24-25 for more detail on how we are taking a stand. This enhanced focus ensures sustainablity is embedded across our business and integrated into the Group’s decison- making, with robust governance provided by the Board, Management Team and multiple supporting sub-committees. The following pages set out our approach and progress towards our most material sustainable and responsible business topics. Further informatonon our approach to climate change can also be read in our TCFD report at sc.com/tcfd . In 2022, we also intend to provide additonal ESG-related informaton via our ESG report. This will include alignment index tables for disclosures relevant to the GRI, SASB and World Economic Forum frameworks,and willbe available at sc.com/ESGreport in Q1 2022. See pages 51 to 59 toreadhow engagement with stakeholders informs ourapproach tosustainable and responsiblebusiness For more informaton on our sustainablity governance see pages276-277 and sc.com/tcfd See pages 455 and 466 for a full list of our 2022 Sustainablity Aspiratons For moreinformaton on ourResponsible Business Standards and Policessee sc.com/standardsandpolices Our Sustainablity Aspiratons Our approach is underpinned by our suite of Sustainablity Aspiratons that set out how we aim to promote social and economic development, anddeliver sustainable outcomes inthe areas in which we can make the most material contributon to the delivery of the UN 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 to develop our approach to measuring, managing and reducing emiss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 intotheGroup Scorecard todrive widespread awareness and support delivery. At the end of 2021, 82.9 per cent of our Aspiratons are on track or achieved. This is an increase from 78.4 per cent in 2020; however, COVID-19 continued to impact the delivery of several Aspiratons. Further detailon each Aspiraton canbe found between pages 55 and 77. We remain focused on scaling up delivery in subsequent years to achieve our targets. To ensure stakeholder confidencein our approach, we haveconducted a limted-scope assurance exercise over performance data related toselected Aspiratons, see sc.com/aspiratonsassurance . Thefindngs of this exercise will contribute towards our continued work to strengthen how we track and report progress on our Aspiratons, includng as part of our commitment to the UN Princples for Responsible Banking. Group KPI: Sustainablity Deliverng Sustainablity Aspiratons % + 4.5 ppt Sustainablity Aspiratons achieved or on track 1 2021 2020 2019 82.9 78.4 93.1 1Each aspiraton containsone or more performance measures. The KPI is the proportion of all measures that have been achieved or are on track to be delivered at the end of the reportingperiod. ![]() 62 Standard Chartered – Annual Report 2021 Strategic report Stakeholders and responsiblites #### Sustainable and responsible business #### continued Do more good – promoting sustainable finance Clients Investors Society Our main impact on the environment and society is through the business activtieswe finance. Through ourcore business, we promote sustainable finance in our markets, expanding renewables, andfinancngand 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, balanced by our misson of enabling a just transiton. In other words, do more good and less harm. Pillar 1: Business 2021 SustainablityAspiratons: Business Infrastructure Timelne Status Progress Faciltate project financng services for $40 billon of infrastructureprojects thatpromotesustainabledevelopment that align to our verifed Green and Sustainable Product Framework Jan 2020– Dec 2024 Faciltated $9.6billon,bringngthe total faciltated since January 2020 to $12 billon. Climate change Faciltate $35 billon worth of project financng services, M&A advisory, debt structuring, transactionbanking and lending services for renewable energy that align to our verifed Green and Sustainable Product Framework Jan 2020– Dec 2023 Faciltated $22 billon, bringngtotal faciltated since January 2020 to $40.4 billon. We have therefore achieved this Aspiraton ahead of the end 2023 target. Only provide financal services to clients who are: • by 2024, are less than 80% dependent on thermal coal (based on % EBITDA at group level) • by 2025, are less than 60% dependent on thermal coal (based on % EBITDA at group level) • by 2027, are less than 40% dependent on thermal coal (based on % EBITDA at group level) • by 2030, are less than 5% dependent on thermal coal (based on % EBITDA at group level) Jan 2020– Jan 2030 In 2020, we ceased new business with four clients and have now exited these relationshps subject toany outstanding contractual arrangements. In light of the recent strengthening of our coal policy, we are now on track to transiton or exit all clients at an entity level that are greater than 80% dependent on thermal coal, subjectto any outstandingcontractual arrangements. \*In 2021, we changed from EBITDA to revenue basis. See page 455. Commit to measuring, managing andreducing emissons associated with our financng of clients to support our objectve to achieve net zero by 2050. We will develop and consult with shareholders, investors, clients and civl society on a defintion, methodology, targets and timelne Jan 2020– Dec 2021 In October 2021, we announced ambitous new targets to reach net zero carbon emissons from our financed activty by 2050. We havefurther incorporated these new targets into our 2022 Aspiratons. See page 455. Entrepreneurs Provide $15 billon of financng to small business clients (Business Banking) Jan 2020– Dec 2024 Provided $2.96 billon, bringng the total provided since January 2020 to $5.96 billon. Provide $3 billon of financng to microfnance insttutions Jan 2020– Dec 2024 Provided $617.5 millon, bringng the total faciltiated since January 2020 to $1.13 billon. Concluded in the year AchievedNot achieved Ongoing aspiratons On trackNot on track ![]() Strategicreport 63 Standard Chartered – Annual Report 2021 2021 SustainablityAspiratons: Business continued Retail Banking Timelne Status Progress Launch a suite of five core sustainablity- focused Retail Banking products inselected markets across ourfootprint Jan 2021– Dec 2022 Five products were successfullylaunched during 2021, achievng this Aspiraton a year ahead of schedule. These were: i) Sustainable Term Deposits inSingapore,Indonesia and Taiwan, and sustainable Current Account Savings Accounts in Hong Kong i) Carbon-neutral cards in Singapore, Bangladesh, Malaysia and Hong Kong ii) Green home loans in Hong Kong, Singapore and Taiwan iv) Green home renovation financng – extended preferential pricng to help clients acquire solar energy and water treatment equipment in Kenya v) ESG unit trusts available in 16 markets. Commerce Bank 10,000 ofour clients’ internatonal and domestic networks of suppliers and buyers through banking theecosystem programmes Jan 2020– Dec 2024 Enrolled 3,473 suppliers and buyers, bringng the total enrolled since Jan 2020 to 7,153. Digtal Roll out digtal-only banks in a total of 12 markets Jan 2020– Dec 2021 We have launched digtal-only banks in 10 markets since January 2020. Further launches in Bahrain and the United Arab Emirates have been delayed and are expected to launch in 2022. Double the number of clients we bank in Africa and the Middle East to 3.2 millon Dec2017– Dec 2021 1 At the end of 2021 we had a total of 2,366,000 digtal clients in the AME region. COVID-19 has impacted our abilty to onboard new clients during periods of lockdown. We will continue to enhance our capabilties through 2022. Impact finance Developa tailored Impact Profile for all Private Bank clients providng a framework that enables themtounderstand their passions and harness capital market solutions to support theSDGs Jan 2020– Dec 2024 The goal of the Impact Profile tool was to include ESG elements as a part of understanding a client’s financal profile and to enable conversations with clients based on preferences. As part of our October 2021 net zero approach, we plan to integrate ESG consideratonsin our wealthmanagementadvisory which are incorporated into our updated 2022 Aspiratons and will replace this Aspiraton (see page 455). Triple the value of sustainable investng Assets UnderManagement 2 Jan 2021– Dec 2024 Our Sustainable Investing Assets Under Management(AUM) has grown by 2.79 times. For 2022, we will replace this Aspiraton with a more ambitous Sustainable Investing AUM Aspiraton (see page 456) as part of our net zero Aspiratons which will expand products covered to include exchange traded funds (ETFs), bonds, equites, structured products among others. This is more holistc than the current Aspiraton covering only mutual funds. Roll out ESG scores for single holding investments and funds where applicable ESG scores are available from third-party data providers Jan 2021– Dec 2021 Sustainalytcs ESG risk ratings available on equity derivatves and fixed income trade notes since August 2021 for both Private Bank and Consumer (Affluent). 1This start date has been restated to reflect the period over which baseline data has been gathered 2This has been amended from ‘percentage’ as previously disclosed, to ‘value’ Concluded in the year AchievedNot achieved Ongoing aspiratons On trackNot on track Pillar 1: Business continued ![]() 64 Standard Chartered – Annual Report 2021 Strategic report Stakeholders and responsiblites #### Sustainable and responsible business #### continued We create and offer sustainable finance products that support sustainable development. In 2021, welaunched 13 new sustainable finance products, includng sustainable current and savings accounts for both our CCIB clients and retail customers, and green mortgages in some of our key markets, Singapore, Hong Kong andThailand. Our 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ngscertif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. Together, these Frameworks define the activties that count towards our target to mobilse $300 billon in green and transiton finance by 2030, the key driver of our abilty to meet our net zero targets. BetweenJuly 2020 and June 2021,our SustainableFinance asset base increased by 138 per cent year-on-year to $9.2 billon. This increase was driven by organic growth coupled with the identficaton ofexistng exposures that had not previously been tagged as green or sustainable. With more than 84 per cent of these assets located in Asia, Africa and the Middle East, our dedicated Sustainable Finance team is focused on accelerating the deployment of sustainable finance to the markets where it matters the most. Our second Sustainable Finance Impact Report found that our green lending avoided 1.4 millon tonnes of CO 2 emissons from July 2020 to June 2021, a 264 per cent increase in CO 2 avoided year-on-year, and equivalent to more than 3 millon economy class aeroplane seats from Londonto Singapore. Our green assets in Organisaton for Economic Cooperation and Development Development Assistance Committee (OECD- DAC) least developed, lower- and lower-middle income markets have achieved signficantly more impact in terms of CO 2 emissons avoided per dollar invested than our green asset base in the rest of the world. This reinforces the findngs of our Opportunity2030 Report and emphasises the need to keep finance flowing to the markets in our footprint where it matters most and can have the greatest impact. We also made progress towards our Aspiratons for small business lending ($15 billon, January 2020 to December 2024) and microfnance ($3 billon, January 2020 to December 2024), enabling more than 885,000 microfnance loans and providng nearly 20,000 loans to small and medium enterprises, often the powerhouses of the economy in many of our markets. In 2020, we announced that we would commit $1 billon ofnot-for-profit financng for companies that provide goods and services to help in the fight against COVID-19. By the endof 2021, we had approved $930 millon of this, and dispersed $782 millon. This has helped businesses across our markets manufacture anddistrbute emergency ventilators, face masks, protective equipment and sanitsers, and governments to finance the purchase of World Health Organisaton approved COVID-19 vaccines. 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. We will continue to grow our sustainable finance propositon, and increase lending into areas aligned with the SDGs. Read our Sustainable Finance Impact Report: sc.com/SFimpactreport Read our Sustainable Finance Frameworks: sc.com/sustainablefnanceframework Read ourOpportunity2030 Report: sc.com/opportunity2030 See our 2021 Sustainablity Aspiratons on page 62 Do less harm – managing environmental andsocial risk We have acomprehensiveapproach to managing environmental and social (E&S) risk. We work with clients, regulators and peers across the finance sectorto continuously improve E&S standards and mitgate the impact that may stem from our financng decisons. We have a suite of detailed policy frameworks and Positon Statements, approved by the Group Responsiblity and Reputational Risk Committee (GRRRC), which draw on global bestpractice,includng theInternational Finance Corporation (IFC)Performance Standards and theEquator Princples (EP), to outline the cross-sector standards we expect of ourselves andour clients. Sector-specifcguidance is also provided for clients operating in sectors with high environmental orsocialimpact 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 inalign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. Pillar 1: Business continued ![]() Strategicreport 65 Standard Chartered – Annual Report 2021 Pillar 1: Business continued We identfy and assess E&S risks related to our CCIB clients, and embed our E&S risk framework directly into our credit approval process. Whererequired,we proactively engage with clients to mitgate identfied risks and impacts and support them to improve their E&S performance over time. All relationshp managersand 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. During 2021 we provided trainng to 1,280 colleagues. Our approach remains to work with clients to improve their E&S performancewith specifc timeboundaction plans. Where clients are unable or unwillng to meet our requirements, we will ultimately exit those relationshps, subject tocontractual obligatons. During 2021, we reviewed 786 clients and 547 transactions that presented potential specifcrisks against our Positon Statements. During 2021, we continued to hold the positon of Chair of the EP Associaton, and member of the Board of Governors of the Roundtableon SustainablePalm Oil. In additon, we adopted the PoseidonPrinc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 sustainable and responsible 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 moreaboutour Positon Statements at sc.com/positonstatements Read more about our prohibted activties at sc.com/prohibtedactivties Read moreabout our reporting against theEquator Princples at sc.com/ equatorprincples Respondingto 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 of the toughesttransiton-financngand climate challenges. Asset out on page 64, we plan to mobilse $300 billon aligned to our Green and Sustainable Product Framework, and Transiton Finance Framework. 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 announced 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, we have set out our roadmap to reduce financed emissons, finance transiton projects and accelerate new solutions. Read more about our approach to net zero at sc.com/netzero.  % Over 70 per cent of our Sustainable Finance assets are located in emerging anddeveloping economies. CO 2 avoided from operational assets . #### m tonnes ![]() 66 Standard Chartered – Annual Report 2021 Strategic report Stakeholders and responsiblites #### Sustainable and responsible business #### continued Pillar 1: Business continued We aim to reduce absolute financed thermal coal minng emissons by 85 per cent by 2030, in additon to the existng prohibtion on financng new or expanding coal-fired power plants. We are also reducing emissons intensty in other high-carbon sectors, setting interm targets for power (-63percent emissons intensty), steel and minng (-33percent emissons intensty respectively), and oil and gas(-30percent emissons intensty). 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 are also committed to reducing the emissons we produce, and in 2021 we brought forward our target to achieve net zero in our operations from 2030 to 2025. With approximately 12,100 suppliers, we understand that there can be signficant carbon emissons associated with the procurement of goods and servicesand a potential physical impact on our supply chain that may impact our abilty to serve our clients. 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on reductions. We also began to embed emissons-related clauses into relevant supplier contracts to reduce our consumptionand mitgate remainderemissons. Managing thefinancal risk from climatechange 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 ERMF, 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, we 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fyingkey portfolios vulnerable toclimate risk. In partnership with peers, industry and academia, we are transitoning from measurement to management ofclimate risk. Through ongoing partnership with Imperial College London, we supported the publicaton of a new climate research which revealed the potential for nature-based solutions to tackle the interlnkages between agriculture, land-use and climate change. Princpal Board decison – our pathway to net zero As part of the consideraton process for approving the net zero pathway, the Board had to ensure it was comfortable with themethodology, the potential outcome ofapplying the methodology and the substance of the pathway, all set withn the context of an agreed and robust risk management framework. To achieve this, the Board particpated in several discussons during the year and provided valuable input across a number of areas, taking into account the impacton the Group’sstakeholders. Examples of such consideratons were: • the risk that some clients may consider the Group’s approach too aggressive, or conversely that it does not go far enough,considerng in particular the challenges of the Group’s footprint in emerging markets and developing countries and recognisng the differng pathways to net zero in different markets and the need to support and faciltate a just transiton • the impact of the pathway on ongoing discussons with civl society groups, such as NGOs • likelystakeholder reaction includng governments, regulators, communites andclients as wellas investors and NGOs to the methodology • when to announce the pathway and how this would impact certain stakeholders • the signficant level of engagement the Group had undertaken withsome stakeholders, includng investors and NGOs, while formulating the net zero pathway • the importance of providngopportunity for feedback from those stakeholders not already consulted once the pathway was published • the content of the communicatons material to be published to ensure effectivereadabilty forstakeholders • future reporting of progress against the pathway to the market • the potential opportunites of Transiton Financeofferings for clients • the importance of supporting the transiton for many clients towards lower-emittng technologies to support a just transiton • the intended plan to put the pathway to an advisory vote at Standard CharteredPLC’s 2022 AnnualGeneral Meeting (AGM) in recogniton of how important this is to our shareholders andother stakeholders Stakeholder consideratons were taken into account inthe Board’s oversight of the net zero pathway among many other factors. As a result, the Board, cognisant of the methodological approach and interest in the pathway by shareholders and other stakeholders, approved the recommended pathwayand communicatons plan. ![]() Strategicreport 67 Standard Chartered – Annual Report 2021 Summary ofStandard Chartered’s TCFD response Standard Chartered publicly committed to the recommendations of the Financal Stabilty Board’s Task Force on Climate-related FinancalDisclosures (TCFD) recommendations in 2017 and has subsequently released annual TCFDreports since 2018. Our comprehensive TCFDdisclosure ispublished in a standalone report which provides informaton in a readily identfiableand accessible format for all interested stakeholders. This can be accessed at sc.com/tcfd . The table below sets out the 11 TCFD recommended disclosures and summarises the progress we have made in 2021. Through consistency with the TCFD recommendations, we have achieved compliance with the listng rules. 1 Governance Board oversight of climate- related risks and opportunites Current status • In 2021, we held Board-level and Management Team trainng on our approach to net zero and Board-level trainng, delivered by Imperial College London, on climate scenarios to support the Board with their review and challenge ofclimate related regulatory stress testing. • The Board reviewed and approved our approach to reaching net zero carbon emissons from our financng by 2050 and associated interm targets. • The Board received regular Climate Risk updates via the Board Risk Committee (BRC) and reports from the Group Chief Risk Officer. • First-generation ClimateRisk reporting andManagement LevelRisk Appetite metrics were shared with the BRC and approved by the Group Risk Committee which has oversight of Climate Risk. Future priorties • We aimtoenhance Climate Risk trainng to our subsidary boards, buildng on intial trainng delivered in 2020. • Results of management stress tests will be reviewed and challenged by the BRC and will strengthen the Board’s oversight of the impact from Climate Risk on ourbusiness, financal performance and operations and strengthen business strategyand financal planning. Management’s role in assessing and managing climate related risks and opportunites Current status • The Group Chief Risk Officer (CRO) has Senior Management Responsiblity for Climate Risk and is supported by the Global Head, Enterprise Risk Management who has day-to-day oversight, and has appointed the Climate Risk Management Forum that oversees the delivery of the Group’s commitment tomanage climate related financal and non-financal risks. • In 2021, we established a robust governance structure to support our net zero approach through the Net Zero Steering Group chaired by the Group Head, Conduct, FinancalCrime & Compliance. • We aimtostrengthen business segment, country, and regionalClimate Risk governance and continue to keep the Management Team updated through the Group CRO reports and Management Information report to the GRC. Future priorties • We will continue to exercise appropriate oversight andgovernance of our approach to net zero at Board and Management Teamlevel. • Weaim to strengthen business segment, market, and regional Climate Risk governance and continue to keep the Management Teamupdated through the Group CRO reports and Management Information report to the GRC. Strategy Climate- related risks and opportunites identfied over the short, medium and long term Current status • We have assessed the impact of climate risk to the banking book under three transiton scenarios over a 30-year time horizon, which has enabled us to identfy climate risks, strategies to mitgate risk as well as climate opportunites. • In 2021, we identfied climate-related opportunites linked to the Bank’s net zero in financed emissons approach includng aimng to: – mobilse $300 billon in green and transiton finance – reduce absolute financed thermal coal minng emissons by 85% – reduce emissons intensty in other high carbon sectors with the interm 2030 targets includng power (-63% emissons intensty), steel and minng (- 33% emissons intensty respectively), and oil and gas (-30% emissons intensty). • We use quantitatve and bottom up tools and methodologies to assess transiton and physical climate risk and we apply these to our clients, portfolios, and our own operations. Future priorties • Wewill continueto develop and enhance our Climate Risk/opportunity identficaton, interplay and modelling capabilties to strengthen climate risk quantifcation. This includesconsistency and where possible, uniformty of time horizons. • We aim to disclose annually the progress we are making against our $300 billon and other net zero targets and build out our client capabilty to achieve our net zero through: – our newly developed Transiton Acceleration Team – reportingmortgage emissons with a view to setting targets by 2023 – doubling our sustainable investng assets undermanagement – launching and growing sustainable products includng Universal Climate Finance Loans, green mortgages and sustainable investngofferings while integratng ESG consideratons in our wealth managementadvisory activties. 1Some of the data, metrics and methodologies used in relation to the Group’s TCFD report which is summarized in this section is subject to limtations. The reader should treat the informaton provided, and conclusions and assumptions drawn from the underlying data with caution. The limtations to the data, metrics and methodologies as well as the basis on which the Group’s TCFD report was made are set out in the Important Notice – Basis of Preparation and Caution Regarding DataLimtations section of the Group’s TCFD report available at sc.com/tcfd. ![]() 68 Standard Chartered – Annual Report 2021 Strategic report Stakeholders and responsiblites #### Sustainable and responsible business #### continued Summary ofStandard Chartered’s TCFD response continued Strategy Impact of climate risks and opportunites on business, strategy and planning Current status • Sustainablity has been elevated to become a pillar of the Group’s strategy. • We continue to restrict financng of thermal coal minng and reduce emissons intensty in other carbon intensve sectors. Where clients do not show a sufficent level of commitment to the transiton, we reserve the right to cease providng them with our services. • In 2021, we engaged with approximately 2,000 of our clients, to help understand their exposure toclimate risk andidentfy climate opportunites. • To make our business model more resilent to Climate Risk we are already reducing appetite for selected high-carbon sectors such as coal, in support of our plan to reach net zero in our financng by 2050, whilst balancing transiton riskand opportunity with ambitous interm targets tosubstantially reduce our financed carbon emissons intensty by 2030. Future priorties • We will develop Climate Risk management scenarios, which willfurther inform us of the potential impact from Climate Risk on our business, financal performance and operations and strengthen business strategy and financal planning. Climate- related scenario analysis Current status • Our climate-related scenario analysis, based on those from the Network of Central Banks and Supervisors for Greening the Financal System (NGFS), includes orderly, disorderly andhot-house world scenarios. Future priorties • Wewilldevelop management scenarios that will strengthen consideratonsof Climate Risk in into the Group’s corporate plan and net zero strategy. Risk management Identifyng and assessing climate- relatedrisks Current status • We identfy physical and transiton risk as part of client, portfolio and own property assessments and consider: – Physical risk: current day and longer term time horizons for acute weather events (storm, flood, wildfre, earthquakes) and chronic sea level rise. – Transiton risk: financal impact at a client level under a range of NGFS based scenarios. – Temperature alignment: providesa temperature score to indcate client and portfolio level global warming potential up to 2030. • Climate Risk is recognised in our central Enterprise Risk Management Framework (ERMF) as an integrated risk type and is managed in-line with the Princpal Risk Type (PRT) impacted e.g. Credit, Market, Operational. • Climate Risk is assessed as part of regulatory stress testing through the annual Internal Capital Adequacy Assessment Process (ICAAP), the 2021 Bank of England Climate Biennal Exploratory Scenario (CBES),andlocal countryregulatory stresstests. • In 2021 client engagement has improved the coverage of data that informs the climate client level risk assessments being integrated into the credit underwritng process. Future priorties • Further embedding of Climate Risk management across PRTs, consideraton of risk mitgation over time as methodologies mature and expanding coverage across products and markets. Managing climate- relatedrisks Current status • Climate Risk is managed in accordance with the Princpal Risk Type (PRT) through which it manifests. Depending on the PRT framework, it is applied at a client, location or portfolio level as part of transactional, portfolio or operational level analysis for priortisedareas. • There is a Risk Appetite (RA) Statement that is accompanied by RA metrics that are based on potential losses under different climate scenarios and these RA metrics are reported to the GRC. Future priorties • Risk Appetite thresholdsbecome effective in 2022. Integrating into the organisaton’s overall risk management Current status • Climate Risk is integrated into and managed as part of existng PRTs: – Credit Risk: Climate Risk (physical and transiton) assessments arebeing incorporated into the credit underwritng process for CCIB clients. For our CPBB sector, physical risk consideratons inform credit portfolio quarterly reviews for over 90% of the retail mortgage portfolio. – Operational and Technology Risk: all new property sites are assessed for physical risk vulnerabilties. – Traded Risk: a physical risk-based scenario is included as part of the Traded Risk stress testing framework. – Country Risk: the setting of Country Risk limts include Climate Risk as a factor andregional Country Riskreviews for sovereign credit grades continue to includeClimate Risk consideratons. – Reputational and Sustainablity Risk: for priortised high-carbon clients and transactions a Climate Risk overlayassessment is applied (in additon to Environmental and Social RiskManagement and restrictve polices). – Compliance: a process has been established for tracking various Climate Risk-related regulations. – Treasury Risk: Climate Risk was considered as part of the 2020 and 2021ICAAPs. Future priorties • Continueto embed Climate Risk consideratons withn PRTs,includng expanding CCIB coverage. ![]() Strategicreport 69 Standard Chartered – Annual Report 2021 Summary ofStandard Chartered’s TCFD response continued Metrics andTargets Metrics usedto assess and manage climate-related risk and opportunites in line with strategy andrisk management processes Current status • Early stage risk management metrics are used for quantifyng transiton and physical risk at a client and portfolio level, and for our own operations. These are used for different processes such as regulatory stress testing, monitorng climate risk aspartof Risk Appetite reporting, and to inform the assessments being integrated into existng transactional risk processes and client reviews. Some metrics we use include: – financal impact of various transiton scenarios up to 2050, expressed as weighted averageprobabilty of default – outstanding exposureof retailmortgageportfolios to current and forward looking physical risk events (flooding, storm, wildfre, future sea levelrise) – percentage of our own offices, branches and data centres in locations at extreme gross physical risk events – Country-Climate Risk index ranking countries byphysical and transiton risk. • In 2021, we expanded our disclosures to include: – the financal impacton exposure to high-carbon sectors loans and advances. Future priorties • Continue to refine and enhance coverage and applicaton of Climate Risk related metrics asour tools andmethodologies mature, with a greater focus on developing internal climate modelling capabilties and assessing the implcations of an internal carbon price where possible. Disclose Scope 1, Scope 2 and, if appropriate, Scope 3 greenhouse gas emissons and the relatedrisks Current status • Our 2021, our Scope 1 emissons were 2,902 tonnes carbon dioxde equivalent (tCO 2 e), a reduction of 27 per cent from 2020, and Scope 2 emissons were 82,761 tCO 2 e, a reduction of 27 per cent from 2020. • In 2021, our Scope 3 air travel emissons were 3,654 tCO 2 e, a reduction of 89 per cent from 2020. • In 2021, we baselined and estimated our 2020 Scope 3 supply chain emissons (vendors), using spend data. As a result of this exercise we estimate these emissons as 365,911 tCO 2 e. • We measured the absolute financed emissons baseline of our corporate lending portfolio as of 2020-year end, focusing on $74.8 billon of assets (equating to a coverage of 77 per cent of our in-scope assets of $97.3 billon, equal to 45.2 millon metric (Mt) CO 2 e). There is currentlyinsuffcient available data to accurately reflect the financed emissons of the remainng 23 per cent of our in-scope assets. A linear extrapolation would translate to an overall baseline of up to approximately 59Mt CO 2 e. • In 2021, we offset our Scope 1-3 (flights and data centres) through high quality and verifable carbon credits at a cost of $7.65/tonne. Future priorties • We will continue to extend our Scope 3 financed emissons measurement capabilties,targeting additonal sectors and incorporating additonal financal products as methodologies allow. For 2022, a specifc priorty will be baselinng the emissons from ourresidental mortgage lending. Targets used by the organisatonto manage climate relatedrisks and opportunites and performance against targets Current status • We have continued to evolve and challenge our existng Sustainablity Aspiratons includng setting interm and long-term targets to reach net zero in our operations by 2025 and net zero in our financed emissons by 2050. • In 2021, we faciltated $9.6 billon towards sustainable infrastructure and $22 billon towards renewable energy services. • In 2021, metrics and targets developed and disclosed include: – plan to mobilse $300 billon aligned to our Green and Sustainable Product Framework and Transiton Finance Framework – measuring, managing and reducing emissons associated with our financng of clients to support our objectve to achieve net zero by 2050. Future priorties • We will annually disclose against our 2050 net zero in financngtargets. • We will continue to drive consistency of use of targets across the Group’s functions and buildour knowledge of the interrelation between targets. ![]() 70 Standard Chartered – Annual Report 2021 Strategic report Stakeholders and responsiblites #### Sustainable and responsible business #### continued Clients Regulators and governments Suppliers Society 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. 2021 SustainablityAspiratons: Operations Environment Timelne Status Progress Reduce annual greenhouse gas (GHG) emissons (Scope 1 and 2) to net zero by 2030 with an interm target: Dec 2021: 106,000 tCO 2 e Dec 2025: 60,000 tCO 2 e Jan 2019– Dec 2030\* Surpassed interm targets, achievng 85,662 tonnes CO 2 equivalent (tCO 2 e) based on continued efficency work across theestate, plus anaccelerated renewable energy programme. \*In 2021, we brought forward our ambiton target to achieve net zero GHG emissons in our operations to December 2025. See page 455. Source all energy from renewable sources Jan 2020– Dec 2030\* Renewable energy was up 89% in 2021, representing 15% of total energy consumed (28.2 of 183 GWh) globally, an increase from 7% (14.9 GWh) in 2020. \*In 2021, we brought forward our target to achieve net zero emissons and ensurewe only consume renewable energy across our portfolio to 2025. See page 455. Join the Climate Group ‘RE100’ Jan 2021– Dec 2021 We engaged with RE100 during the year as they developed critera for financal insttutions seeking to become RE100 members. Following finalsation of those critera, we joned RE100 as a standard member which was formalised in January 2022. Achieve and maintan flight emissons 28% lower than our 2019 baseline of 94,000 tonnes. Jan 2021– Dec 2023 Flight emissons reduced 96% from 2019’s baseline, far exceeding the target. This reduction was primarly driven by the COVID-19 pandemic reducing all travel. Reduce waste per colleague to 40kg per year Jan 2020– Dec 2025 Total waste produced in 2021 was 43kg per colleague compared with 65kg per colleague in 2020. Reduction was largely dueto more peopleworking from home in light of COVID-19 pandemic. We also reduced the number of our printers, disposable cutlery, containers andutensilsas well as introducng on-sitefood composting. Recycle 90% of waste Jan 2020– Dec 2025 32% of waste was recycled during the year, up from 23% in 2020. Developa methodologyto measure Scope 3 emissons from our supplychain Jan 2021– Dec 2021 Methodology to measure Scope 3 emissons from our supply chain was developed and approved by the Sustainablity Forum in June 2021. Total supply chain emissons from our vendors was estimated to be 365,911 tonnes in 2020. 2021 figures are in progress and will be reported in 2022. Offset all residual emissonsfrom our operations(Scope 1 and 2, Scope 3 flights, waste and data centres) Jan 2021– Dec 2021 We have achieved our 2021 carbon offset Aspiraton to offset all residual emissons through the following providers: First Climate, CiX and Rabobank. Total volume of emissons offset was 136,000 tonnes at an average price of $7.65/tonne. Pillar 2: Operations Concluded in the year AchievedNot achieved Ongoing aspiratons On trackNot on track ![]() Strategicreport 71 Standard Chartered – Annual Report 2021 Conduct Timelne Status Progress Learn from risks identfied through concerns raised via our Speaking Up programme and conduct plans and publish an annual Threats and Themes Report Ongoing Threats and Themes report was issued in April 2021. Developenhanced internalpolices and guidelnes on privacy, data ethicsand algorithmc fairness, andembed a new governance framework for all data-relatedrisks Jan 2020– Dec 2021 The threeexistngData Management Standards covering data quality, records management, and privacy were refreshed to ensure better alignment andconsistency. The Responsible Artifcial Intelligence (RAI) guidelnes were upgraded into a formal Group RAI Standard under the Group’s ERMF in July 2021. The RAI Standard was further updated during the year and a new Sovereignty Standard was drafted. Guidelnes to accompany the Data Quality Standard were enhanced and published in November 2021. A Group-wide risk control and self-assessment exercise was concluded in 2021 covering risks in data quality, records management and privacy. Financal crime compliance Tacklefinancalcrimes by contributngto developing typologies and red flags for financal flows, trainng frontline staff to identfy potential suspicous transactions, and particpating in public-private partnerships to share intellgence and good practices Ongoing We activelycontribute to buildng industrycapacity,includng via hostinga two-dayvirtualAfricaAnti-MoneyLaundering Symposium and providng input to forestry crimes and wildlfe trade work by the United Nations and Financal Action Task Force over the course of 2021. Supporting this, we continue to train our staff across the Bank on financal crime risks includng via mandatory trainng delivered to all staff. Deliver atleast 50 correspondent banking academies Jan 2021– Dec 2023 The challenging COVID-19 landscape has made delivery of correspondent banking academies verydiffcult.Both internal strategicpriorties, andexternal client educationrequests/ needs are shiftng. We will therefore retire this Aspiraton and refocus our attention to a more robust future strategy which will extend the reach of the academy construct to a broader set of financal insttution clients, and extend the topics beyondtheframework historcally offered by the academies. Pillar 2: Operations continued Concluded in the year AchievedNot achieved Ongoing aspiratons On trackNot on track Drivng good conduct and ethics Good conduct is critcal to deliverng positve outcomes for our clients, markets and stakeholders. Our 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-making framework tohelp colleagues makegood 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, 99.6 per centof our colleagues completed this. In 2021, Conduct Risk became an integral component of the ERMF, ensuring it is considered withn each Princpal Risk Type. A new management approach using targeted metrics, analytics and data toenhance our Conduct Risk identficaton and mitgation will be rolled out in phases across 2022. In October 2021 weupdated ouroperational 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 Group Conduct Dashboard to faciltate data andinsght analysis. TheGroup ConductDashboard collates a diverse array of data to present a visual summary of potential ConductRisks. The abilty to raise concerns is essential to upholding the Group’s Here for good brand and valued behaviours. Early disclosure of concerns reduces the risk of financal and reputational loss caused bymisconduct.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 known or suspected misconduct without fearof retaliaton. Examples of whistleblowng concerns include breaches of regulatory requirements, breaches of Group policy and/or standards, or behaviour that has adverse effects on colleagues or on the Group’s reputation. Our 2021 My Voice survey showed 87 percent of colleagues feltconfidentto raise concerns without fear of reprisal. ![]() 72 Standard Chartered – Annual Report 2021 Strategic report Stakeholders and responsiblites #### Sustainable and responsible business #### continued In 2021, we saw the volume of concerns fall by 4 per cent, driven in part by the change in working arrangements during the COVID-19 pandemic. During the year, we closed 285 Speaking Up cases. Of the top three substantiated themes closed in 2021, 17 related to sexual harassment, 12 to informaton and cyber security breaches and 12 related to failure toensure occupational health and safety. Together, these account for approximately34 per cent of substantiated cases. In comparison with previous years we saw fewer instances of concernsrelated to theft of informaton, personal account dealingand close personal relationshps. For the substantiated investgations, a range of corrective actions were recommended includng process improvements, targeted coaching, trainng, and discplinary sanctions ranging from verbal warnings to dismssals. 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 ourdetectioncapabil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 continueto develop ourGroup 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. Speaking Up cases Year Total raised 1 In scope 2 Closed 3 Substantiated 4 Unsubstantiated 2021 1,159 256 119 166 20201,209 273 115 135 2019 1,382 294 179 189 The data in these reporting periods has been updated as at 31 December 2021. 1Total concerns raised withn the reporting year 2A concern under the FCA whistleblowng rules that is raised withn the reporting year and considered withn the scope of the Speaking Up programme 3This represents all cases closed withn the reporting year. This includes cases that were raised in the reporting year and in previous years 4Closed and with sufficent evidence supporting the orignal allegation(s) 5Case numbers reported in prior years differ from those reported in this period due to closed cases being either reclassifed, based on new informaton, or updated for adminstrative reasons 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 Fightng financal crime Our ambitonis 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 sets our financal crime risk management framework. We safeguard againstmoney laundering (AML), terrorist financng, sanctions, fraud and otherrisks, applyingcore controls such as client due-dilgence, screening and monitorng. Inadditon, anti-bribery and corruption (ABC) controls aim to prevent colleagues, or third parties working on our behalf, from engaging in bribery. During 2021, 41 processes (representing 7.3 per cent of our identfied process universe withn the Operational Risk & Technology Framework) were identfied as susceptible to bribery and corruption-related risk. All processes are tracked through enhanced reporting and first- and second-line governanceforums tomitgate this risk. The Group Risk Assessment found no processes or countries to be operating at a high residual risk level; however, 14 countries were identfied ashaving a high inherentrisk. No public legalcases involvngallegations of corruption were brought against the Group or its employees during the year. Internally, our Shared Investigatve Services (SIS) team conducted 62 investgations classifed as having an ABC nexus, which resulted in 10 discplinary cases. A particular focus of our financal crime investgatory teams is the use of data analytics to identfy those clients and cases which generate the greatest financal crime risk. In 2021, we increased coordinatng and streamlinng the work carried out by theseindvidual teams. This has strengthened thesecond line of defence in support of colleagues in business lines and country teams across the Bank. To mitgate the risk offinancal crime, particularly laundering the proceeds of corruption, in the lead-up to, during and after major politcal elections in certain footprint markets, the Group conducts enhanced monitorngdesigned to identfy and investgate transactions of potential concern. In 2021, enhanced monitorngwas conducted during major elections held in Uganda, Zambia and The Gambia. CFCC also investgated risks tothe Group arisng from a numberof prominentfinancalcrime stories inthe press, conducting investgations prompted by events such as the FinCEN Files and Pandora Papers leaks, among others. Pillar 2: Operations continued ![]() Strategicreport 73 Standard Chartered – Annual Report 2021 Pillar 2: Operations continued In 2021, CFCC addressed new and emerging sanctions related to developments in both Belarus and Afghanistan. CFCC also incorporated numerous additonal sanctioned parties under existng sanctions programmes into our control processes. The Group continues todevelop its Sanctions Compliance Programme with the aim of ensuring that the programme is sustainable andable to adapt tothe evolving sanctionsrisks that the Group faces. Withn our CPBB segment, 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 frequently inform and alert clients about potential fraud threats and have robust controls and processes in place to help clients identfy false actors and alert usshouldthey encounter any phishng orfraudulent transaction attempts. We have invested signficantly toensureouremployees are properly equipped to combat financal crime. In 2021, 99.6 per cent of colleagues completed financal crime e-learnings which cover ABC, AML, sanctions and fraud topics and this was supported by a Group-wide communicaton campaign, ‘The whole story’, which extended our awareness raisng activties. ABC-related internal investgations Year Total raised 1 In scope 2 Closed 3 Substantiated 4 Unsubstantiated 2021 62 60 28 34 2020 42 41 10 20 2019 42 407 17 The data in these reporting periods has been updated as at 31 December 2021. 1Total concerns raised withn the reporting year classifed as having an ABC nexus 2Includes concerns raised withn the reporting year and considered withn the scope of Group Investigaton Standards 3This represents all cases closed withn the reporting year. This includes cases that were raised in the reporting year and in previous years 4Closed and with sufficent evidence supporting the orignal allegation(s) For those inhigh-risk roles andfunctions, additonal targeted ABC trainng, masterclasses and forums were held to deepen understanding. We also shared our Supplier Charter, which sets out our expectations and minmum standards related to ABC, with more than 12,100 suppliers and third parties across 55 markets. In additon to internal trainng, we are taking our contributon beyond our business and partnering with governments, regulators and other global banks to build a framework to enable cooperation and two-way communicaton on financal crime.These ‘public–private partnerships’ include intiatves with the International Center for Missng &Exploited Children which focuses on the use of cryptoassets in the trade of child exploitaton and abuse material; the National Cyber Forensics and Trainng Alliance which assists law enforcement in identfyingsignficant organised groupsengaged in business email compromise schemes; and US Customs and Border Protection which focuses on economic security, trade security, forced labour and other risk areas, such as Trade Based Money Laundering. These partnerships are producing material new insghts about various crimnal typologies and advances in how we collectively combat financal crime in an increasng numberof jursdictons, includngSingapore, South Africa, the UK and the US. Throughout 2021, we also engaged with peers in contributng to the ongoing dialogue to advance effectiveness in combatingfinancal crime through our active particpation in several of the leading industry groups, includng Wolfsberg, Madison Group and UK Finance. We also particpated in discussons and forums with many external thought leaders includngthe World Economic Forum’s Partnering Against Corruption Initative (PACI). 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 use process, governance and due dilgence to avoid infrngements and complicty in the infrngements of others, whether in our role as an employer, as a procurer of goods and services, or as a provider of financal 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. Our 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 Conductand SupplierCharter. Our Modern Slavery Statement, approved by the Board, 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, weupdated ourE&S risk assessment process. We now require additonal due dilgence checks ![]() 74 Standard Chartered – Annual Report 2021 Strategic report Stakeholders and responsiblites #### Sustainable and responsible business #### continued for those clients identfied ashaving a heightened modern slavery risk. A humanrights specialst consultancy database was established to assist in conducting this due dilgence and to support clients to implementcorrective action plans when human rights allegations areflagged. 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 and internal communicatons to raiseawarenessof modern slavery across allsupplychain category managers and contract owners. Modern slavery risk is now highlghted at the vendor onboardingstage for all high-risk categories, and Procurement Category Plans have been enhanced for all supplier categories found to haveheightened risk, includng office servicesand supplies, property, human resources, banking operations services, marketing and advertisng services, technology hardware, and telecoms and networks in specifc identfied countries. 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 may also be 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 topromote fair pay practiceswithn their workforce, includng the development of their own understanding of livng wage. Read ourModern Slavery Statement at sc.com/modernslavery Read ourHumanRightsPositon Statement at sc.com/positonstatements Managing our environmental footprint We are committed toimprovngourenvironmental performance and reducing the direct environmental impact of our branches and offices. To do this, we measure and manage energy and water efficency, and our GHG emissons closely, verifyng our performance through third-party assurance. We also measure the amount of non-hazardous waste our branchesand offices generate and recycle.We do not produce or handle, and therefore do not report informaton on, material quantites of hazardous waste. Pillar 2: Operations continued Annual energy use of our property (kWh/m 2 /year) 2021 Actual 2020 Target 2008 174 185 494  % Since 2008 Case study ª WELLHealth-Safety #### Ratingº Our engagement withcolleagues highlghted a levelof uncertainty and apprehension regarding returning to the office due tothe ongoing pandemic. To reassure our colleagues, clients and the broader community that our offices and branches are healthy and safe, we have achieved WELLHealth-Safety Rating certifcation for our top45 buildngs based on headcount, which house over 65,000 colleagues (70 per cent of our Group). The WELL Health-Safety Rating is an evidence-based, externally verifed certifcation which focuses on operationalpolices, maintenance protocols, stakeholder engagement and emergency plans to addressa post- COVID-19 environment. WELL Health-Safety certifcation is issued by the International WELL Buildng Institute (IWBI). ![]() Strategicreport 75 Standard Chartered – Annual Report 2021 Pillar 2: Operations continued 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 intiatve (SBTi) as being in line with a well-below two degrees Celsius 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. In 2021, energy and emissons reductions intiatves included clean power purchase agreements, water recycling, solar rooftops and on-site waste composting. Together with a 5 per cent reduction in our real estate portfolio, these direct intiatves reduced our CO 2 emissons by 27 per cent, and our energy consumption by 15 per cent year-on-year to 183 GWh. Specifcally, investment in energy-efficent products accounted for 11 GWh of this reduction, resulting in a lower- carbon and more efficent portfolio. 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 and have improved measurement of the portfolio by 10per cent. We are committed to reducing waste in all its forms and since 2019, have been committed to reducing waste to 40 kilograms per employee per year, and recycling 90 per cent of our waste by 2025. Each year, we prevent more than 1 millon disposable cups going to landfill and are proud to have now certifed 103 properties as ‘single-use-plastic free’. Non-recyclable waste is sent for energy generation or compost to limt our impact on landfillwherepossible. 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 andavoidance. 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 set out the princples and methodology for measuring our emissons; and our Scope 1 and 2 emissons, as well as water and waste data, are independently assured by Global Documentation. Read theprincples and methodology formeasuringour environment dataat sc.com/environmentcritera Read theindependentenvironment assuranceat sc.com/environmentalassurance Our Sustainablity Network To further embed our sustainablity ambitons, in 2021 we created a colleague Global Sustainablity Network to share insghts and best practices about climate issues withn our markets. Now with over 1,200 members globally, members are invted to regular virtual townhall events to learn about climate, sustainablity and the wider ESG agenda. Our 2021 Global Learning Week also championed sustainablity. Through 12 livesustainablity events across four days, we engaged morethan 7,000 colleagues in sessions ranging from our sustainable finance propositons to our net zero approach, the science behind climate change to our approach tocarbonoffsetting. Colleagues who particpated in over four hours of learning were given the opportunity to complete a short assessment to attain a certifcation linked directly to their indvidual performance review. More than 700colleagues completed this course and certifcation. In 2022, we intend to continue to grow our Sustainablity Network and introduce a global sustainablity learning programme on the Bank’s diSCover platform. In additon, we will build on a pilot carried out during 2021, and roll out a global digtal solution to enablecolleagues to analyse and reduce their carbon footprint both at home and at work. Case study ª Sierra Leone solar #### PVarrayº During 2021, our Sierra Leone Property team installed more than 300 solar photovoltaic (PV) panels on the roof of our headquarters buildngin Freetown. Theinstallaton is the largest of its kind in the country, and currently produces more direct power than the buildng consumes. Excess power is exported to the local grid, contributng to decarbonisaton ofthecity’s power supply. ![]() 76 Standard Chartered – Annual Report 2021 Strategic report Stakeholders and responsiblites #### Sustainable and responsible business #### continued Regulators and governments Society We aim to create more inclusve economies by sharing ourskills and expertise and developing community programmes that transform lives. Pillar 3: Communites 2021 SustainablityAspiratons: Communites Community engagement Timelne Status Progress Invest 0.75% of prior year operating profit (PYOP) in our communites Ongoing In 2021, $48.9 millon community expenditure, which represents 3% of PYOP. Raise $75 millon for Futuremakers by Standard Chartered Jan 2019 – Dec 2023 In 2021, $14 millon was contributed through fundraisngand donations by the Group,taking the total from 2019 to 2021 to $64 millon. Education: Reach 1 millon girls and young women through Goal Jan 2006 – Dec 2023 In 2021, 89,014 girls particpated in Goal. This brings the total reach from 2006 to 2021 to 735,452 girls and young women. Employabilty: Reach 100,000 young people Jan 2019 – Dec 2023 In 2021, 66,534 young people particpated in employabilty programmes. This brings the total to 87,703 young people reached from 2019 to 2021. Entrepreneurship: Reach 50,000 youngpeople Jan 2019 – Dec 2023 In 2021, 46,808 young people particpated in entrepreneurship programmes. This brings thetotal to 62,496 young people reached from 2019 to 2021. \*In 2021, this Aspiraton has been amended to reflect number of young people reached instead of young people, micro and small businesses. This is consistent with the methodology used in 2019 and 2020. Increase particpation for employee volunteering to55% Jan 2020 – Dec 2023 In 2021, 25% of employees volunteered. The pace of deliverng employee volunteering continues to be impacted by COVID-19 restrictons. We continueto supportour communites through Futuremakers byStandard Chartered, our global intiatve to tackle youth economicincluson and enablethe next generation to learn, earn and grow. In 2021, we contributed $14 millon to Futuremakers, includng donations from the Group and fundraisng of $1.4 millon from our employees and partners. Despite the challenging global environment, blending face-to-faceinteracton with digtal delivery methods enabled Futuremakers programmes to reach more than 304,369 young people in 2021. From 2019–2021, Futuremakers has reached a total of 671,070 young people across 41 markets and raised $64 millon. Goal, our Futuremakers girls’empowerment programmeto tackle negative gender and social norms, implemented face-to-facesessions wherepossibleand combinedthese with a digtal curriculum delivered through phone messaging, radio or online. In 2021, Goal reached 89,014 girls and young women. We also supported the FREE (Financal Resilence and Economic Empowerment) Fund, led by our Goal partner Women Win, to further long-term investment in the economic empowerment of adolescent girls and young women who havebeen heavily impacted by COVID-19. Through additonal funding allocated in 2020 to support COVID-19 economic recovery, this year we signficantly scaled-up our livelhood programmes. Our Futuremakers employabilty skills programme, reached more than 66,500 young people andentrepreneurshipactivties reached more than 46,800 young people in 2021. Concluded in the year AchievedNot achieved Ongoing aspiratons On trackNot on track ![]() Strategicreport 77 StandardChartered – Annual Report 2021 Pillar 3: Communites continued In nine markets, the Standard Chartered Women in Tech incubators supported female-ledentrepreneurial teams with business management trainng, mentoring and seed funding. In 2021, we delivered the second editon of our virtual Futuremakers Forum to create partnerships and opportunites for youngpeople.TheForum engaged more than1,000 particpants from 63 markets includng business leaders and policy experts. It resulted in a collective 1,800 hours of 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 ofyoung people and identfy business leaders who are committed to ensuring that the next generation is prepared for success. A summary of learning from the Forum is available at sc.com/FuturemakersForum2021 . Despite COVID-19 restrictons limting face-to-face volunteering, 25 per cent of employees volunteered, contributng more than 31,600 volunteering days with many contributng throughnew 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 partnershipsto increase employeevolunteering, release a Futuremakers impact report and host the third Futuremakers Forum, focused on entrepreneurs and liftng particpation. Read more about Futuremakers by Standard Chartered at sc.com/Futuremakers A full breakdown of our2021 fundraisngand donations willbepublished in our ESG report, in Q1 2022. See sc.com/ESGreport. Case study: Futuremakers ª Aisha’sstory º Twenty-year-oldAisha lives inBangladesh.Herfamily struggled to make ends meet, and her father’s sole income was not enough to pay for her education beyond secondary school. Thanks toFuturemakers by Standard Chartered, Aishawas able to attend a fully funded technical and vocational skills trainng programme with a local school. After completing a six-month technical course, and with the support of the school’s Decent Employment andEntrepreneurshipDevelopment team, Aisha secured a job as an assistant technican at an engineerngfirm. This trainng enabled Aisha to support her family after her father’s job loss due to COVID-19. Today, Aisha dreams of becoming an entrepreneur and running her ownelectronics shop, which will in turn support more girls like her. Our community expenditure2021 1. Cash contributons 57.70% 2. Employee time (non-cash item) 23.41% 3. Gifts in kind (non-cash item) 1 5.34% 4. Management costs 9.65% 5. Leverage 2 3.90% 1Gifts in kindcomprises all non-monetary donations 2Leverage data relates to the proceeds from staff and other fundraisng activty 1 2 3 4 5 $.7 m ![]() 78 StandardChartered – Annual Report 2021 Strategic report Stakeholders and responsiblites #### 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 disclosuresare available on sc.com and in our 2021 ESG Report which will be published at sc.com/esgreport in Q1 2022. Reporting requirement Where to read more in this report about our polices and impact (includng risks, policy embedding, due dilgence and outcomes) Page Environmentalmatters Risk review and Capital review • Group Chief Risk Officer’s review 41 Sustainable and responsiblebusiness • Sustainablefinance 64 • Managing environmental and social risks 64 • Respondingto climatechange 65 • Summary of Task Force on Climate-related Financal Disclosure 67 • Managing our environmental footprint 74 Directors’ report • Environmental impact of ouroperations 188 Supplementarysustainablity informaton • Environment performance data\* 451 Employees Engaging stakeholders • Employees 55 • Gender pay gap and equal pay 59 Sustainable and responsiblebusiness • Drivng good conduct and ethics 71 Directors’ report • Employee polices and engagement 185 • Health and Safety 186 Supplementarypeopleinformaton 446 Human Rights Engaging stakeholders • Suppliers 54 Sustainable and responsiblebusiness • Respecting humanrights 73 Social matters Engaging stakeholders • Society 55 Sustainable and responsiblebusiness • Communites 76 Anti-corruption and bribery Group Chief Risk Officer’s review 41 Sustainable and responsiblebusiness • Drivng good conduct and ethics 71 • Fightng financal crime 72 Director’s report • Politcal donations 181 Descripton of business model Business model 18 Non-financalKPIs Employees • Employeeengagement (eNPS) 56 • Gender diverstyin senior roles 58 • Female representation 59 • Trainng on financal crime 73 • Recommitmentto the Code of Conduct 71 Society • Sustainablity Aspiratons achieved or on track 61 • Energy, water, waste and emissons 75 • Community expenditure 77 • Reach of community programmes 76 Princpal risks and uncertaintes Risk review and capital review 194 \* Vist sc.com/environmentcritera for our carbon emissons critera and sc.com/environmentalassurance for Global Documentation’sAssuranceStatementof our Scope 1 and 2 emissons, and waste and water data. ![]() ª Health,wealth ## and lifestyle ## with Franklin Templetonand ## SC Ventures º We are working with Franklin Templeton, one of the world’s largest independent asset managers, to create Autumn – a digtal app to help users achieve their financal and personal goals. Autumn, which is incubated and backed by SCVentures, helps customers plan and manage their financal and physical wellbeing with tools, products, and services across all aspects of their wealth, healthand lifestyle. Read more online at www.sc.com/autumn 79 Standard Chartered – Annual Report 2021 Strategicreport ![]() 80 Standard Chartered – Annual Report 2021 Strategic report Underlying versusstatutoryresults 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 (segment) $millon Total $millon Underlying operating income 8,407 5,733 573 14,713 Restructuring 9– (41) (32) Other items –– 2020 Statutory operating income 8,416 5,733 552 14,701 2020 (Restated) 1 Corporate, Commercial & Institutonal Banking 1 $millon Consumer Private & Business Banking 1 $millon Central & other items (segment) $millon Total $millon Underlying operating income 8,485 5,691 589 14,765 Restructuring 40– (13) 27 Other items –– (38)(38) Statutory operating income 8,525 5,691 538 14,754 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 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 10,448 2,446 2,003 (184) 14,713 Restructuring 30 3 (30) (35) (32) Other items ––– 2020 Statutory operating income 10,478 2,449 1,973 (199) 14,701 2020 (Restated) 1 Asia 1 $millon Africa & Middle East $millon Europe & Americas $millon Central & other items $millon Total $millon Underlying operating income 10,382 2,364 1,922 97 14,765 Restructuring 78 (2) – (49) 27 Other items (43) ––5 (38) Statutory operating income 10,417 2,362 1,922 53 14,754 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 beenrestated #### Underlying versus statutory results #### reconcilations ![]() 81 Standard Chartered – Annual Report 2021 Strategicreport 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 14,713 – (32) 20 – 14,701 Operating expenses (10,375) (62) (487) –– (10,924) Operating profit/(loss) before imparmentlosses and taxation 4,338 (62) (519) 20 – 3,777 Credit imparment (263) –9–– (254) Other imparment (355) – (17) –– (372) Profit from associates and jont ventures 176 – 20 –– 196 Profit/(loss)beforetaxation 3,896 (62) (507) 20 – 3,347 2020 Underlying $millon Regulatory Fine $millon Restructuring $millon Net loss on businesses disposed/ held forsale $millon Goodwill imparment $millon Statutory $millon Operating income 14,765 – 27 (38) – 14,754 Operating expenses (10,142) 14 (252) –– (10,380) Operating profit/(loss) before imparmentlosses and taxation 4,623 14 (225) (38) – 4,374 Credit imparment (2,294) – (31) –– (2,325) Other imparment 15 – (113) – (489) (587) Profit from associates and jont ventures 164 – (13) –– 151 Profit/(loss)beforetaxation 2,508 14 (382) (38) (489) 1,613 Profit before taxation (PBT) by client segment 2021 Corporate, Commercial & Institutonal Banking $millon Consumer Private & Business Banking $millon Central & other items (segment) $millon Total $millon Operating income 8,407 5,733 573 14,713 External 7,952 5,373 1,388 14,713 Inter-segment 455 360 (815) – Operating expenses (5,278) (4,377) (720) (10,375) Operating profit/(loss) before imparmentlosses andtaxation 3,129 1,356 (147) 4,338 Credit imparment 44 (285) (22) (263) Other imparment (49) – (306) (355) Profit from associates and jont ventures –– 176176 Underlying profit/(loss)before taxation 3,124 1,071 (299) 3,896 Restructuring (114)(235) (158)(507) Goodwill imparment –––– Other items –– (42)(42) Statutory profit/(loss)beforetaxation 3,010 836 (499) 3,347 ![]() 82 Standard Chartered – Annual Report 2021 Strategic report Underlying versusstatutoryresults Profit before taxation (PBT) by client segment continued 2020 (Restated)¹ Corporate, Commercial & Institutonal Banking 1 $millon Consumer Private & Business Banking 1 $millon Central & other items (segment) $millon Total $millon Operating income 8,485 5,691 589 14,765 External 8,304 4,795 1,666 14,765 Inter-segment 181 896 (1,077) – Operating expenses (5,003) (4,230) (909) (10,142) Operating profit/(loss) before imparmentlosses andtaxation 3,482 1,461 (320) 4,623 Credit imparment (1,529) (741) (24)(2,294) Other imparment 41 (10) (16) 15 Profit from associates and jont ventures –– 164164 Underlying profit/(loss)before taxation 1,994 710 (196) 2,508 Restructuring (221) (61) (100) (382) Goodwill imparment –– (489)(489) Other items –– (24)(24) Statutory profit/(loss)beforetaxation 1,773 649 (809) 1,613 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 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 income 10,448 2,446 2,003 (184) 14,713 Operating expenses (6,773) (1,623) (1,485) (494) (10,375) Operating profit/(loss) before imparmentlosses andtaxation 3,675 823 518 (678) 4,338 Credit imparment (434) 34 144 (7) (263) Other imparment (300) (1) (18) (36) (355) Profit from associates and jont ventures 175 ––1 176 Underlying profit/(loss)before taxation 3,116 856 644 (720) 3,896 Restructuring (286) (25) (69) (127) (507) Goodwill imparment ––––– Other items ––– (42)(42) Statutory profit/(loss)beforetaxation 2,830 831 575 (889) 3,347 2020 (Restated) 1 Asia 1 $millon Africa & Middle East $millon Europe & Americas $millon Central & other items $millon Total $millon Operating income 10,382 2,364 1,922 97 14,765 Operating expenses (6,357) (1,683) (1,383) (719) (10,142) Operating profit/(loss) before imparmentlosses andtaxation 4,025 681 539 (622) 4,623 Credit imparment (1,484) (654) (161) 5 (2,294) Other imparment 110 (14) 8 (89) 15 Profit from associates and jont ventures 163 ––1 164 Underlying profit/(loss)before taxation 2,814 13 386 (705) 2,508 Restructuring (134) (88) (45) (115) (382) Goodwill imparment ––– (489)(489) Other items (43) –– 19 (24) Statutory profit/(loss)beforetaxation 2,637 (75) 341 (1,290) 1,613 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 beenrestated ![]() 83 Standard Chartered – Annual Report 2021 Strategicreport Return on tangible equity (RoTE) 2021 $millon 2020 $millon Average parent company Shareholders’Equity 1 46,383 45,087 Less Preference share premium 1 (1,494) (1,494) Less Average intangble assets 1 (5,218) (5,003) Average Ordinary Shareholders’ Tangible Equity 1 39,671 38,590 Profit/(loss) for the period attributable to equity holders 2,313 751 Non-controlling interests 2 (27) Divdend payable on preference shares and AT1 classifed as equity (410) (395) Profit/(loss) for the period attributable to ordinary shareholders 1,905 329 Items normalised: Regulatory Fine 62 (14) Restructuring 507 382 Goodwill Impairment – 489 Net (gains)/losses on sale ofBusinesses (20) 38 Tax on normalised items (87) (83) Underlying profitfor the period attributable to ordinary shareholders 2,367 1,141 Underlying Return on Tangible Equity 6.0% 3.0% Statutory Return on Tangible Equity 4.8% 0.9% 1Yearly average is computed as an average of the four preceding quarterly averages 2021 Corporate, Commercial& Institutonal Banking % Consumer Private & Business Banking % Central & other Items (Segment) % Total % Underlying RoTE 9.6 10.2(10.5) 6.0 Regulatory Fine –– (0.8)(0.2) Restructuring Of which: Income –– (0.6) (0.1) Of which: Expenses (0.6) (3.0) (1.3) (1.2) Of which: Credit imparment –––– Of which: Other imparment 0.1 – (0.6) – Of which: Profit from associates and jont ventures –– 0.3 0.1 Net gains on sale of Businesses –– 0.3 0.1 Goodwill imparment –––– Tax on normalised items 0.20.7 – 0.1 Statutory RoTE 9.3 7.9 (13.2) 4.8 2020 (Restated) 1 Corporate, Commercial & Institutonal Banking 1 % Consumer Private & Business Banking 1 % Central & other Items (Segment) % Total % Underlying RoTE 5.96.9 (12.0) 3.0 Regulatory Fine –– 0.2 – Restructuring Of which: Income 0.2 – (0.2) 0.1 Of which: Expenses (0.5)(0.8) (1.0) (0.7) Of which: Credit imparment (0.2) –– (0.1) Of which: Other imparment (0.4) – (0.1)(0.3) Of which: Profit from associates and jont ventures –– (0.2) – Net losses onsale of Businesses –– (0.6) (0.1) Goodwill imparment –– (7.3) (1.3) Tax on normalised items 0.20.2 0.1 0.3 Statutory RoTE 5.2 6.3 (21.1) 0.9 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 ![]() 84 Standard Chartered – Annual Report 2021 Strategic report Underlying versusstatutoryresults Earnings per ordinary share (EPS) 2021 Underlying $ millon Regulatory Fine $ millon Restructuring $ millon Profit from jont venture $ millon Gains arisngon repurchase of senior and subordinated liablites $ millon Net gain on saleof businesses $ millon Goodwill imparment $ millon Taxon normalised items $ millon Statutory $ millon Profit for the year attributable to ordinary shareholders 2,367 (62) (507) –– 20 – 87 1,905 Basic – Weighted average number of shares(millons) 3,1083,108 Basic earnings per ordinary share (cents) 76.2 61.3 2020 Underlying $ millon Regulatory Fine $ millon Restructuring $ millon Profit from jont venture $ millon Gains arisng on repurchaseof senior and subordinated liablites $ millon Net loss on saleof businesses $ millon Goodwill imparment $ millon Taxon normalised items $ millon Statutory $ millon Profit for the year attributable to ordinary shareholders 1,141 14 (382) –– (38) (489) 83 329 Basic – Weighted average number of shares(millons) 3,1603,160 Basic earnings per ordinary share (cents) 36.1 10.4 ![]() 85 Standard Chartered – Annual Report 2021 Strategicreport 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. Measure Defintion Constant currency basis (CCY) A performance measure on a constant currency basis 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 forrestructuring and other items representing profitsor losses ofa capitalnature; 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/normalisedand statutory performance is contained in Note2 to the financal statements. The following balances and measuresare 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 oftotal operatingexpensesto 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 Statutoryinterest incomediv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 correspondingrate for operatingexpenses. 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 outstandingat the end of a reportingperiod. 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alMarkets 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 average ordinary shareholders’ equityfor 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 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. #### Alternative performance measures ![]() 86 Standard Chartered – Annual Report 2021 Strategic report Viablity statement The directors are required to issue a viablity statement regarding the Group, explainng their assessment of the prospects of the Group over an appropriate period of time and statewhether they have reasonable expectationthat the Group will be able to continue in operation and meet its liablites as they fall due. The directors are to also disclose the period of time for which theyhave made theassessmentand the reasonthey consider that period to be appropriate. In considerng the viablity 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. The viablity assessment has been made over a period of three years, which the directors consider appropriate as it is withn both the Group’s strategic planning horizon and, the basis upon which its regulatory capital stress tests are undertaken and is representative of the continuous level of regulatory change affectingthe financal services industry. The directors willcontinue to monitor andconsider the appropriateness of this period. The directors have reviewed the corporate plan, the output of the Group’s formalised process of budgeting and strategic planning. For the 2022 Corporate Plan, the forward-looking cash flows and balances continue to include the longer-term impact of COVID-19, specifcallywith regards to expected credit loss. The Corporate Plan further includes the anticpated impact of global interest rates on revenues. The corporate plan is evaluated and approved each year by the Board with confirmaton from the Group Chief Risk Officer that the Plan is aligned with the Enterprise Risk Management Framework and Group Risk Appetite Statement and considers the Group’s future projectons of profitablity, cash flows, capital requirements andresources, liqudityratios and other key financal and regulatory ratios over the period. The corporate plan details the Group’skey performance measures, of forecast profit, CET 1 capital ratio forecast, return on tangible equity forecasts, cost to income ratio forecasts and cash investment projectons. The Board has reviewed the ongoing performance management process of the Group by comparing the statutory results to the budgets and corporate plan. The Group performsenterprise-wide stress tests usinga range of bespoke hypothetical scenarios that explore the resilence of the Group to shocks to its balance sheet and business model. To assess the Group’s balance sheet vulnerabilties and capital and liqudity adequacy,severe butplausible macro-financal scenarios explore shocks that triggerone or more of: • Global slowdowns includng recessions in China, Asian and Western economies that can be acute or more protracted • Sharp falls in world tradevolumes and disrupton toglobal supply chains, includng the severe worsening of trade tensions and rise ofprotectionsm. • Material and persistent declines in commodity prices • Financal market volatilty, includng a sharp fall in asset prices driven by a drop in risk appetite amongst financal market particpants This year, the primary focus has continued to be on macro- financal stress related to the COVID-19 pandemic. Scenario analysis has explored the impact of new virus variants that lead to further restrictons and tighter financng conditons across theGroup’s footprint markets, particularly countries with lower rates of vaccinaton. The Group further performed the 2021 Climate Biennal Exploratory Scenario to explore key risks from climate change, being transiton risk of the economy moving away from carbon and the physical risks of higher global temperatures. For the Group this Focussed on credit risk in the loans and advances portfolio to corporate and insttutional clients as well as personal customers over a thirty year time horizon. Under this range of scenarios, the results of these stress tests demonstrate that the Group has sufficent capital and liqudity to continue asa going concern andmeet regulatory minmum capital and liqudity requirements. To assess the Group’s business model vulnerabilties, extreme and unlikely scenarios are explored that, by design, result in the Group’s business model no longer being viable these scenarios have included for the Group extreme geopolitcal tensions disruptng capital flows withn the Group’s footprint and cyber security attacks. Insights from these reverse stress tests can inform strategy, risk management and capital and liqudity planning. The directors further considered 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. Funding and liqudity was considered in the context of the risk appetite metrics, includng the ADR and LCR ratios. Further informaton on stress testing is provided in the Risk managementapproach section (pages 260 and 261). #### Viablity statement ![]() 87 Standard Chartered – Annual Report 2021 Strategicreport The Board Risk Committee (“BRC”) exercises oversight on behalf of the Board of the key risks of the Group and makes recommendations to the Board on the Group’s Risk Appetite Statement. These risks include, amongst others;credit, traded, treasury, operational and technology, reputational and sustainablity, compliance, informaton and cyber security financal crime and model risks. The BRC further exercises oversight over the integrated risks of climate, digtal asset and third party which cut across all princpal risks. The BRC receives regular reports that inform it of the Group’s key risks, as well as updateson the macroeconomic environment, geo-politcaloutlook, market developments, and regulatory updates on relevant matters. In 2021, the BRC had deeper discusson on: Blue Sky Thinkng/ Horizon Scanning, the Chinese banking sector and the Group’s risk managementapproach,Hong KongOperational Stabilty Issues, Korea Deep Dive includng the Mortgage Portfolio, CCIB Risk Deep Dive, CPBB Risk Review, CPBB Fraud Risk Deep Dive, Interest Rate Risk Deep Dive, Operational Resilence, Approach to Crypto Assets Management, Third Party Risk Management with a focus on ICS Risks, Management, Control and Governance of SC PLC, Resolvabilty, CBES Stress Test, IBOR Transiton, Safety and Security Risk, UAE Risk Review and a Structural Foreign Exchange Risk Deep Dive. Based on the informaton received, the directors’ considered the princpal uncertaintes as well as the princpal risks in their assessment of the Group’ viablity, how these impact the risk profile, performance and viablity of the Group and any specifc mitgating or remedial actions necessary. For further details of informaton relevant to the directors, assessment can be found in the following sections of the annual report and accounts: • The Group’s Business model (pages 18 to 21) and Strategy (pages 22 and 23) • The Group’s current positon andprospects includng factors likely to affect future results and development, together with a descripton of financal and funding positons are described in the client segment reviews and regional reviews (pages 26 to 30) • An update on the key risk themes of the Group is discussed in the Group Chief Risk Officer’s review, found in the Strategic Report (pages 32 to 40) • The BRC section of the Director’s report (pages 123 to 129) • The Group’s Emerging Risks, sets out the key external factors that could impact the Group in the coming year (pages 280 to 287). • The Group’s Enterprise Risk Management Framework details how the Group identfies, manages and governs risk (pages 259 to 263) • The Group’s Risk profileprovides an analysisof our risk exposures across all major risk types (page 264 to 287) • The capitalpositon of the Group,regulatory development and the approach to management and allocation of capital are set out in the Capital review (pages 288 to 293) Having considered all the factors outlined above, the directors confirm that they have a reasonable expectation that the Group will be able to continue in operation and meet its liablites as they fall due over the period of the assessment up to 31 December 2024. Our Strategic report from pages 1 to 87 has been reviewed and approved by the Board. Bill Winters Group Chief Executive 17 February 2022 ![]() ª Supporting ## our colleagues throughthe ## menopause º We partnered with the Financal Services Skills Commisson in the UK to understand how the menopause impacts women in the financal services industry and how employers can provide better support. More than 100 organisatons particpated in the UK research project which revealed that a lack of dialogue and support for menopausal employees negatively impacts the female leadership pipelne. In response, we launched a menopause guide for our employees as well as dedicated resources through our mental health app, online learning platform and employee assistance provider. Read more online at www.sc.com/menopause 88 Standard Chartered – Annual Report 2021 #### Directors’ report 90Group Chairman’s governance overview 91Board of Directors 95Management Team 98Corporate governance 141Directors’ remuneration report 181Other disclosures 191Statement of directors’ responsiblites ![]() Directors’ report 89 Standard Chartered – Annual Report 2021 ![]() 90 Standard Chartered – Annual Report 2021 Directors’ report Group Chairman’s governance overview #### Group Chairman’s #### governance overview #### “ The Board remained resolute on #### deliverng our strategic objectves #### through a culture that promotes #### transparency, good conduct #### and trust” Dr JoséViñals Group Chairman foundation for exponential growth and to drivng positve change in some of theworld’s fastest-growingeconomies. New business models create shareholder value and provide a best-in-class experience for our clients. Alongside this, the Board continued to review, challenge and advise management on the Group’s technology and innovaton strategymore broadly. The 2021 Boardand committees’effectivenessreview wasconducted internally, faciltated by the Group Company Secretary, and in accordance with the UK Corporate Governance Code. The results were insghtful and were reviewed with the Governance and Nominaton Committeeahead of Board discusson.Key findngs, recommendations and an Action Plan for 2022 were then presented and approved. Further detail is given on page 108. The Board and its committees invested time in reviewng and approving the Group’s Resolvabilty Assessment Report ahead of submisson to the Bank of England in October 2021, with Resolvabilty remainng a focus area throughout 2022. Further detail can be found in the key areas of Board discusson section of this report on page 99 and in the Board Risk Committee report starting on page 123. Stakeholderengagement is vitalto Board discussonand decison-making. In additon to our net zero pathway being proposed to shareholders at the 2022 AGM, we are also requesting approval of our newdirectors’ remunerationpolicy. Following consultationwith major shareholders, the Remuneration Committee reviewedthe existng policy, concluding it remains appropriate to support the delivery of our strategy, with no signficant change proposed to the overall structure or quantum of the current executive directors’ remuneration. Further detail can be found in the Remuneration Committee report on pages 160 to 166. During the year, we held our first ever AGM offering virtual particpation, where our shareholders were able to vote on resolutions and engage with the Board. I also hosted a virtual stewardship event in November 2021 alongside severalBoard colleagues, allowingus to update insttutionalinvestors and shareholder representative bodies on key areas of focus for the Board as well as respond to their questions. Overall, despite being unable to meet in our key markets this year, the Board has remained actively involved by virtually attending subsidary board, committee and management meetings, and through employeeand other stakeholderengagement sessions. Good progress was made to enhance and maintan effective subsidary linkages through eventssuchas our subsidarychair meetings, as well as via formal reporting mechanisms. In additon to this, we continued to strengthen the Group’s corporate structure through the creation of ourconsolidated ASEANhub under Standard Chartered Bank (Singapore) Limted. Further detail on the Board’s engagement with stakeholderscan be found onpages 110 to115. We continued to make good progress with succession planning and evolution of the Board and its committees. Maria Ramos joned the Board, Audit Committee and Board Risk Committee in January 2021, and was appointed as a member of the Remuneration Committee in July 2021. Diversty remains key in succession planning, especially considerng our business, network and footprint. While our female and ethnicallydiverse representation on the Boarddroppedfollowing Dr Ngozi Okonjo-Iweala’s departure last year, we remain committed to achievng our target of at least 33 per cent female and our ambiton of 30 per cent from an ethnic minorty background. Further detail on both Board changes and diversty can be found in the Governance and NominatonCommitteereport starting on page 133. Amanda Mellor left the Group on 23 December 2021 after nearly three years as our Group Company Secretary, and her contributonshave beengreatly appreciated,particularlyin navigatngcomplex governance arrangements throughout the pandemic’s evolution. Scott Corrigan, GlobalHeadof Disputes and Government Investigatons, hasbeen appointed asInterimGroup Company Secretary until a permanent successor is confirmed. 2021, as with 2020, has been an exceptional year. The Board remains cautiously optimstic for the future and is committed to our strategy, our purpose, and is laser focused on improvng returns. Dr JoséViñals Group Chairman 2021 has seen a mixed picture in terms of recovery from the pandemic acrossour markets. The Boardcontinued to monitor the impact of COVID-19, alongside geopolitcal andinternatonal developments, and sustained the 2020 approachto meeting more often, given restrictons on travel and usual meeting patterns. This ensured that effective Board oversight and strong corporate governance were maintaned. It was clear to the Board how important continued discusson, review and approval of our Corporate Plan and strategic priorties were,especially inlightof an ever-evolving landscape. Our oversight focused on drivng profitablity while continung to strengthen resilence, setting targets thatbalanced business opportunites against risks andcontrols. The Board remained resolute on deliverng our strategic objectves through a culture that promotestransparency, good conduct andtrust. The importance ofresilencein deliverng these objectves cannot be underestimated, with the Board focused onfurther strengthening our risk and control culture with the help of the Board Risk, Board Financal Crime Risk and Audit committees. The Board also spent signficant time during the year discussng the Group’s sustainablity approach. We recognise that climate change isoneof the greatest challengesfacing the world today and appreciate the complex trade-offs which comewith climate action, meaning there are no simple answers. The Group’s net zero pathway announced in the year was reviewed and approved at Board level, andconsequently theGrouphas mobilsedresources dilgently to support these commitments. We plan to put the pathway to an advisory vote at Standard Chartered PLC’s 2022 Annual General Meeting (AGM) in recogniton of how important this is toour shareholders and other stakeholders. Inadditon, the Brand, Values and Conduct Committee (BVCC) was renamed the Culture and Sustainablity Committee (CSC) following a refocus of its remit. Greater weight hasbeen given toenvironmental, social and governance matters, and areas of duplicaton have been addressed. The CSC has been actively involved in supporting the Board and the business in relation to our net zero proposals. Further detail can be found in the Strategic report on pages 61 to 77 and the CSC report on pages 130 to 132 respectively. The Board hascontinued to drive thetransformational agenda. As the Group’s Innovation and Digtisaton event made clear, digtaltransformation is fundamental to establishng a solid ![]() 91 StandardChartered – Annual Report 2021 Directors’ report #### Board of Directors Committee Chair shown in green Audit Committee Board RiskCommittee Culture and Sustainablity Committee Governance andNominaton Committee Board Financal Crime Risk Committee Remuneration Committee A Ri S N C R Committee key Dr José Viñals (67) Group Chairman Appointed October 2016 and Group Chairman in December 2016. José was appointed to the Court of Standard Chartered Bank in April 2019. Experience José has substantive experience in the internatonalregulatory arenaand has exceptional understandingof the economic, financal andpolitcal dynamics of our markets and of global trade, and a deep and broad network of decison-makers in the jursdictons in our footprint. Career José began his career as an economist andasa member of the faculty at Stanford Universty,before spending 25 years at the Central Bank of Spain, where he rose to be the Deputy Governor. José has held many other board and advisory positons, includng Chair of Spain’s Deposit Guarantee Fund, Chair ofthe International Relations Committeeat the European Central Bank, member of the Economic and Financal Committee of the European Union, and Chair of the Working Group on Institutonal Investors at the Bank for International Settlements. José joned the InternationalMonetary Fund (IMF) in 2009 and stepped down in September 2016 to jon Standard Chartered PLC. While at the IMF, he was the Financal Counsellor and the Director of the Monetary and Capital Markets Department,and was responsible for the oversight and directon of the IMF’s monetary and financal sector work. He was the IMF’s chief spokesman on financal matters, includng global financal stabilty. During his tenure at the IMF, José was a member of the Plenary and Steering Committee of the Financal Stabilty Board, playing a key role in the reform of internatonalfinancal regulation. External appointments José is Co-Chair of the United Nation’s Alliance of Global Investors forSustainableDevelopment (GISD) and a board member of the Institute of International Finance (IIF). He is also a member of the board of directors of the Bretton Woods Committee, amemberof the Advisory Council of CityUK and a board member of the Social Progress Initative. Committees N Bill Winters (60) Group Chief Executive Appointed June 2015. Bill was also appointed to the Court of Standard Chartered Bank in June 2015. Experience Bill is a career banker with signficant frontline global banking experience and a proven track record of leadership andfinancalsuccess. He has extensiveexperience of working in emerging markets and a proven record in spotting and nurturing talent. Career Bill began his career with JP Morgan, where he went on to become one of its top five most senior executives and later co-chief executive officer at the investment bank from 2004 until he stepped down in 2009. Bill was invted to be a committee member of the Independent Commissonon Banking, established in2010, torecommend ways to improve competiton and financal stabilty in banking. Subsequently, he served as an adviser to the Parliamentary Commisson on Banking Standards and was asked by the Court of the Bankof England to completean independent review of the bank’s liqudity operations. In 2011, Bill founded Renshaw Bay, an alternativeasset managementfirm, where he was chairman and CEO. He stepped down on appointment to the Standard Chartered PLC Board. Bill was previously a non-executive director of PensionInsurance Corporation plc and RIT Capital Partners plc. He received a CBE in 2013. External appointments Bill is an independent non-executive director of Novartis International AG. Bill recently chaired the Taskforce on Scaling Voluntary CarbonMarkets. Andy Halford (62) Group Chief Financal Officer Appointed July 2014. Andy was also appointed to the Court of Standard Chartered Bank in July 2014. Andy has astrong financebackgroundand deep experience ofmanaging complex internatonal businessesacross dynamic and changing markets. Career Andy was finance director at East Midlands Electricty plc prior to joning Vodafone in 1999 as financal director for Vodafone Limted, the UK operating company. Andy was later appointed financal director forVodafone’sNorthern Europe, Middle East and Africa region, and later the chief financal officer of Verizon Wireless in the US. He was a member of the board of representatives of the VerizonWireless Partnership. Andy was appointed chief financal officer of Vodafone Group plc in 2005, a positon he held for nine years. As Group Chief Financal Officer at StandardChartered, Andy isresponsible for Finance, Corporate Treasury, Strategy, Group Corporate Development, Group Investor Relations, Property and Supply Chain Management functions. External appointments Andy is Senior Independent Directorand Chair ofthe Audit Committee at Marks and Spencer Group plc. He is also a trustee of the StandardChartered Foundation. Bill Winters leads the Management Team Andy Halford also sits on the Management Team ![]() 92 Standard Chartered – Annual Report 2021 Directors’ report Board ofDirectors Naguib Kheraj (57) Deputy Chairman Appointed January 2014and Deputy Chairman in December 2016. Naguib was appointed to the Court of Standard Chartered Bank in April 2019. Experience Naguib has signficant banking and finance experience. Career Naguib began hiscareer at Salomon Brothers in 1986 and went on to hold senior positons at Robert Fleming,Barclays, JP Morgan Cazenove and Lazard. Over the course of 12 years at Barclays, Naguib served as group finance director and vice-chairman and in various business leadership positons in wealth management,insttutional asset management and investment banking. Naguib was also a Barclays’ nominated non-executivedirector of ABSAGroup in South Africa and of First Caribbean International Bank. He also served as chief executive officer of JP Morgan Cazenove. Naguib isa former non-executivedirector of NHS England and served as a senior adviser to Her Majesty’s Revenue and Customs and to the Financal Services Authority in the UK. He also served as a member of the investmentcommitteeof the Wellcome Trust and the Finance Committee of the Oxford Universty Press. External appointments Naguib is Chairman of Rothesay Life, a specialst pensions insurer and a member of the Finance Committee of theUniversty of Cambridge. He is also Chairman of Petershill Partners plc and anindependent board member of Gavi, The VaccineAlliance. Naguib spends a substantial amount of his time as a senior adviser to the Aga Khan Development Network and serves on the boards of various entites withn its network. Committees Ri C N Gay Huey Evans, CBE (67) Independent Non-Executive Director Appointed April 2015. Gay was appointed to the Court of Standard Chartered Bank in April 2019. Experience Gay has extensive banking and financal services experience with signficant commercialand UK regulatoryand governance experience. Career Gay spent over 30 years working withnthe financal services industry, the internatonal capital markets and with the financalregulator.Gay spentseven years with the Financal Services Authority from 1998 to 2005, where she was director of markets divsion, capital markets sector leader, with responsiblity for establishng a market-facing divsion for thesupervison of market infrastructure, oversightof market conduct anddeveloping markets policy. From2005 to 2008, Gay helda number of roles at Citbank, includng head of governance,Cit Alternative Investments, EMEA, before joning Barclays Capital where she was vice chair of investment banking and investmentmanagement. She waspreviously a non-executive director at Aviva plc, the London StockExchangeGroupplc and Itau BBA International Plc. In 2016, she received an OBE for services to financal services and diversty and a CBE for services to the economy and philanthropy in the Queen’s Birthday Honours list 2021. External appointments Gay is Chair of the London MetalExchange, a non-executive director of ConocoPhillps and IHS Markit, and a non-executive member of the HM Treasury board. Gay also sits on the panel of senior advisers at Chatham House and the board of the Benjamn Franklin House. Committees C Ri Christne Hodgson, CBE (57) Senior Independent Director Appointed September 2013and Senior Independent Director inFebruary 2018. Experience Christne has strong business leadership, finance, accounting and technology experience. Career Christne held anumber of senior positons at Coopers & Lybrand and was corporate development director of Ronson plc before joning Capgemin in 1997, where she held a variety of roles includng chief financal officer for Capgemin UK plc and chief executive officer of technology services for North West Europe.Christne stepped down as chair for Capgemin UK plc in March 2020. Christne was previously a trustee of MacIntyreCare, a non-executivedirector of Ladbrokes Coral Group plc, and stepped down from the board of The Prince of Wales’ Business in the Community on 9 February 2021. External appointments Christne is chair of Severn Trent Plc and TheCareers &Enterprise Company Ltd,a government-backed companyestablished to help inspre and prepare young people forthe world ofwork. She is also Senior Pro Chancellor and Chair of Council of Loughborough Universty and External Board Advisor to Spencer Stuart Management Consultants NV.Christne received a CBE for services to education in the Queen’s New Year Honours 2020. Committees R A C S N Phil Rivett (66) Independent Non-Executive Director Appointed May 2020. Phil was also appointed to the Court of Standard Chartered Bank in May 2020. Experience Phil has signficant professional accountancy and audit experience, specifcally focused in the financal services sector. He has a strong technical understandingand broadfinancaland business experience. Career PhiljonedPricewaterhouseCoopers (PwC) as a graduate trainee accountant in 1976, becoming a Partner in 1986. He spent more than 30 years as a Partner at PwC and was leadrelationshpPartner forseveral large FTSE 100 companies includng a number of internatonal banks and financal services insttutions. He alsohassubstantial internatonal experience, having worked with banks across the Middle East and Asia, in particularChina. He became Leader of PwC’s Financal Services Assurance practice in 2007 and was appointed Chairman of its Global Financal Services Group in 2011. Phil has sat on a number of global financal servicesindustry groups, producingguidelnes for best practice in governance, financal reporting and risk management. External appointments Phil is an independent non-executive director and Chair of the Audit Committee at Nationwde Buildng Society, the world’s largest buildng society. Committees A Ri N ![]() 93 Standard Chartered – Annual Report 2021 Directors’ report David Conner (73) Independent Non-Executive Director Appointed January 2016. David was appointed to the Court of Standard Chartered Bank in April 2019. Experience David has signficant global and corporate, investment and retail banking experience, strong risk management credentials andan in-depth knowledge of Asian markets. Career David spent his career in the financal servicesindustry, livng andworking across Asia for 37 years, for both Citbank and OCBC Bank. He joned Citbank in 1976 as a management trainee and went on to hold a number of Asia-based senior management roles, includng chief executive officer of Citbank India and managing directorand marketing manager at Citbank Japan, before leaving Citbank in 2002. David joned OCBC Bank in Singapore as chief executive officer and director in 2002. He implemented a strategy of growth and led the bank through a period of signficant turbulence. David stepped downas chiefexecutive officer in 2012 but remained as a non- executive director on the board of OCBC Bank, before leaving the group in 2014. He was previously a non-executive director of GasLog Ltd. External appointments David is a trustee of Washington Universty in St Louis where he also serves as chair of the Medical Affairs Committee. Committees A Ri S C David is also a member of the Combined USOperationsRisk Committee ofStandard Chartered Bank. Dr Byron Grote (73) Independent Non-Executive Director Appointed July 2014. Experience Byron has broad and deep commercial, financal and internatonal experience. Career From 1988 to 2000, Byron worked across BP in a variety of commercial, operational and executive roles. He was appointed as chief executive of BP Chemicals and a managing director of BP plc in 2000 and had regionalgroup-level accountabilty for BP’s activties in Asia from 2001 to 2006. Byron was chief financal officer of BP plc from 2002 until 2011, subsequently serving as BP’s executive vice president, corporate business activties, from 2012 to 2013, with responsiblity for the group’s integrated supply andtrading activties,alternative energy, shippng and technology. Byron was a non-executive director at Unilever plc and Unilever NV before stepping down in 2015. External appointments Byron is Senior Independent Director atAngloAmericanplc and Tesco PLC and is Deputy Chairman of the supervisory board at Akzo Nobel NV. He is also a member of the European Audit Committee Leadership Network. Committees A R Jasmine Whitbread (58) Independent Non-Executive Director Appointed April 2015. Jasmine was appointed to the Court of Standard Chartered Bank in April 2019. Experience Jasmine has signficantbusiness leadership experience as well as first-hand experience of operating across our markets. Career Jasmine began her career in internatonal marketing in the technology sector andjoned ThomsonFinancal in 1994, becoming managing directorof the Electronic Settlements Group. After completing the Stanford Executive Program, Jasmine set up one of Oxfam’s first regional offices, managing nine country operations in West Africa, later becoming internatonal director responsiblefor Oxfam’s programmes worldwide. Jasminejoned Save the Children in 2005, whereshe was responsible for revitalsing one ofthe UK’s most established charites. In 2010, she was appointed as Save the Children’s first internatonal chief executive officer, a positon she held until she stepped down in2015. Jasmine stepped down as a non-executive director from the Board of BT Group plc in December 2019 and as chief executive of London First in March 2021, a business campaignng group with a misson to make London the best city in the world todo business. External appointments Jasmine became Chair of Travis Perkins plc in March 2021 and is a non-executive director of WPP plc and Compagnie FinancèreRichemont SA. Committees S R N Maria Ramos (63) Independent Non-Executive Director Appointed January 2021. Maria was also appointed to the Court of Standard Chartered Bank in January2021. Experience Maria has extensive CEO, banking, commercial, financal, policy and internatonal experience. Career Based in SouthAfrica, Mariaserved as chief executive officer of ABSA Group Limted (previously Barclays Africa Group), a diversfied financal services group serving 12 African markets, from 2009 to 2019. Before joning ABSA, Maria was the group chief executive of Transnet Ltd, the state- owned freight transport and logistcs service provider, for five years. Prior to her CEO career, Maria served for seven years as director-general ofSouth Africa’s National Treasury(formerly the Department of Finance) where she played a key role in transforming the NationalTreasury into one of the most effective and efficent state departmentsin the post-apartheid adminstration. Maria has served on a number of internatonal boards, includng Sanlam Ltd, Remgro Ltd, and SABMiller plc and more recently was a non-executive director of The Saudi Britsh Bank and Public InvestmentCorporation Limted before stepping down in December 2020. External appointments Maria is Chair of AngloGold Ashanti Limted and a non- executive director of Compagnie Financère Richemont SA. She is also a member of the Group of Thirty and sits on the International Advisory Board of the Blavatnik School of Government atOxford Universty. Committees A Ri R ![]() 94 Standard Chartered – Annual Report 2021 Directors’ report Board ofDirectors David Tang (67) Independent Non-Executive Director Appointed June 2019. David was also appointed to the Court of Standard Chartered Bank in June 2019. Experience David has deep understanding and experience of emerging technologies in the context of some of our key markets, most notably mainland China. Career David has more than 30 years of internatonal and Chinese operational experience in the technology andventure capital industres, covering venture investments,sales, marketing,business development, research anddevelopment, and manufacturing. From 1989to 2004, David held anumber of seniorpositons in Apple, Digtal Equipment Corp and 3Com based in China and across the Asia Pacifc region. From 2004 to 2010, David held various positons inNokia,includng corporate senior vice president, chairman of Nokia Telecommunicatons Ltd andvice chairman of Nokia (China) Investment Co. Ltd. He went on to becomecorporatesenior vice president, regional president of Advanced Micro Devices (AMD), Greater China, before joning NGP Capital (Nokia Growth Partners) as Managing Director and Partner in 2013. External appointments DavidjonedKaiyun Motors, an electric vehicle start-up based in China, in June 2021 as Chief Value Officer. David is also a non-executive director of JOYY Inc., the Chinese live streaming social media platform listedon the Nasdaq Stock Market, andKingsoft Corporation, a leading Chinese software and internet services company listed on the Hong Kong Stock Exchange. Committees Ri S Carlson Tong (67) Independent Non-Executive Director Appointed February 2019. Carlson was appointed to the Court of Standard Chartered Bank in April 2019. Experience Carlson has a deep understanding and knowledgeof operating in mainland China and Hong Kong and has signficant experience of the financal services sectorin those markets. Career Carlson joned KPMG UK in 1979, becoming an Audit Partner of the Hong Kong firm in 1989. He was elected Chairman of KPMG China and Hong Kong in 2007, before becoming Asia Pacifc chairman and a member of the global board and global executive team in 2009. He spent over 30 years at KPMG and was actively involved in the work of the securites and futures markets, serving as a member of the Main Board and Growth Enterprise MarketListng Committee of theStock Exchange of Hong Kong from 2002 to 2008 (Chair from 2006 to 2008). After retirng from KPMG in 2011, he was appointed a non-executive director of the Securites and Futures Commisson, becoming its Chair in 2012 until he stepped down in October 2018. He oversaw a number of major policy intiatves during his term as the chair includng the introducton of the HongKong and Shanghai/Shenzhen Stock connect schemes and the mutual recogniton of funds between the mainland andHong Kong.Carlson was appointed as a non-executive director of the Hong Kong InternationalAirportAuthorityin 2017, a positon he held until he stepped down in July 2020. External appointments Carlson sits on various Hong Kong SAR government bodies, includng as chair of the Universty Grants Committee and a member of the Hong Kong Human Resource Planning Commisson. Carlson is also an observer on behalf of the Hong Kong Government for Cathay Pacifc Airways Ltd. Committees A Ri C Scott Corrigan (55) Interim Group Company Secretary Appointed Scott was appointed Interim Group Company Secretary in December 2021. Experience Scott jonedStandard Chartered in 2014 and he is currently Global Head of Disputes & Government Investigatons, Legal. He previously served as an Enforcement Counsel for the Federal Reserve Bank of New York and as an Assistant Distrct Attorney at the NewYork Country Distrct Attorney’s Office. After leaving government service, Scott represented banks, other financal insttutions and financal services executives in governmentinvestgationsand civl litgation. He also served in a variety of managerial roles as a law firm partner. Dr Ngozi Okonjo-Iweala was appointed as Director-General of the World Trade Organizaton on 1 March 2021 and stepped down from the Board on 28 February 2021. Amanda Mellor stepped down as Group Company Secretary on 23 December 2021. Contributons of howeach director standing for re-election is, andcontinues to be, importantto Standard Chartered PLC’slong-term sustainable success will be included in the Notice of AGM 2022. ![]() 95 Standard Chartered – Annual Report 2021 Directors’ report #### Management Team Bill Winters (60) Group Chief Executive Andy Halford (62) Group Chief Financal Officer Simon Cooper (54) CEO, Corporate, Commercial & Institutonal Banking and Europe & Americas Simon joned the Group as CEO, Corporate & Institutonal Banking in April 2016. He assumed additonalresponsiblity for CommercialBanking in March 2018 andthe Europe & Americas region in January 2021. Career Simon was previouslygroup managing director andchief executive of Global Commercial Banking at HSBC. He has extensive experience across our markets and client segments. Simon joned HSBC in 1989 and held a number of senior roles there, includngdeputy chairman and chief executive officer, Middle East and North Africa; chief executive officer, Korea; and head of Corporate and Investment Banking, Singapore.He has signficant experience in the areas of corporate finance, corporate banking and transaction banking. External appointments Simon is a member of the advisory board of the Lee Kong China School of Business and a trustee of the StandardChartered Foundation. Judy Hsu(58) CEO, Consumer, Private & Business Banking Judy was appointed Regional CEO, Consumer, Private & Business Banking on 1January 2021 and has been a member of the Group Management Team since 2018. Career Prior to hermost recent appointment, Judy was Regional CEO, ASEAN & South Asia, a positon she held from June 2018. Judy was the country CEO for Standard Chartered Singapore from 2015 to 2018. She joned Standard Chartered in December 2009 as the Global Head of Wealth Management and led the strategic advancement of the Bank’s wealth management business. Prior to this, Judy spent 18 years at Citbank, where she heldvarious leadership roles inits Consumer Banking business in Asia. External appointments Judy is serving as a board member of theUrban Redevelopment Authority Singapore as well as Workforce Singapore. She was appointed to the board of CapitaLand Investment Limted as an Independent Directorin June 2021. Claire Dixon (49) Group Head of Corporate Affairs, Brand & Marketing Claire joned Standard Chartered as Group Head of Corporate Affairs, Brand & Marketing in March 2021. Career Claire is a seasoned communicatons expert who has led teams at global brands in a variety of sectors, in Europe and the US. She spent nearly eight years livng and working in Silcon Valley, includng for eBay/PayPal and most recently as Chief Communicatons Officer at Intel. Throughout her career she has been a champion for creating positve global impact, includngleading Global Corporate Responsiblity atGlaxoSmithKlne. External appointments Claire is a trustee of the Standard CharteredFoundation. ![]() 96 Standard Chartered – Annual Report 2021 Directors’ report Management Team Sunil Kaushal (56) CEO, Africa & MiddleEast Sunil was appointed CEO, Africa & Middle East on 1 October 2015. Career Prior to his current role, Sunil was regional CEO South Asia, responsible for Standard Chartered’s operations in South Asia (which includedIndia, Bangladesh, Sri Lanka, and Nepal). He has over 33 years of banking experience in diverse markets and has been with Standard Chartered for over 23 years, holding senior roles across the Wholesale and Consumer Bank. Sunil has rich experience across the Group’s footprint, having served as the Head of Corporate Banking in UAE, Head of Orignations and Client Coverage in Singapore, Global Head Small and Medium Enterprises (SME) and New Ventures in Singapore and Chief Executive Officer of Standard Chartered Bank (Taiwan) Ltd. Before joning Standard Chartered in 1998, Sunil held various banking positons at a number of leadinginternatonal financal insttutions. External appointments Sunil is a Global Advisory Board member of MoneyTap, a leading Indian Fintech company. Tanuj Kapilashram (44) Group Head, Human Resources Tanuj joned the Management Team as Group Head, Human Resources (HR) in November 2018. She joned the Bank in March 2017 as Group Head, Talent, Learning and Culture andtookon additonal responsiblity as Global Head HR, Corporate,Commercial and Institutonal Banking in May 2018. Career Prior to joning the Group, Tanuj built her career at HSBC. She has worked across multiple HR discplines in many of our footprint markets (Hong Kong, Singapore,Dubai, India and London). External appointments Tanuj is a non-executivedirector of Sainsbury’s PLC and a member of their Nominaton and Remunerationcommittees.Sheis a member of the Asia House board of trustees, of which Standard Chartered is a founding stakeholder. Asia House isa London-based centre of expertise on trade, investment and public policy whose misson it is to drive politcal, economic and commercial engagement betweenAsia and Europe. Tanuj is also a board member of the UK Financal Services Skills Commisson. Benjamn Hung (57) CEO, Asia Ben was appointed CEO, Asia on 1 January 2021. Career Ben joned Standard Chartered in 1992 and has held a number of senior management positons spanning corporate and retail banking. Prior to his current role, Ben was Regional CEO for Greater China & North Asia and CEO for the Bank’s Retail Bankingand Wealth Management businesses globally. He is currently based in Hong Kong and hasinternatonal banking experience in the United Kingdom and in Canada. Ben was previously chairman of the Hong Kong Associaton of Banks, a member of the Financal Services Development Counciland a board member of theHong KongAirport Authority andthe Hong Kong HospitalAuthority. Hewas also a Council Member of the Hong Kong Universty. External appointments Ben is an independent non-executive director of the Hong Kong Exchanges andClearing Limted and a member of the Hong Kong Chief Executive’s Council of Advisers on Innovation and Strategic Development. He also sits on the Exchange Fund Advisory Committee and is a member of the General Committee of the Hong Kong General Chamber of Commerce. He is a strategic advisor at the International Consultative Conference on the FutureEconomic Developmentof Guangdong Province, China. Roel Louwhoff(56) Chief Digtal, Technology & Innovation Officer Roel joned the Group as Chief Digtal, Technology & InnovationOfficer in November 2021 and is responsible for leadingthe digtal transformation of theGroupinto anagile, digtal and future-focused organisaton. He spearheads the Group’stechnology strategy; the developmentofits technology systems and infrastructure, which support its customers and employeesglobally; and leads its innovaton. Roel’sexpanded role as Chief Technology, Operations and Transformation Officercommences on 1 April 2022. Career Prior to joning Standard Chartered, Roel was Chief Operations and Transformation Officer at ING Bank, where he oversaw operations, technology and the broader transformation agenda. During his seven years in this role, Roel led the successful digtaltransformationof ING, seen by many as a trailblazer in digtisng financal services. Before ING, Roel spent ten years at Britsh Telecom (“BT”), latterly as CEO of BT-Operate based in the UK. At BT, he redefinedthe technologyand operational approach andled the BTcommunicaton side of the 2012 Olympics before applying that learning indeliverng turn-key digtal and infrastructure solutions formajor exhibtion and sporting events. External appointments None. ![]() 97 Standard Chartered – Annual Report 2021 Directors’ report Dr Michael Gorriz, previously Group Chief Information Officer, and David Fein, previously Group General Counsel, retired from the Group on 31December 2021. It was announced on 13 January 2022 that Dr Sandie Okoro would jon the Group as Group General Counsel in early April2022. David Whiteng (53) Group Chief Operating Officer Mary Huen (54) CEO, Hong Kong and Cluster CEO, Hong Kong, Taiwan and Macau David joned Standard Chartered as Group Chief Operating Officerin September 2018 and will step down from the Group in March 2022. Career David jonedStandard Chartered from the Commonwealth Bank of Australia where he was the Group Chief Information Officer, responsible for all of the technology and operations teams of the Group and for deliverng the Group’s strategic pillar of ‘world leadingapplicaton ofoperations and technology.’ He is a highly experienced executive with a track record of deliverng cultural transformation in Australia and overseas. Prior to joning the CBA Group in 2013, David was Vice President of Enterprise Systems at BP in the UK. He is a former Accenture technology andoperations partner withextensive transformation experience. External appointments David is an independent directorof SilconQuantum Computing Ltd and a director of Zetaris Ltd. Mary was appointed Chief ExecutiveOfficer (CEO) for Hong Kong in March 2017, and took on an expanded role as Cluster CEO for Hong Kong, Taiwan and Macau in January 2021. She joned the Group’s Management Team in December 2021. Career Mary has over 30 years of experience in businessmanagement and banking services. Since joning the bank in 1991, she has held various key positons across balance sheet product management, wealth management anddistrbution. Priorto her current role, Mary was Regional Head of Retail Banking, Greater China & North Asia, and theHead of Retail Banking, HongKong. External appointments Mary is the chairperson of the Hong Kong Associaton of Banks, a member of the Banking Advisory Committee of theHong Kong Monetary Authority, the Financal Infrastructure and Market DevelopmentSub-Committee and the Currency Board Sub-Committee under the Exchange Fund Advisory Committee. She is also a representative of Hong Kong, China to the Asia-Pacifc Economic Cooperation (APEC)Business Advisory Council,the chairperson of theHong Kong TradeDevelopment Council Financal Services Advisory Committee and the Asian Financal Forum Steering Committee, a board member of the Hong Kong Tourism Board andHospital Authority. Mary is not a Person Dischargng Managerial Responsiblites (“PDMR”) under theUK Market Abuse Regulation. Mark Smith (60) Group Chief Risk Officer Mark was appointed Group Chief Risk Officer in January 2016. Mark is responsible for Credit, Market,Operationaland Technology, Information and Cyber Security, Reputational and Sustainablity, Climate and Model Risk across the Group and ensuring the broader risk framework is effective. Mark is a member of the Court of Standard Chartered Bank. Career Before joning Standard Chartered, Mark was the chief risk officer Europe, Middle East and Africa and global head, Wholesale Creditand Traded Riskfor HSBC. He had a long and successful career at HSBC, having joned Midland Bank as a graduate trainee prior to its acquistion by HSBC. Other roles at HSBC included chief operating officer, Global Corporate & Institutonal Banking. He has worked in London and Hong Kong. External appointments Mark sits on the Foundation Board of the International Financal Risk Institute. Tracey McDermott, CBE (52) Group Head Conduct, Financal Crime and Compliance Tracey has been the Group Head Conduct, Financal Crime and Compliance since January 2019. She orignally jonedStandard Chartered as Group Head of Corporate, Public andRegulatory Affairs inMarch 2017, subsequently adding Brand and Marketing to her portfolio in December 2017 and Compliancein March 2018. Career Prior to joning the bank, Tracey served as Acting Chief Executive of the Financal ConductAuthority(FCA) from September 2015 to June 2016. She joned the thenFinancal Services Authority (FSA) in 2001 where she held a number of senior roles includng: Director ofSupervison and Authorisatons, and Director ofEnforcement and Financal Crime. Traceyalso served as a Board Member of the FSA from April 2013, as a member of the Financal Policy Committee of the Bank of England, and as non-executivedirector of thePrudential Regulation Authority from September 2015 to June 2016. Prior to joning the FCA, Tracey worked as a lawyer in private practice, having spent time in law firms in the UK, USA and Brussels. In 2016, Tracey received a CBE for her services to financal service consumers and markets. External appointments Traceychairs the Net Zero Banking Alliance, is a member of the International Regulatory Strategy Group Counciland chairsthe Conduct andEthics Committee of the Fixed Income, Currencies and Commodites Markets Standards Board. She is a trustee of the Standard Chartered Foundation. ![]() 98 Standard Chartered – Annual Report 2021 Directors’ report Corporate governance #### Corporate #### governance Key areas of Board discusson during 2021 The following pages offer an insght into key items covered by the Board during the year, as well as the structure of Board meetings andother activties. The Board commences each year reviewng its key priorties to help formulate its forward plan, which requires a balance between standing items, governance requirements, and areas of strategic, operational and tactical focus. Board meetings help structure Board activties and faciltate discusson and action. In additon, they provide an important forum for oversight and challenge of management in respect to aspects of the Group’s operations, performance and strategy. Some of the areas detailed on the following pages formed part of the standing agenda for each meeting, while others were reviewed periodcally throughout the year. Stakeholder consideraton and open interacton arecentral to the Board’s priorties, with the need to generate and promote positvestakeholder relationshpsof key importance. Signficant time is spent interactngwithkey stakeholders to better understand their views, as well as the opportunites, challenges and the Group’s impact across our diverse markets. In additon,the Boardregularlydiscusses the impacton stakeholders, their views and their feedback, whether in Board and committee meetings, or as part of other interactons across the Group. Some examples of this can be found in the section 172 of the Companies Act 2006 (s.172) disclosure on pages 50 to 77, withn spotlight items on the following pages and on pages 110 to 115. Directors are alert totheir statutory duties andobligatons, includng those outlined under s.172, and this forms an integral part of director inducton and annual trainng. The Board will continue to focus on considerng stakeholders as part of the Board’sdecison-making. Our stakeholders their interests:drivng commerce and prosperity through our uniquediversty The Board spends signficant time considerng and interactng with its key stakeholders to better understand their views and perspectives. A summary of stakeholder interests can be found in the Strategic report on the pages identfied below. Clients Read more on page 52 Regulators and governments Read more on page 53 Investors Read more on page 54 Suppliers Read more on page 54 Society Read more on page 55 Employees Read more on page 56 COVID-19continued response As was the case last year, the evolution of the pandemic continued to impactour colleagues, clients and communites during 2021. The Group operates across a diverse footprint, and the extent to which COVID-19 impacted each market varied. Despite the continued uncertainty, the Board maintaned its oversight of effective governance across the Group. Board meetings continued to be held in a virtual or hybrid form throughout the year as a result ofongoing travel restrictons impactng many oftheGroup’s geographies. While the Board was unable to meet in a number of key markets this year, it was actively involved in a virtual capacity. Further detail can be found later in this report. The Board continues to play a key role in steering the Group’s COVID-19 response, receivngregularupdates at scheduled Board meetings.The Board’s focusremained to protect stakeholder interests, includng our colleagues’ wellbeing, shareholder rights, customer and client needs, as well as support for our communites. In order to assist with this aim, the Board delegated specifc responsiblites to its committees and the Management Team during 2020, and this framework remained in place through 2021. Where necessary, expert opinons were sourced, both externally and from insde the Group, which also helped ensure effective decison-makingby the Board. Code compliance The UK Corporate Governance Code 2018 (the Code) and the Hong Kong Corporate Governance Code containedin Appendix 14 of the Hong Kong Listng Rules (HK Code) are the standards against which we measured ourselves in 2021. The directors are pleased to confirm that Standard Chartered PLC (the Company) continued to comply with the provisons set out in the Code and the HK Code for the year under review. Throughout this corporate governance report we have provided an insght into how governance operates withn the Group and how we have applied the princples set out in the Code and HK Code. The Group confirms that it has adopted a code of conduct regarding directors’ securitestransactions on termsno less exacting than required by Appendix 10 of the Hong Kong Listng Rules. Having made specifc enquiry of all directors, the Group confirms that all directors have complied with the required standards oftheadoptedcode of conduct. Copies of the UK Corporate Governance Code and the Hong Kong Corporate Governance Code can be found at frc.org.uk and hkex.com.hk respectively To the extent applicable, informaton required by paragraphs 13(2) (c), (d), (f), (h) and (i) of Schedule 7 of the Large and Medium-sized Companies andGroups(Accounts andReports) Regulations 2008 is available inOther disclosures on pages 181 to 190 ![]() 99 Standard Chartered – Annual Report 2021 Directors’ report • Reviewed and approved the 2022-2026 Corporate Plan as a basis for preparation of the 2022 budget, receivng confirmaton from the Group Chief Risk Officer that the plan is aligned to the Enterprise Risk Management Framework and the Group Risk Appetite Statement • Discussed progress made against the Group’s strategic priorties and critcal enablers • Reviewedthe Group’s Stands • Reviewed and scrutinsed the strategic and operational performance of the business across client segments, product groups and regions, which included details of their priorties, progress, opportunites and response to currentevents. This included deep dives into the follow areas: – China – HongKong – SME banking – Personal banking • Discussed, reviewed and approved the Group’s net zero pathway • Receivedand discussed regular corporatedevelopment updates • Reviewed and approved changes to certain property-related supplier relationshpsin line with the Group’s property strategy • Discussed andreviewed the Group’s technology and innovaton strategy • Received an update on the Group’s investment in China Bohai Bank • Discussed SC Ventures, strategic investments and partnershipsprocess Key areas of Board discusson during 2021 continued Spotlight #### The Group’s Stands The Group launcheda combinednarrative for the organisaton, bringng together what we stand for and alignng the strategy, priorties and actions to deliver on them. One of the key components of the narrative is the Stands. We have three Stands – Accelerating Zero, Liftng Particpation and Resetting Globalisaton. The Stands are not an add-on or separate from our strategy, but instead are executed through our strategy. During the year, the Board received feedback on colleagues’ reactions to the Stands, as well as providng its own reflections and views. In additon, the Board highlghted areas of caution to management associated with this intiatve. Further detail regarding the Stands can be found on pages 24 and 25. Stakeholders Risk management • Reviewed and discussed risk reports from the Group Chief Risk Officer • Received regular updates on the impact of COVID-19 • Engaged with thePrudentialRegulation Authority (PRA) on the findngs of their 2021 Periodc Summary Meeting Letter • Discussed and reviewed the Group’s risk culture • Approved the risk appetite validaton of the 2022 Corporate Plan • Approved the renewal of the Group’s insurance polices for 2021/2022 • Discussed many aspects of Resolvabilty, approved the Group’s Resolvabilty Assessment Report and undertook a signficant Board and management Resolvabilty scenario • Discussed and reviewed the Group’s Transformation and Remediaton Portfolio and Information and Cyber Security (ICS) Risk profile • Undertook blue sky thinkng/horizon scanningdiscussons, which considered the potential risks and opportunites that the Group might be or could become exposed to Clients Regulators and governments Investors Suppliers Society Employees Group strategy Spotlight #### Group Chief Risk Officer’s report The Group ChiefRisk Officer regularly presents reports at Board meetings. The content of the report covers themacroeconomic environment, geopolitcal outlook and key risk trends, with a particular focus on Risk Appetite, the impact from the pandemic and other market events on our portfolio, markets and operations, updateson Princpaland Integrated Risk Types, and key regulatory matters. The Board deliberates onthe updates provided andengages in robust review and challenge where appropriate. Stakeholders Clients Regulators and governments Investors Suppliers Society Employees ![]() 100 StandardChartered – Annual Report 2021 Directors’ report Corporate governance Key areas of Board discusson during 2021 continued Financals and performance • Approved and reviewed the Group’s 2022-2026 Corporate Plan and 2022 budget • Monitored the Group’s financal performance • Approved the full year and half year results • Monitoredand assessed the strength of the Group’s capital and liqudity positons • Considered the Group’s approach to capital management and returns • Approved 2020 final divdend and 2021 intermdivdend • Approved twoshare buy-back programmes • Received bi-annual updates on and discussed the Group’s major investment programmes in 2021 includng an update on theGroup’s digtal transformationagenda • Received bi-annual updates on, and discussed, investor relations matters • Discussed peer benchmarking against 2020 performance • Approved the Group’s 2020 Country-by-Country Reporting disclosures • Received an update on new ways of working Spotlight #### Share buy-back programmes In 2021 the Board approved, after engagement with the regulator, the re-commencementof a share buy-back programme that was suspended in March 2020 due to the impact of the pandemic and in response to a request by the PRA. The Board recognised the signficance of balancing a cautious approach to capital management in light of the continued impact of the pandemic against returns to our shareholders, and this was reinforced by the decison to approve a further buy-back programme that completed in September 2021. The Board will continue to consider andengage with stakeholders in order to drive optimal ways ofgenerating shareholder value. Stakeholders People, culture and values • Approvedthe Group’s 2020 Modern Slavery Statement • Discussed progress made against the Group’s people strategy • Discussed and reviewed an update on the Group’s culture • Discussed aspects of the Group’s global employee engagement survey, My Voice • Received updates on the progression and evolution of the Management Team’s and senior management’s succession plans • Discussed the Group’s Global Diversty and Inclusion intiatves • Discussed the Board Diversty Policy • Reviewed an annual report update on the operation and effectiveness of the Group’s Speaking Up programme • Approved the adoption ofthe 2021 Standard Chartered Share Plan, subjectto shareholder approval at the 2021Annual General Meeting(AGM) External environment • Receivedupdates on the macroeconomic headwinds and tailwnds in the global economy, includng an assessment of the impact on the key drivers of the Group’s financal performance • Receivedinternal and externalbriefngsand input acrossa range ofsubjects, includng: – climate-related matters – net zero pathway methodology – developments incloud technology, digtal currenciesand crypto assets – the globaleconomic outlook – economic recovery, risks and opportunites – evolving geopolitcal landscape – ‘blue sky thinkng’/‘horizon scanning’ discussons Spotlight #### People strategy The Board reviewed the progress made on the people strategy previously approved by the Board in the context of evolving client needs, the industry, and expectations of colleagues, particularly in light of the ongoing pandemic. The Board recognised the importance of providng constructive feedback on the strategy and discussed aspects of the people and culture agenda where they anticpated challenges. Stakeholders Spotlight #### Economic recovery, risks and opportunites Simlar to last year, the Board invted a number of external and internalspeakers to attendBoard sessions. The speakers provided expert, professional insghts across a variety of matters, such as commentary on the economic recovery during 2021 and key risks to recovery in the future. These insghts provided valuable context to Board discussons on how these risks and opportunites may impact the Group, what further actions may be prudent in response to these risks, and a consideraton of other external risks. Briefngs also helped shape Board decison- making more broadly. Stakeholders Clients Society Employees Clients Investors Suppliers Society Regulators and governments Employees Regulators and governments Investors ![]() 101 Standard Chartered – Annual Report 2021 Directors’ report Examples of how the Board considered stakeholder perspectives in some princpal decisons during the year are provided on pages 53 and 66 Key areas of Board discusson during 2021 continued For a detailed overview of our strategy see pages 22 and 23 Governance • Noted and/or approved changes to the membership of the Auditand Remuneration committees • Received reports at each scheduled meeting from the Board committee Chairs on key areas of focus for the committees and quarterly updates fromStandard Chartered Bank (Hong Kong) Limted and its Audit and Board Risk committees • Approvedthe re-appointment ofindependent external adviser to the Board on cyber security and cyber threats • Authorised various potential conflicts of interest relating to directors’ external appointments • Discussed the observations and themes arisng from the 2021 internal Board andcommittees’ effectiveness review and approved the 2022 Action Plan • Reviewed, and approved updates where appropriate, to the Terms of Reference for each Board committee • Further developed meaningful linkages between the Board and its subsidaries at chair, board and committee level • Approved the transiton from the Brand, Values and Conduct Committee to the Culture and Sustainablity Committee Shareholder and stakeholder engagement • Engaged virtually with investors, held meetings with brokers, discussed the views of insttutional shareholders • Held the 2021 AGM • Held a virtual stewardship event attended by investors representing a sizeable proportion of our equity as well as several shareholder representative bodies • Engaged with key clients, shareholders andregulators • Discussed support provided to clients, colleagues and communitesduringcontinued impact ofthepandemic • Receivedbi-annual updatesfromInvestor Relations,includng share price and valuation analysis, market engagement and ownership analysis andsell-side sentiment • Held six virtual employee engagement sessions across our markets Spotlight #### Culture and Sustainablity Committee The Board approved the change from the Brand, Values and Conduct Committee (BVCC) to the Culture and Sustainablity Committee(CSC)in May 2021 following a refocus of the Committee’s remit. Greater weight has been given to environmental, social and governance (ESG) matters, and areas of duplicaton addressed. Detailed mapping work was conductedwhich resulted in the recommendation of a number of changes to the BVCC’s Terms of Reference, includng handing off areas of overlap to a combinaton of other Board committees, management and the Board. Further detail can be found in the CSC report on page 130. Stakeholders Spotlight #### AGM The Board’s intentonwas to invte shareholders toattend the 2021 AGM in person, especially as this is regarded as an importantopportunity forshareholders to engage with the Board. However, due to the continued challenge of the pandemic, includng prevailng government guidelnes on non-essential travel and public gatheringsat the time, the Company’s AGM on 12 May 2021 was held as a combined physical and electronic meeting. Shareholders were not permitted physical entry into the AGM venue but were able to attend the AGM electronically via a live web- portal. The meetingformat ensured thatshareholders could engage with the Board regarding the Company’s recent performance and strategic priorties, while also protectingthehealth and safety of ourshareholders, colleaguesand otherstakeholders. Further detail regarding the meeting can be found on page 112. Stakeholders Regulators and governments Society Investors Employees Clients Suppliers Regulators and governments Society Investors Employees ![]() 102 Standard Chartered – Annual Report 2021 Directors’ report Corporate governance Board and committee structure: decisons, responsiblites and delegation of authority Terms of Reference for the Board and each committee are in place to provide clarity over where responsiblity for decison-making lies. These are reviewed annually against industry best practice and corporate governance provisons and guidance, includng the PRA Supervisory Statement onBoard Responsiblites. With the exception of the Governance and Nominaton Committee (where the Group Chairman is its Chair) and the Board Financal Crime Risk Committee (where two external advisers are members), all of the Board committees are composed of independent non-executive directors (INEDs) who bring a diversty of skills, experience and knowledge to the discusson, and play an important role in supporting the Board. Written Terms of Reference for the Board and its committees can be viewed at sc.com/termsofreference StandardChartered PLC Group Chief Executive Audit Committee Oversight and review of matters relating to financal reporting, the Group’s internal controlsand internal financal controls, and thework undertakenby Conduct, Financal Crime & Compliance, Group Internal Audit andtheGroup’s Statutory Auditor, Ernst & Young LLP (EY). Culture and Sustainablity Committee Oversight and review of the Group’s culture and key sustainablity priorties. Board Risk Committee Oversight and review of the Group’s Risk Appetite Statement, the appropriateness and effectiveness of the Group’s risk management systems andthe princpalrisks, includng Climate Risk, to the Group’s business. Furthermore, consideraton of theimplcations of material regulatory change proposals and due dilgence on materialacquistions and disposals. Read more on page 116 Read more on page 123 Read more on page 130 Governance and Nominaton Committee Oversight and review of Board and executive succession, overallBoard effectiveness andcorporate governance issues. Read more on page 133 Board Financal Crime Risk Committee Oversight and review of the effectiveness of the Group’s polices, procedures, systems, controls and assurance arrangements designed to identfy,assess, manage,monitor and prevent and/or detect money laundering, non-compliancewith sanctions, bribery, corruption and tax crime by third parties. Read more on page 138 Remuneration Committee Oversightandreview of remuneration, share plans andother incentves. Read more on page 141 The Board must act with integrty and is collectively responsiblefor establishng the Company’s purpose, values and strategy, promoting its culture, overseeing its conductand affairs for promoting the long-term success of the Group, and ensuring leadership withna framework of effective controls. The Board sets the strategic directon of the Group, approves the strategy and takes the appropriate action to ensure that the Group is suitably resourced to achieve its strategic aspiratons. The Board considers the impact of its decisons and its responsiblites to all of the Group’sstakeholders, includng employees, shareholders, regulators and governments, clients, suppliers, the environment and the communites in which it operates. The Boarddischarges its responsiblites directly or, in order to assist it in carrying out its function of ensuring effective independent oversight and stewardship, delegates specifed responsiblitesto its committees. Detail of how the Board fulfilled its responsiblites in 2021, as well as key topics discussed and considered by the Board committees, can be found in this Directors’ report. Biographes for each director are set out on pages 91 to 94. The Group ChiefExecutiveis responsible for the management of all aspects of the Group’s businesses, developing the strategy in conjuncton with the Group Chairman and the Board, andleading its implementaton. The Board delegatesauthority for the operational managementof the Group’s business to the Group Chief Executive for further delegation by him inrespectof matters that are necessary for the effective day-to-day runningand management of the business. TheBoard holds theGroup Chief Executive accountable in dischargng his delegated responsiblites. Management Team The Management Team comprises the Group Chief Executive and the Group Chief Financal Officer, regional CEOs, client segment CEOs, and our global function heads. It has responsiblity for executing the strategy. Details of the Group’s Management Team can be found on pages 95 to 97 . ![]() 103 Standard Chartered – Annual Report 2021 Directors’ report Our Board meetings The Board is committed tomaintaning a comprehensive schedule of meetings and a rolling agenda to ensure its time is used most effectively and efficently, and is supported by the Group Company Secretary to faciltate this. Flexiblity in the programme is important and permits key items to be added to any agenda so that the Board can focus on evolving and important matters at the most appropriate time. Performance against delivery of the agreed key financal priorties is reviewed at every scheduled meeting, with particular referenceto the detailed Group management accounts. The Group Chief Executive and Group Chief Financal Officer comment on current trading, business performance, the market, colleagues, relevant stakeholders, and regulatory and external developments ateachscheduled meeting, and present comparative data and client insght. In additon, the Group Chief Risk Officer periodcally attends meetings to update the Board on key risks. The Group Chairman holds INED-only meetings ahead of each scheduledBoard meeting, which providesthe opportunity for discusson onkey agenda items and other matters without theexecutivedirectors and management present. Sir Iain Lobban, who is engaged by the Board to act as an independent adviser to the Board and its committees on cyber security and cyber threat management, attended a number of Board and committee meetings to provide an independent and current view on the Group’s progress in this area. The Board continue to find Sir Iain’s input relevant, practical and challenging. In 2021, Sir Iain’s appointment was renewed for a further 12-month term. Our Board committees The Board places signficant reliance on its committees by delegating a broad range of responsiblitesand issues to them. It therefore remains crucial that effective linkages are in place between the committees and the Board as a whole, not least as it is impractcable for all INEDs to be members of all of the committees. Mechanisms are in place to faciltate these linkages, includng ensuring that there are no gaps or unnecessary duplicatons between the remit of each committee andoverlappingmembership between Board committees where necessary. Alongside interconnected committee membership, the Board receives a written summary of each of the committee’s meetings and verbal updates at the Board, where appropriate. Further details on each committee, includng their oversight and focus during 2021, can be found in the Board committee reports starting on page 116. Development of Board activties in 2021 As the pandemic continued into 2021, the Board and its committees maintaned their utilsation of interactve technology to ensure agile and authentic engagement. The most appropriate format for each Board meeting was assessed by the Group Chairman, with support from the Group Company Secretary, on a case-by-case basis. This was essential due to evolving external factors such as travelrestrictons, withsome meetings being held as a hybrid but the vast majorty held entirely virtually. Overall, the Board adjusted well to a fluid approach to meeting formats, and irrespectve of physical location and time zone, each director was able to interact effectively with other Board members. As was the case last year, the length of scheduled Board meetings was adjusted and a number of ad hoc meetings and informal sessions were organised. This enhancement to the Board’s programme helped uphold and protect considered and collaborative discusson onkey items. The timelne on this page shows the Board’s collective engagement throughout the year. Board activties during 2021 January F ebruary March April May June July August September October NovemberDecember Scheduledmeeting Key Informal session AGM Ad hoc meeting ![]() 104 Standard Chartered – Annual Report 2021 Directors’ report Corporate governance Board compositon, roles and attendance in 2021 Group Chairman Group Chairman J Viñals 1Directors particpated electronically at the AGM. Further detail can be found on page 112 2A number of ad hoc meetings were arranged during the year. As they took place outside of the scheduled Board calendar, it impacted the abilty of our directors to attend these meetings. All directors who were unable to attend received accompanying material and had opportunites to provide comments to the Board. Further detail is provided below: –Andy Halford was unable to attend the ad hoc meeting held on 3 June 2021 due to a medical appointment –Byron Grote and Phil Rivett were unable to attend the ad hoc meeting held on 18 October 2021 as a result of long-standing external board commitments The biographes of each director are set out on pages 91 to 94 The roles of the Group Chairman and Group Chief Executive are distnct from one another and are clearly defined in detailed role descriptons which can be viewed at sc.com/roledescriptons The Group Chairman is committed to ensuring optimal Board effectiveness. A key #### mechanism to drive this is the appropriate compositon and balance of indviduals. The Board is composed ofa majorty ofindependent non-executive directors. Detail regarding Board diversty can be found withn the Governance and Nominaton Committee report on pages 133 to 137 Group Chief Financal Officer A N Halford 2 Responsiblites Responsible forleading the Board, ensuring its effectiveness in all aspects of its role and developing the Group’s culture with the Group Chief Executive. Promotes high standards of integrty and governance acrossthe Group and ensures effective communicatonand understanding betweenthe Board, management, shareholders and wider stakeholders. Executive directors Group Chief Executive W T Winters Responsiblites Responsible forthe management of all aspects of the Group’s businesses, developingthe strategy in conjuncton with the Group Chairman and the Board and leadingits implementaton. Attendance AGM 1 Y Scheduled 8/8 Ad hoc 8/8 Responsiblites Responsible forFinance, Corporate Treasury, Strategy, Group Corporate Development, Group Investor Relations, Property and Supply ChainManagementfunctions. Attendance AGM 1 Y Scheduled 8/8 Ad hoc 8/8 Independent non-executive directors Deputy Chairman N Kheraj Senior Independent Director C M Hodgson, CBE P G Rivett 2 G Huey Evans, CBE J M Whitbread D P Conner B E Grote 2 DTang CTong Responsiblites Providessupport andguidance to the Group Chairman as required and, incoordinaton with the Group Chairman, acts as an ambassador for the Board and the Group in theirrelationshps with governments, regulators, colleagues and clients. Deputises for the Group Chairman at Board, general shareholder, orother meetings when the Group Chairman isunable to attend. Responsiblites Provides a sounding board for the Group Chairman and discusses concerns thatare unable to be resolved through the normal channels or where such contact would be inapproprate with shareholders andother stakeholders. Chairs the Governance and Nominaton Committee when considerng succession of the Group Chairman. Is availableto shareholders if they have concerns that cannot be resolved or for which the normalchannels wouldbeinapproprate. Can be contacted via the Group Company Secretary at 1 Basinghall Avenue, London EC2V 5DD. Attendance AGM 1 Y Scheduled 8/8 Ad hoc 8/8 Attendance AGM 1 Y Scheduled 8/8 Ad hoc 8/8 Attendance AGM 1 Y Scheduled 8/8 Ad hoc 7/8 Responsiblites Providean independent perspective, constructive challenge,and monitortheperformance and delivery of the strategy withn the Risk Appetite and controls set by the Board. Attendance AGM 1 Scheduled Ad hoc Y 8/88/8 Y 8/8 7/8 Y 8/88/8 Y 8/8 7/8 Y 8/88/8 Y 8/88/8 Y 8/88/8 N/A 1/1 2/2 Y 8/88/8 N Okonjo-Iweala INEDs that have stepped down NgoziOkonjo-Iweala stepped down from the Board on 28February 2021. INEDs that have joned M Ramos Maria Ramos joned theBoard as an INED on 1 January 2021. ![]() 105 Standard Chartered – Annual Report 2021 Directors’ report Director inducton All new Board members are given an extensive and robust inducton programme which is tailored to reflect their skills and experience. This is to ensure all directors are in a strong positon to make positve contributons from the outset of their tenures. A formalised framework for inducton programmes guarantees key topics are covered, includng informaton on a diverse range of matters relating to the role and responsiblites of a director as well as our businesses and markets. Each inducton typically consists of acombinaton of meetings with existng Board members and senior staff. New Board members are also given the opportunity to attend key management meetings and engage with key stakeholders such as investors and clients. In light of the continued impact of the pandemic, vists to key markets across our footprint have been restricted and typically replaced with virtual engagements. The Group Corporate Secretariat function supports the INEDs as they undertake their inducton programmes, which are typically completed withn the first six to nine months of an INED appointment. The programmes are regularly reviewed and take into account directors’ feedback to ensure continuous development and improvement. One new director, Maria Ramos, was appointed to the Board in January 2021. Maria brings highly applicable skills and a range of knowledge relevant to Board debateand discusson. She possesses deep CEO, banking, commercial, financal, policy and internatonal experience, as well as considerable non-executiveexperience, having served on internatonal boards. Prior to being appointed to the Board, the Audit and Board Risk committees, and later the Remuneration committee, Maria was given a number of inducton sessions to ensure a smooth transiton into taking up her roles. On joning the Board and committees, she undertook a detailed inducton programme. Further detail can be found on page 106 and 107. Ongoing development plans Continuous trainng and development beyonda director’s inducton plan is essential to maintaning a highly engaged, effective and well-informedBoard. Ongoing development plans also help ensure directors lead with integrty and promote the Group’s culture, purpose and values. Mandatory learning and trainng are important elements of directors’ fit and proper assessments as mandated under the Senior Managers Regime. During the year, all directors received acombinaton of mandatory learning and trainng, internal and external briefngs, presentations from guest speakers, and papers on a wide range of topics to ensure the directors are well-informed and that the Board remains highly effective. The Boardcommitteemembers also received specifc trainng relevant to the work of their respectivecommittees. The format ofongoing trainng varied, includng formal refresher sessions and informal meetings. The trainng covered a variety of topics throughout the year, the majorty of which were held virtually in light of the continued impact of the pandemic. The table below gives further detail on who received these briefngs. The Group Chairman reviews with each director their trainng and development needs both in real time and as part of the annual performance cycle. Where it is recognised that the Board orindvidual directors need further trainng or development in key areas, additonal sessions are arranged with subject matter experts. All of the directors have access to the advice of the Group Company Secretary, who provides support to the Board and is responsiblefor advisng the Board on governance matters. Directors also have access toindependent professional advice at the Group’s expense where they judge it necessary to discharge their responsiblites as directors. 2021 director trainngoverview Induction 1 Directors’ duties and regulatory updates 2 Activsm 3 Digtal currencies Technology Climate- related matters Climate Risk Global economic outlook J Viñals N/A W T Winters N/A N/A A N Halford N/A N/A D P Conner N/A B E Grote N/A C M Hodgson, CBE N/A G Huey Evans, CBE N/A N Kheraj N/A N Okonjo-Iweala 4 N/A N/AN/AN/AN/AN/AN/A M Ramos 5 P G Rivett N/A DTang N/A CTong N/A J M Whitbread N/A 1Applicable todirectorswho received inductontrainng during 2021 2Trainng tookplace viacirculaton ofmaterial andopportunity to raise questions withexternal counsel andthe Group Company Secretary 3Trainng wasspecifcally designed fornon-executive directors 4Ngozi Okonjo-Iweala stepped down from the Board on 28 February 2021. Most trainng sessions identfied above took place after this date 5Maria Ramos joned the Board on 1 January 2021 Director attendedthesession Director did not attend the session but received accompanying material and had opportunites to raise questions with the Group Chairman and Group Company Secretary ![]() 106 Standard Chartered – Annual Report 2021 Directors’ report Corporate governance Spotlight #### Board inducton An insght into Maria Ramos’ tailored Board programme Key topics The inducton programme covered a wide range of activties, includng: Board, Board committees and strategy • held regular meetings with Group Chairman and Group Company Secretary, which included an overview of the Board as well as the Governance and Nominaton Committee • heldone-to-one meetings with Group ChiefExecutive, Audit Committee Chair, Board RiskCommittee Chair, Senior IndependentDirector and Remuneration Committee Chair • briefng on overview of Board committees with Culture and Sustainablity Committee Chair and Board Financal Crime Risk Committee Chair • heldone-to-one engagements with INEDs • briefng on the Group’s strategic agenda and core strategic projects from Global Head, Strategy • separate committee inductons were also undertaken during the year Conduct, financal crime and compliance • briefngs on overview of and introducton to Compliance with Group Head Conduct, Financal Crime and Compliance andGroup Chief Risk Officer • Speakup/whistleblowng discusson withCompliance team • meeting with Global Head of Financal Crime Compliance, Conduct& Compliance Framework concerning Financal Crime Compliance Programme • regulatory requirements and conduct trainng with Group Regulatory Advisor and Compliance team • briefngs on regulatory affairs, Senior Managers Regime,systems andcontrols, treating customers fairly and conduct ofbusinesswithGroupRegulatory Advisor and Complianceteam • discusson on internal governance includng changes connected to hub entity structure with Group Regulatory Advisor • meetingswith Financal Conduct Authority and PrudentialRegulation Authority • briefng on the Group’s Conduct programme and Code of Conduct with Group Head Conduct, Financal Crime and Compliance • meeting with Global Head, Sanctions Compliance Corporate governance • overview of the UK and HK corporate governance landscape with Group Company Secretary • meeting with external counsel on directors’ responsiblites and duties as well as UK and Hong Kong legal frameworks • briefng on Board, Board committee and indvidual director evaluation with Group Company Secretary • discussonon Board trainng and development programme with Group Company Secretary • discusson on key governance issues affecting the Company and shareholder feedback from 2020 AGM • briefng on market, includng shape of the share register and understanding the views of major insttutional investors with Global Head, Investor Relations • overview of executive remuneration, includng policy, trends and issues affecting the Group with Global Head, Performance and Reward M Ramos Independent Non-ExecutiveDirector Q. In light of the continued impact of the pandemic your inducton programme had to be undertaken remotely. How did you find that worked? A. The extensive challengesincludng travel restrictons imposed by COVID-19 meant that the inducton programme for an INED such as myself had to be adapted to new ways of working. The extensive programme of inducton was structured so that it could be undertaken entirely remotely through the use of electronic facilties. The programme was completed over a six month period. A signficant amount of thought and planning went into the design of the programme to priortise the key areas of work and responsiblity so that I could particpate appropriately in Board and committee work, no matter where I was physically located. #### Interview with #### Maria Ramos ![]() 107 Standard Chartered – Annual Report 2021 Directors’ report Key topics The inducton programme covered a wide range of activties, includng: Client segments, product groups and regional businesses • meetingswith Management Team members responsible for Corporate, Commercial and Institutonal Banking, includng Corporate Finance; Financal Markets;Transaction Banking; Retail Banking and Wealth Management; and Private Banking • meeting with Management Team members responsible for Africa and Middle East region; ASEAN and South Asia region; Greater China and North Asia region; and Europe and Americas region Risk and control • meeting with the Group Chief Risk Officer • briefng on anti-bribery and corruption (ABC) with Head ABC, Strategy, Governance and Programme Management • meeting with Group Chief Operating Officer Legal • sessionon Legal function, regulatory environment andgovernment investgations with Group General Counsel • briefng onlitgationmatters withSenior LegalCounsel,DisputeResolution Finance, taxation, capital and liqudity • meeting with GroupChief Financal Officer • session with GroupTreasurer Audit • discusson with Group Head, Internal Audit • meeting with external auditors, EY • briefng on Audit Committee with Audit Committee Secretary People • briefng with Global Head, Human Resources on the Group’s people strategy, culture and My Voice survey • meeting with Global Head, Performance and Reward on reward matters Corporate activty, brand and marketing • briefng on role of Corporate and Public Affairs with Group Head, Corporate Affairs, Brand and Marketing • corporate social responsiblity overview with Group Head, Corporate Affairs, Brand and Marketing • meeting with Economic Research team, includng macro-economic overview • corporate development overview with Global Head, Corporate Development • overview of Brand and Marketing with Group Head, Corporate Affairs, Brand and Marketing Technology,operations and innovaton • briefng from Group Chief Information Officer on technology, operations, digtal, cyber and innovaton agenda • meeting with Group Chief Information Security Risk Officer • meeting with Global Head of SC Ventures Vists to key markets • due to the continued impact of the pandemic, vists to key markets were substituted with virtual stakeholder engagements. Vists to markets will take place once global travelrestrictonslessen Q. How successful did you view your inducton programme in preparing you for Board and committee discussons? A. The inducton programme was exceedingly successful in preparing me for the work of the Board and committees. The materials prepared were focused and dealt with relevant issues. Importantly, I had the opportunity to meet (virtually) a lot of the executive leadership of the Bank around the world and interact with them. Q. To what extent did your inducton programme provide an insght into the Group’s culture? A . Although the interactons were all virtual, they provided me with important insghts into the Bank’s culture. The sense of purpose was visble, the commitment to sustainablity, the resilence, care and respect for people were evident. Moreover, a culture of openness and transparency prevailed in my interactons with everyone I engaged with. Q. How flexible did you find the inducton programme? A. The programme isflexible and each director elects topics for deep dives as necessary. I was able to balance this againsta broad rangeof subjects. Q. How effectively has your inducton programme transitoned into ongoing engagement? A. The programme provided me with the necessary base for engagement with key stakeholders,both internal and external. ![]() 108 Standard Chartered – Annual Report 2021 Directors’ report Corporate governance The 2021 Board and committees’ effectiveness review was conducted internally, faciltated by the Group Company Secretary, and in accordance with the UK Corporate Governance Code. Progress against the 2021 Action Plan The 2021 Action Plan set out a number of actions to be achieved following the internal Board evaluation conducted in 2020 and built on those ambitons set following the externally faciltated reviews by Independent Board Evaluation and the PRA in 2019. The 2021 Action Plan was regularly reviewed during the year and good progress had been made against many of the actions as evidenced by this year’s internal Board effectiveness review. The continued limtations to travel during the year have impacted on the delivery of some specifc actions which have been carried forward to 2022. 2021 Board effectivenessreview Questionnares were sent toeachdirector for completion in respect of the Board and relevant committees. These questionnares sought to draw out and explore some of the themes for the previous year’s review as well as pose some more wide-ranging and probing questions. Theresults were compiled into a detailed report and conclusions were discussed with the Group Chairman and by the Governance and Nominaton Committee ahead of a Board discusson. At the Board, the key findngs and recommendations were presented along with an Action Plan for 2022, which was then approved. Details of the key observations from this year’s review and the agreed Action Plan are set out on this page. The Board’s six committees were also included as part of the effectiveness review. The observations and key themes were shared with the relevant committee Chairs before being circulatedto each ofthe committees andaction plans for 2022 approved. Details of the key observations and action plans for each of the committees can be found withn each of the committees’ reports. Key observations from the 2021 internal effectiveness review • The Board has continued to remain effective in meeting its priorties despite the continuedCOVID-constrained environment • Recogniton of the positve challenge provided to the strategy and helpful additonal perspectiveon a range of issues from guest speakers and the ‘blue sky sessions’ • Good progress made on understanding of the Group’s Resolvabilty plans but a need to ensure they continue to develop and remain part of the forward agenda • Support for the reallocation of the work of the Board Financal Crime Risk Committee (BFCRC) into a combinaton of the Audit Committee, Board Risk Committee (BRC) and Board • Scope to continue trainng on the rapidly changing landscape of emerging technology and risks 2022 Action Plan • Enhance the Board’sinsghts into what customer/ product numbers drive revenue growth, how customers view the Bank and its brand, and how our intiatves are perceived relative to competitors • Devote Board time to a broader discusson of the business enabling greater consideraton of social trends, demographics and technology, as well as our competitors and trends from non-bank/financal services competitors • Consider reallocating the work of the BFCRC to the BRC, Audit Committee and Board in 2022, maintaning strong oversight of financal crime risks • Continue to focus on Resolvabilty and ensure this is embedded into the Board’s forwardagenda • Review the key performance indcators and their scope to ensure new drivers of business growth and sustainablity are measured, withn an appropriate dashboard • Continue to build the Board’s trainng programme, schedulingfurther sessions on emerging technology and risks, digtal assets, data, and current uses of artifcial intellgence (AI). Explore the use of online modules and podcasts to enable greater flexiblity and maximse the use of directors’ time #### Board effectiveness Internal evaluation process Review approach agreed Questionnares completed Evaluation and report Findngs shared with committee Chairs Findngs discussed with the Group Chairman and Governance and Nominaton Committee Board discusson and agreed Action Plan for 2022 ![]() 109 Standard Chartered – Annual Report 2021 Directors’ report Directors’ performance The Group Chairman led the evaluation of indvidual director performance during 2021. These one-to-one sessions provided an important opportunity for each of the INEDs to discuss with José Viñals, among other things: • their performance against core competencies and their indvidualeffectiveness • their time commitment to the Group, includng (where relevant) the potential impact of any outside interests • their ongoing development and trainng needs • the Board’s compositon, taking into account when each INED envisaged stepping down from the Board • the current and future committee membership and structure • their engagement across theGroup These performance reviews are used as the basis for recommending the re-electionof directors by shareholders at the 2022 AGM and to assist the Group Chairman with his assessment of the INEDs’ competencies. In additon, the Group Chairman has responsiblity for assessing annually the fitness and propriety of the Company’s INEDs and the Group Chief Executive Officer under the Senior Managers Regime. These assessments were carried out in respect of each INED and the Group Chief Executive at the end of 2021. Group Chairman’s performance The Senior Independent Director, Christne Hodgson, oversaw the process of reviewng the Group Chairman’s performance. Without the Group Chairman present, she spoke with the INEDs separately to evaluate his performance, taking into account the views of the executive directors. The feedback was collated, and consolidated feedback was shared with José Viñals. Director independence The Governance and Nominaton Committee reviews the independence of eachof the non-executivedirectors, taking into account any circumstances likely to impar, or which could impar, their independence. Recommendations are then made to the Board forfurther consideraton. In determinng the independence ofa non-executivedirector, the Board considers each indvidual against the critera set out in the UK Corporate Governance Code, the Hong Kong Listng Rules and also considers their contributonand conduct at Board meetings, includng how they demonstrate objectve judgement and independent thinkng. The Board considers all of the non-executive directors to be independentof Standard Chartered, concluding that there are no relationshps or circumstances likely to impar any INED’s judgement. Time commitment Our INEDs commit sufficent time in dischargng their responsiblites as directors of Standard Chartered. In general, we estimate that each INED spent approximately 35 to 70 days on Board-related duties, and considerably morefor those who chair or are members of multiple committees. External directorshps and other business interests Board members hold external directorshps and other outside business interests. Werecognisethe signficant benefits that broader boardroomexposureprovides for our directors. However, we closely monitor the nature and quantity of external directorshps our directors hold, in order to satisfy ourselves that any additonal appointments will not adversely impact their time commitment to their role at Standard Chartered, and to ensure that all of our Board members remain compliant with the PRA directorshp requirements, as well astheshareholder advisory groups’ indvidualguidance on ‘over-boarding’. These requirements impose a limt on the number of directorshps both executive and independent non-executive directors are permitted to hold. Details of the directors’ external directorshps can be found in their biographes on pages 91 to 94. Before committng to an additonal appointment, directors confirm the existence of any potential or actual conflicts, that the role will not breach their limt as set out by the PRA, and provide the necessary assurance that the appointment willnot adversely impact their abilty to continue to fulfil their role as a director of the Company. All directors continue to hold no more than the maximum number of directorshps permittedunder the PRA rules. Our established internal processes ensure that directors do not undertake any new external appointments without first receivng formal approval of the Board. The Board has delegated authority tomakesuch approvals to the Group Chairman, with the exception of his own appointments. Of those INEDs who took on new external directorshps during the year, three were regarded as signficant directorshps (appointed to the board of a listed company) and as such were announced to the market in line with our listng obligatons. Further detailon the specifcappointments are provided below: • Jasmine Whitbread, independent non-executive director, was appointed Chair of the board of Travis Perkins plc with effect from 31 March 2021, and to the board of Compagnie Financère Richemont SA as a non-executive director and a member of its nominatons committee with effect from 8 September 2021 • Following Petershill Partners plc’s Inital Public Offering in London on 28 September 2021, Naguib Kheraj, Deputy Chairman, became Chairman of another public quoted company Both directors indvidually discussed their respective appointments with the Group Chairman in advance of accepting the positons and each provided assurance that their appointments would not impact their abilties to devote sufficent time and focus to both their Board and committee responsiblites.Naguib Kheraj streamlined his committee responsiblites by stepping down as a member of the Remuneration andAudit committees The Board’s executive directors are permitted to hold only one non-executive directorshp. Of ourexecutive directors, Andy Halford is the Senior Independent Director, Chair of the Audit Committee and member of the NominatonCommittee at Marks and Spencer Group plc, listed on the FTSE 250, and Bill Winters is a non-executive directorof Novartis International AG, listed on SIX Swiss Exchange. ![]() 110 Standard Chartered – Annual Report 2021 Directors’ report Corporate governance #### Stakeholder #### engagement #### Ensuring authentic engagement #### across our markets Clients Suppliers Regulators and governments Employees Investors Society Stakeholder consideraton and engagement form a crucial aspect of Board decison-making and discussons. The Board also recognises this as signficant in its continued review of the Group’s purpose, values and strategy. Adjustment to the format of traditonal engagement continued to be essential in 2021, as was the case during the preceding year. Prior to the pandemic, the Board would vist different markets across the Group’s footprint. This was a key enabler of stakeholder engagement as itprovided detailed understanding of the markets, opportunites and risks the Group faces, as well as the opportunity to meet internal and external stakeholders. The Boardhopes tobeable to engage with stakeholders in person during 2022. Board vists to markets were replaced with virtual engagements in 2021 due to the continuedrestrictonson travel. However, the Board recognises the mutual benefits to both stakeholders anditself from engagementactivties. While faciltating two-way dialogue via interactve technology was productive and effective, in some areas it did prevent the breadth of engagement which the Board would usually undertake.Despitethis,authenticengagement led to a numberof invaluableopportunitesfor the Board to meet with stakeholders across the Group’s diverse network, includng those identfied on the following pages. Directors did not just engage collectively with stakeholders, but also communicated with some of them indvidually. External adviser members to the Board Financal Crime Risk Committee also engaged directly with stakeholders. Informal and formal sessions with indvidual stakeholders and stakeholder groups across our footprint help provide INEDs and external adviser members witha comprehensive understanding of the Group’s marketoperations, implementaton of strategy, and theexternal and internal impact of the Group’s services. Further detail regarding the Board’s engagement with our stakeholders can be found on the following pages. Detail regarding how Board Committees and their members engaged with stakeholders can be found in the committee report sections starting from page 116. The Board ofDirectors 2021AGM ![]() 111 Standard Chartered – Annual Report 2021 Directors’ report Our approach Increasing shareholdervalue by deliverng robust returns and a long-term, sustainable share price is of key importance to the Board. Continuously looking to improve engagements helps support the Board’s focus on developing open and trusted relationshps with investors. This is underpinned by openly seeking feedback and reviewng previous activties. As was the case for all forms of stakeholder engagement, the pandemic limted the Board’s abilty to physically meet with shareholders during the year. A virtual approach in most instances was taken. This restricted the on-the-ground benefits of Board members engaging with shareholders face-to-face but did offer shareholders the opportunity to particpate in events where extensive travel may have restricted them in the past. During the year, we maintaned a comprehensive programme of engagement with investors and other key stakeholders, includng investor advisory bodies and credit rating agencies, and provided updates on progress made to transform ourbusiness forimproved returns. The Group Chairman and other Board directors maintandirect contact withinvestors and advisory voting bodies, and receive regular updates from the Investor Relations team, includng reports on market and investor sentiment. The Group Chairman, as part of his role, leads engagement withshareholders and hosted the 2021 AGM alongside fellow Board members. The Group Chairman and certain Board members also held an Investor Stewardship Event simlar to last year. Christne Hodgson, Chair of the Remuneration Committee, continued to discuss with and collect feedback from shareholders on a rangeof remuneration matters, includngthe Group’s newDirectorsRemuneration Policy. In her role as Senior Independent Director she is alsoavailable toshareholders shouldthey have concerns that cannot be resolved or for which the normal channels would be inapproprate. Bill Winters and Andy Halford are the primary spokespeople for the Group. Throughout the year they engaged extensively with existng shareholders and potential new investors during indvidual or group virtual meetings and conferences. In additon,each member oftheManagement Team responsible for a client segment or a geographic region, as well as the Group Treasurer, virtually met with investors to promote greater awareness and understanding of the strategy in their respective areas, as well as taking the opportunity toreceive investorfeedback first hand. Institutonalshareholders The Group maintans a diverse, high-quality and predominantly insttutional shareholder base. The Investor Relations team has primary responsiblity for managing day-to-day communicatonswith these shareholders and provides support to the Group Chairman, Group Chief Executive, Group Chief Financal Officer, other Board members and senior management in conducting a comprehensive engagement programme. Presentation material and webcast transcripts are made available on the Group’s website and can be viewed at sc.com/investors Debt investors and credit rating agencies Our Debt Investor Relations teamhasprimary responsiblity for managingthe Group’s relationshps with debt investors and the three major rating agencies, with local market chief executives andchief financal officers leading on smaller subsidary ratings. In 2021, management met virtually with debt investors across Europe, North America and Asia, and maintaned a regular dialogue with the rating agencies. It is important that the Group, as an active issuer of senior unsecured and non-equity capital,maintans regular contact withdebt investors to ensurecontinued 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. Further informaton can be viewed at sc.com/investors Investor stewardshipevent The Group Chairman; Deputy Chairman and Chair of the Board Risk Committee;the SeniorIndependent Director andChair of the Remuneration Committee; and the Chair of the Culture and Sustainablity Committee hosted the stewardship event on 22 November 2021. The event was attended by investors representinga sizeable proportion of our equity as well as several shareholder representative bodies. As a result of feedback last year, the opening section of the event was streamlined, with the Group Chairman providng a strategic update regarding Board and committee activties during the year, as well as opening remarks from the Chair of the Remuneration Committee. This was followed by a question and answer session (Q&A). The event was held virtually, with live Q&A faciltated through a web-based platform, which permitted written and verbal communicatons. Engagement with investors Engagement with investors: what we did during 2021 February 2020 full year results March Investor conferences and roadshows April 2021first quarter results May AGM and investor conferences June Investor conferences August 2021 half year results, investor conferences and roadshows September Investor conferences and roadshows October Innovation and Digtisaton Event November 2021 third quarter results and Stewardship event and investor conferences December Investorconferences ![]() 112 Standard Chartered – Annual Report 2021 Directors’ report Corporate governance Retail shareholders The Group Company Secretary oversees communicaton with our retail shareholders. AGM The Board’s intenton was to invte shareholders to attend the 2021 AGM in person, especially as this is seen as an important opportunity for shareholders to engage with the Board in a face-to-face setting. However, due to the continued challengeof the pandemic, includng prevailng government guidelnes on non-essential travel and public gatherings at the time, the Company’s AGM on 12 May 2021 was held as a combined physical and electronic meeting. Shareholders were not permitted physicalentry into the AGM venue. Shareholders were ableto attend the AGM electronically via a live web-portal. The meeting format ensured that shareholders could engage withthe Board regardingthe Company’s recent performanceand strategic priorties, while also protecting the health and safety of our shareholders, colleagues and other stakeholders. Withn this portal, shareholders were able to view a live video feed of the AGM, submit voting instructons and questions in writng or ask them through an audio line. Questions received from shareholders covered a diverse range of matters, includng climate/environmental issues, geopolitcal developments, strategy, shareholder engagement and share price.Allproposedresolutions were passed, with shareholder support for each ranging from 95.22 per cent to 99.97 per cent. Shareholder uptake for the AGM was low in comparison to our last purely physical AGM in 2019; however, the Boardreceivedpositvefeedback regarding the web-portal functionalty. The results of the voting at the 2021 AGM can be viewed at sc.com/investors A summary of responses to questions on key themes was made available on our websiteto shareholders after the meeting and can be found at sc.com/agm Engagement with investors continued Clients are central to everything we do in the Group and the Board recognises the importanceof promoting productive, sustainable relationshps with them. Prior to thepandemic, a largeproportion of key customer engagements were built into Board and director vists to the Group’s markets. Continued limtations on internatonal travel meant that our usual approach could not be carried out during 2021. Instead, certain Board members engaged with clients virtually to keep abreast of developing client trends, experiences and needs. In additon, updates on clients’ insghts formed part of deep dives into product segment strategy at Board meetings. Suppliers provide efficent and sustainable goods and services for our business and certain members of the Board also virtually engaged with them during the year. Detail on how the Group more generally engaged with clients and suppliers can be found on pages 51, 52 and 54 of the Strategic report. Engagement with clients and suppliers The Board, either collectively or indvidually, engages with relevant authorites both in the UK and across our footprint on a regularbasis. During 2021 this took place via a number of virtual forums. Topics varied, includng recovery from the pandemic, internatonal trade, climate-related matters, cyber security and digtal and technological developments. Certain regulators attended Board meetings during the year, which provided the opportunity to discuss key items and developments. Further detail on how the Group engaged with regulators and governments moregenerally can be found on pages 52 and 53 of the Strategic report. Engagement with regulators and governments The Board receives regular updates frommanagement concerning the communitesand environment in which we operate. This year the Board reviewed, discussed, and approved the Group’s pathway to net zero. As part of this decison theBoardtookinto account the potential impact of the pathway on civl society, includng those from non- governmental organisatons, as wellas other stakeholder groups. Further detail can be found regarding the Board’s princpal decison on page 66 of the Strategic report. Due to continued travel restrictons in placethroughout most of 2021, the Board was unable to vist many of the Group’s markets. As such, external and internal speakers provided input to the Board’s discusson throughout the year, which covered some key societal issues such as climate-related matters, the evolving geopolitcal landscape in certain markets, and the impact of the pandemic on the health and wellbeing of the communites in which the Group operates. Engagement with society ![]() 113 Standard Chartered – Annual Report 2021 Directors’ report Board engagement sessions with employees #### Africa and Middle East #### Asia #### Europe and the Americas Africa cluster 30 November 2021 Angola, Botswana,Cameroon,Côte d’Ivoire, The Gambia, Ghana, Kenya, Mauritus, Nigera, Sierra Leone, South Africa, Tanzania, Uganda, Zambia, Zimbabwe Particpating Board members: José Viñals, Maria Ramos and David Conner MENAP markets 23 November 2021 Middle East, North Africa and Pakistan Particpating Board members: José Viñals, Maria Ramos and Byron Grote India and South Asia 24 November 2021 India, Bangladesh, Nepal, Sri Lanka Particpating Boardmembers: José Viñals, Christne Hodgson and Naguib Kheraj Asia cluster 12 July 2021 Australia, Brunei, Indonesia, Malaysia, Philppines, Singapore,Thailand, Vietnam Particpating Boardmembers: José Viñals,Jasmine Whitbread andNaguibKheraj GCNA markets 28 September 2021 China, Hong Kong, Japan, Korea,Macau, Taiwan Particpating Boardmembers: José Viñals, Carlson Tong and David Tang EA markets 15 July 2021 Europe and the Americas Particpating Board members: José Viñals, Phil Rivett and Gay Huey Evans Engagement with employees The events were faciltated through a videoconference with a live Q&A session accessed via a web-based platform. Six sessions covering the below geographical regions were hosted by the Group Chairman, who was joned by a combinaton of INEDs. The compositon of the INEDs who attended was carefully considered in order to ensure a good balance of skills, experience,knowledge andperspectives for each geographical group, promoting insghtful and tailored engagement. Review ofemployee engagement Changes to the framework of formal Board engagement with colleagues was enhanced during the year, based on Board and employee feedback and experience in 2020. These changesincluded using video technology (rather than audio-only)so that colleaguescould see Board members, usinga moderator outside of management to help ensure the questions were asked in an authentic and unfiltered way, and breaking up four regions into six more granulargeographicalgroups to enable closer discusson of local topics. The Board was encouraged by the level of interest employees had shown in engaging directly with Board members and remains committed to evolving and refinng this form of engagementto ensure they remaingenuine, authentic interactons. Further detail regarding employeeengagementthis year can be found withn the Culture and Sustainablity Committee report starting on page 131 The Board values the opportunityto engage with our workforce. It is acutely aware of the importance ofpossessing a comprehensive understanding of issues that are important to colleaguesin each market, learningmore about the on-the-ground realites of working at Standard Chartered, hearing about what is working well and understanding thechallenges thatneed to be addressed. The Board also recognises the role it has in upholding a genuine and transparent two-way dialogue with the workforce. As it is distnct to the role of management, and composed of diverse members with indvidual voices, it is uniquely placed tooversee, guide, support and, where necessary, challengethe Management Team in implementng the Bank’s strategy. This distnction wasa key point communicated by Board members to colleagues as part of engagement throughout 2021. Simlar to last year, the Board continued to adopt an alternative approach tothe workforce engagement methods set out in the UK Corporate Governance Code. The primary reason for taking a different approach was that, as a global organisaton with more than 88,000 colleagues across 59 diverse markets, it is vital that any Board engagement should gatherunfiltered feedback which is representative of the whole workforce in order to be truly effective. The Board took every opportunity toengagewith employees, either collectively or indvidually during the year, in order to gain a true understanding of their views, ideas and concerns. As with other forms of stakeholder interacton this year and last year, traditonal forms of employee engagement were adapted inlight of the pandemic. ![]() 114 Standard Chartered – Annual Report 2021 Directors’ report Corporate governance Engagement with employees continued Key themes covered by employees and Board members during engagement sessions Employees were asked during the sessions which areas they would like to see the Board have greater impact. The top responses received included keeping strategy relevant, protecting and encouragingstakeholder interests, championng diversty and incluson, promoting a culture of greater empowerment andaccountabilty, simplfying processes, balancing costs against business performance, and further investment in the Africa and Middle East region. As parts of the world begin to emerge from the pandemic, colleagues were asked what had changed for the better at StandardChartered, and whetherthey had any concerns. The benefits of ‘going digtal’ was a common theme, with colleagues pleased with the accessiblity to collaborate virtually across our diverse markets, as well as a greater acceptanceof flexibleworking. In contrast to this, concerns were raised by colleagues regarding work-life balance, as well as the transparency and cohesion of certain intiatves between different departments in the Group. The Q&A element of the sessions provided the Board with deep insght into employee views, concerns andinterests. As in previous years, colleagues were encouraged to ask the Board anything, and the dialogue covered a diverse range of topics, some of which are illustrated below. #### Asia India and South Asia • Strategic outlook for local markets • Transformation projects Asia cluster • New ways of working • Groupand country relationshps GCNA • Di gital banking and private banking strategy • Investment in the support functions and local mark ets Africa and #### Middle East Africa cluster • Lessons learntfrom market peers • Technological investment in smaller markets MENAP • Investment in localmarkets • Returnon tangible equity targets • Impact ofCOVID-19 • Sustainablity andnet zero strategy • Diversty and incluson • Strategy • Share price • Geopolitcaldevelopments • Talent strategy, remuneration and career development • Work-life balance • Digtalisaton trends and intiatves • Sponsorship investment and opportunites • TheStands Collective themes (raised by more than one region) Europe and #### Americas • Businessre-structuring • Relationshp with regulators ![]() 115 Standard Chartered – Annual Report 2021 Directors’ report Engagement and linkages with the Group’s subsidaries The Board and its committees recognise the importance of creating, maintaning and buildng upon appropriate linkages with the Group’s subsidaries. Simlar to 2020, the Board’s abilty to physically meet with people from across the Group’s footprint remained limted. Despite this, the Group Chairman and INEDs engaged with the Group’s subsidaries through a number of forums. This included chair andcommittee chair engagement sessions,as well asother forms of interacton. The Group Chairman hosted three subsidary chair engagement sessions during 2021, all held virtually. Each event opened with remarks from the Group Chairman, followed by a Q&A session, with Bill Winters joning one of the sessions. The Group Chairman was encouraged by the high level of interacton and sharing of best practices by our subsidary chairs. Items discussed across the three sessions included: • Group performance and strategy • sustainablity and the Group’s net zero pathway • Resolution Framework • areas of focus for the Group’s boards • Boardeffectiveness • governance best practice The Audit Committee held its annual conference call during the year, which was hosted by the Audit Committee Chair and attended by the chairs of subsidary audit committees. The Group Chairman; Group Head, Central Finance; Group Financal Controller; Group Head of Internal Audit; Global Head, Audit, Quality Assurance; Group Head, Conduct, Financal Crime and Compliance; members of the Group’s statutory auditor, EY,includng the lead auditpartner; and the Group Company Secretary also particpated in the call. Items discussed during the call included: • Group Finance update, which featured IFRS 9 models and overlays, as well as a status report on the Group’s Aspire Programme • conduct, financal crime and compliance developments • Group Internal Audit reporting to subsidary audit committees • Quality Assurance review of subsidary audit committees • Group statutory auditupdatefrom EY In conjuncton with the Chair of the Board Financal Crime Risk Committee, the Board Risk Committee Chair hosted its annual conference call with chairs of the subsidary board risk committees. The Group Chairman; Group Chief Risk Officer; Group Head, Conduct, FinancalCrime and Compliance; Global Head of Financal Crime and Compliance; and the Group Company Secretary also particpated in the call. Items discussed during the call included: • 2021 Board Risk Committee and Board FinancalCrime Risk Committee focus areas • Group Chief Risk Officer’s 2021 priorties • financal crime compliance 2021 priorties The Remuneration Committee Chair held a conference call attended by the subsidary remuneration committee chairs and the chairs of subsidary boards that have remuneration responsiblites. The Group Chairman; members of the Remuneration Committee;the Global Head, Performance, Reward & Employee Relations; Head, Executive Compensation and Reward Governance; regional heads of Performance, Reward & Benefits; and the Group Company Secretary also particpated in the call. These annual calls are important as remuneration governance continues to be under thespotlightas the regulatory landscape evolves across our markets. The calls also foster knowledge sharing and best practice between the PLC Remuneration Committee and the subsidary remuneration committees and raise awareness as remuneration committees are increasngly expected to have oversight over the approach to remuneration for the wider workforce. The topics that were discussed included: • 2021 Remuneration Committee focus areas • 2021 to 2022 Performance, Reward and Benefits priorties • continungto monitor the long-termimpact of the pandemic • renewing the directors’ remuneration policy, which will be subject to a shareholder vote at the AGM in May 2022 • the impact ofregulatory changes on remuneration • our refreshed approach to performance management • ensuring progress with ongoing performance and reward intiatves (for example embedding of the Fair Pay Charter, Wellbeing, Benefits Transformation) Other activties whichtookplace during 2021 to further strengthen thelinkagesacross the Group included: • the Group Chairman attended a number of subsidary board meetingsincludng banking subsidariesin Hong Kong, Singapore, Pakistan, Kenya and Malaysia. • the Group Chairman attended the East Africa Cluster Board Forum and the Southern Africa Cluster Board Forum. • the Chairs of the Group Audit Committee and the Board Risk Committee attended some ofthe subsidary audit and risk committee meetings and some of the subsidary audit and risk committee Chairs attended a meeting of the respective Group Committee. Further detail regarding how the Group engages with its stakeholders can be found on pages 50 to 77 ![]() 116 Standard Chartered – Annual Report 2021 Directors’ report Corporate governance #### Audit Committee I am pleased to present the Audit Committee’s report for the year ended 31 December 2021. In additon to the disclosurerequirements relating to audit committees under the UK Corporate Governance Code 2018, the following report sets out the areas of signficant focus for the Committee and its activties over the course of the year. The report also covers the review undertaken on the effectiveness of the Group’s Statutory Auditor, EY, and ongoing oversight of the effectiveness of the GIA function. Assurance has been sought and received by the Committee concerning the resourcing of Group Finance, GIA and CFCC. Maria Ramos joned the Committee on 1 January 2021 and Naguib Kheraj stepped down from the Committee on 5 July 2021. I would like to convey the Committee’s gratitude to Naguib for his considerable contributon as both a member and Chair over many years. As was the case in 2020, the impacts of COVID-19 have remained of signficant focus for the Committee. This has comprised reviewng and challengingcredit imparment provisons, includngoverlays to deal with the impact of COVID-19, key accounting issues and signficant accounting estimatesand judgements made by management, to ensure they are sufficent, appropriate and that the Group’s public disclosures in regard to this are transparent. The Committee reviewed and considered judgementalpost model adjustments (PMAs) and management overlays in both the wholesale and retail portfolios on a quarterly basis, required in order to estimate expected credit loss (ECL), intended to take into account the impacts of COVID-19. Focus has also been placed on accounting treatment and value in use (VIU) of the Group’s equity accounted investment in China Bohai Bank. Cognisant of the ever-increasng importance of data, the Committee has kept a close watch on the Group’s approach to data management, the challengesin place and actionplans to address these.Towards the end of 2021, the Committee held a deep dive discusson into data management. The Committee recognisedthepaceof regulatory change pertainng to thisand probed into how thebusinesses and functions are priortisngtheir data management actionplans and the governance in place to manage this. Data management will remain an area of focus for the Committee and the Board in 2022 and beyond. In mid-2021, withthe renaming of theBrand, Values and Conduct Committee to theCulture andSustainablity Committee (CSC), Conduct Risk was transferred to this Committee. Cognisant of the overarching nature of thisrisk, theCommitteediscussed theprogress made during 2021 to bring together the new Conduct Risk managementapproach, areas of emerging risk and the roadmap for 2022. The Financal Conduct Authority’s (FCA) consultation on a new Consumer Duty was discussed and this will feature in the Committee’s deliberatons in 2022. Following on from 2020, the Committee has been receivng regular updates from management and EY on the work under way to improve the Group’s Information Technology (IT) access controls and remediate weaknesses identfied during prior year audits. The Committee has been monitorng the progress being made on this, given its importance in protecting the Group’s systems security. This will be a continued priorty for 2022. This is EY’s second year as the Group’s Statutory Auditor and it has been useful to have input from regional and specialst partners on the Committee’s agenda. By way of example, discussons onregional/ country overviews, the Group’s IT access controls and tax have all benefitted from EY partner input. EY continues to provide fresh perspective, independent challengeand subject matter expertise to the Committee’s deliberatons. The Committee has exercised its authority delegated by the Board for ensuring the integrty of the Group’s published financal informaton by discussngand challenging the judgements anddisclosures madeby management, and the assumptions and estimates on which they are based. The Committee has exercised judgement in decidng which of the issues it considered to be signficant in the financal statements, and this report sets out the material matters that it has considered in these deliberatons. Managementreporting tothe Committee from across the business, functions and the Group’s network has provided the opportunity forthe Committee to challenge,probe, discuss and seek assurance from management, enabling the Committee to providean independent perspective. As a result of the Committee’s work in 2021, assurance has been provided to the Board on the quality and appropriateness of the Group’s financal reporting, in particular takingaccount of COVID-19 impacts, and oninternal audit, compliance and regulatory matters,to continue to safeguard the interests of the Group’s broader stakeholders. The following pages provide insght and context into the Committee’s work and activties during the year. Phil Rivett Chair of the Audit Committee Committee compositon Scheduled meetings P G Rivett (Chair) 8/8 D P Conner 8/8 B E Grote 8/8 C M Hodgson, CBE 8/8 N Kheraj\* 4/4 M Ramos 8/8 CTong 8/8 \*Naguib Kheraj stepped down from the Committee on 5 July 2021 Other attendees at Committee meetings in 2021 included: the Group Chairman; Group Chief Executive; Group Chief Financal Officer; Group Chief RiskOfficer; Group General Counsel; Group Head of Internal Audit; Group Head of Conduct, FinancalCrime & Compliance; Group Head, Central Finance; representatives fromGroup Finance;Group Statutory Auditor; andGroupCompany Secretary. As part of herongoing engagement plan in2021, Jasmine Whitbread attended one Committee meeting as an observer. As part of, and in additon to mostscheduledCommittee meetings, the Committee held privatemembers-only meetings. The Committee members havedetailed andrelevant experience and bring an independent mindset to their role. The Board is satisfed that Phil Rivett has recent and relevant financal experience andthat the otherCommittee members also have a depth of experience having managed complex balance sheets or having knowledge of financal reporting in internatonal business. Biographcaldetails of the committee members can be viewed on pages 91 to 94 Main responsiblites of the Committee The Committee isresponsible for oversight and advice to the Board on matters relating to financal reporting. The Committee’s role is to review, on behalf of the Board, the Group’s internal controlsand internalfinancal controls. The Committee has exercised oversight of the work undertaken by Conduct, Financal Crime & Compliance (CFCC), Group Internal Audit (GIA) and the Group’s Statutory Auditor, EY. The Committee reports to the Board on its key areas of focus following eachCommittee meeting. The Committee has written terms of reference that can be viewed at sc.com/termsofreference “As was the case in 2020, the impacts of COVID-19 have remained of signficant focus for the Committee” ![]() 117 Standard Chartered – Annual Report 2021 Directors’ report #### Activties during the year Financal reporting • Satisfed itself that the Group’s accounting polices and practices are appropriate • Reviewed the clarity and completeness of the disclosures made withnthe published financal statements • Considered any changes in disclosures arisng from best practice in applying the UK Finance Code for Financal Reporting Disclosure, recommendations from the Taskforce on Disclosures on Expected Credit Losses (DECL), high-quality practices with regard to implementaton of ECL suggested by the Prudential Regulation Authority (PRA) and Financal Reporting Council (FRC) publicatons on aspects of UK reporting and disclosure requirements from the Financal Stabilty Board’s Task Force on Climate-Related Financal Disclosures (TCFD) with regard to sustainablity • Monitored the integrty of the Group’s published financal statements and formal announcements relating to the Group’s financal performance, reviewng the signficant financal judgements and accountingissues Signficant accounting judgements considered during 2021 are shown below. The Committee can confirm that the key judgements and signficant issues reported are consistent with the disclosures of key estimaton uncertaintes and critcal judgements as set out in Note 1 starting on page 316. Key area Action taken Impairment of loans and advances Reviewed and challenged, on a quarterly basis, reports detailng the compositon and credit quality of the loan book, concentrations of risk and provisoning levels. Reviewed and considered judgemental PMAs and management overlays in both the wholesale and retail portfolios on a quarterly basis that were required to estimate ECL. In the case of PMAs, some models’ performance breached monitorngstandards or validaton standardsnecessitatng adjustments. In the case of management overlays mainly to deal with the impact of COVID-19, the amount of loans placed on non-purely precautionary early alert remains elevated compared with the pre-COVID-19 period and the economic dislocaton observed in 2020 and 2021 has not yet been fully observed in customers’ financal performance, in part due to ongoing government support measures across the Group’s markets. The Committeechallenged the completeness ofthese overlays and the overlays relating to uncertaintes in the China commercial real estate sector. The Committee also reviewed and considered when such management overlays would be released. Reviewed the appropriateness of management’s economic forecasts and the adjustments to provisonsto incorporate the effect ofmultiple economic scenarios. The Committeewas briefed on theperformance of theInternational Financal Reporting Standard (IFRS) 9 models and the remediaton plans in place to address material non-performance issues, where these hadbeenidentfied. The Committee considered the appropriateness of the staging of higher-risk loans, as well as the expectation of elevated losses in industres and locations that have been particularly affected by COVID-19. In respect of high-risk credit grade exposures, the Committee was also briefed on business plans, includng remedial actions and management assessment of the recoveries and collateral available. Impairment of aircraft Reviewed and challenged, on a quarterly basis, management’s assessments of imparment losseson aircraftoperating lease assets, includng the assumptions used to determine asset VIU and market valuations. In particular, the Committee challenged management’sassessments and the detailed sensitvity analysis to ensure that the implcations of COVID-19 had been fully considered, as the aircraft industry was particularly affected by COVID-19 travel restrictons and lockdowns. TheCommitteereviewed detailedsensitvity analysis on the factors that would impactthe VIU assessments includng residual values, remarketing periods after lease terminatons, reductions in market rental rates and discount rates while assessing the imparment calculations for the aircraft. The Committee also focused its review on lease payment deferrals granted to lessees as a result of COVID-19 to assess any potential impact on the VIU assessments for the related aircraft and monitored progress on repayments of the deferrals and any extensions. Goodwill imparment Reviewed management’s annual assessment of goodwill imparment, covering key assumptions (includng forecasts, discount rate and signficant changes from the previous year), headroom availablity and sensitvites to possible changes in keyassumptions. ![]() 118 StandardChartered – Annual Report 2021 Directors’ report Corporate governance Carrying value of investments in associates Reviewed and considered management’s carrying value assessments on the Group’s investment in China Bohai Bank, covering key assumptions and potential sensitvity to changes. The Committee considered the limted public informaton available on China Bohai Bank, upon which to base a VIU assessment, and the impact of China Bohai Bank’s exposures to China commercial real estate in the sensitvity analysis with regard to the VIU assessment. The Committee alsoreviewedmanagement’s assessment that theGroup maintaned signficant influence and satisfed itself that it remained appropriate to continue to equity account for the investment. Recoverabilty of parent company’s investment in subsidaries Discussed and received confirmaton frommanagement thatit hadadequately assessed the recoverabilty of investments in subsidaries, together with any intercompanyindebtedness. IT – user access management Received an update from management and EY where new and existng IT observations had been identfied relating to user access management supporting in-scope applicatons includng privleged access, user access reviewand other useraccess management controls.The Committee discussed how management and EY are working to assess this matter and sought and receivedassurance thismatter is receivngseniormanagement attention. Valuation of financal instruments held at fair value Received reports and updates at each reporting period detailng the key processes undertaken to produce and validate valuations of financal instruments, includng any changes in methodology from prior years and signficant valuation judgements. The Committee received regular updates on the level of unsold positons in the syndicatons portfolio and the valuation of these positons and plans for sell down. The Committee also reviewed credit valuation adjustments, debit valuation adjustments, funding valuation adjustments and own credit adjustments and considered the explanation and rationale for any signficant movements. Other areas of focus: Classifcation of assets as held forsale Reviewed management’s assessment of whetherassets or disposal groups should be reclassifed as held for sale. This included reviewng the facts and circumstances for the proposed sale of shippng assets and the remainng Princpal Finance investments. Restructuring costs Reviewed and considered, on a quarterly basis, income statement charges and credits classifed as restructuring. Hedge accounting Reviewed the ineffectveness reported in operating income from hedge accounting and signficant hedge terminatons and the reasons for this. Taxation Reviewed and considered management’sjudgements and assumptions with respect to tax exposurerisks, includnguncertaintaxpositons, and ensured adequate disclosure inthe financal statements has been made. This included understanding the Group’s effective tax rate, the quantum and basis of recogniton of deferred tax assets, and the UK bank levy charge for the year. Provisons for legal and regulatory matters Considered advice presented on the current status of signficant legal and regulatory matters, andconsidered management’s judgements on thelevel of provisons and the adequacy of disclosure, as set out in Note 26 on page 390. Going concern assessment and viablity statement • Reviewed management’s process, assessment and conclusions with respect to the Group’s going concern assessment and viablitystatement, includngthe forward-looking Corporate Plan cashflows,princpal and emerging risks, liqudity and capital positons, and key assumptions. The Committee also ensured that the going concern assessment and viablity statement is consistent with the Group’s Strategic report and otherriskdisclosures Further details can be found on pages 318, 86 and 87. Fair, balanced and understandable • The Committee considered, satisfed itself and recommended to the Board, that the processes and procedures in place ensure that the Annual Report, taken as a whole, is fair, balanced and understandable,and provides the informaton necessary forshareholders to assess the Group’s positon and performance, business modeland strategy, andthe business risks it faces. The statement is underpinned by the Committee’s, and the Board’s, belief that all important elements have been disclosed; and that the descriptons of the Group’s business as set out in the Strategic report are consistentwith those usedfor financal reportingin the Group’s financal statements #### Activties during the year continued ![]() 119 Standard Chartered – Annual Report 2021 Directors’ report Examples of deeper discussons into specifc topics • EY regional partner overviews: Received overviews and topical updates from EY’s local regional partners from Malaysia, Germany and the UAE. These regional overviews provided insght into the challenges faced in the Group’s markets from a statutory audit perspective; and provided the Committee with the local audit partner’s assessment of the Group’s control systems in these markets, the quality of the Group’s management from a control perspective and a benchmark of the Group’s control environment against local and internatonal peers. The overviews also provided insght into local regulatory developments, the Group’s standing and engagement with local regulators and areas of focus for 2021. These EY regional partner overviews will continue in 2022 and beyond • Financal regulatory reporting: Received and discussed updates on the Group’s financal regulatory reporting remediaton programme. Discusson focused on the challenges involved with resourcing, given the specialst skills required and financal/liqudity reporting in the Group’s network • Aspire programme: Discussed a paper which set out an update on the Group’s Aspire programme (a programme launched in 2018 to deliver a modern technology systems and data landscape). Discusson focused on resources, timelnes and the impact that COVID-19 was having on delivery of the programme • Information technology access controls: Received and discussed reports on the work under way to improve the Group’s IT access controls and remediate weaknesses identfied during prior year audits. The Committee discussed how management is working to remediate the observations raised by EY and sought assurance that this matter is receivng senior management attention. EY’s Technology Risk Partner was invted to jon these discussons. This will continue to be an area of focus for 2022 • Internal financal controls: Received and discussed a paper setting out the approach taken to safeguard the production of the Group’s financal books and records • Department for Business, Energy & Industrial Strategy (BEIS)consultation paper: At the Committee’s request, received and discussed a paper setting out the proposals and recommendations from the BEIS consultation paper entitled: ‘Restoring Trust in Audit and Corporate Governance’. Discusson focused on the recommendations in their current form that might be challenging for the Group to implement and also the approach the Group would take during the consultation period. A sub-committee was formed to finalse oversight of the Group’s written response to the BEIS consultation paper • Data management: Received and discussed papers on the Group’s Data Management Framework, following on from discussons held in 2020. The H1 2021 discusson focused on the resource, timelne, risks and budget allocated to this. The H2 2021 discusson focused on the forward-looking timelnes, how the businesses and functions are embedding their data management action plans and the governance in place tomonitor andmanage thisembedding • Conduct: With the transfer of oversight of Conduct Risk from the CSC to the Committee, received and discussed a paper setting out the progress made on the implementaton of a new Conduct Risk management approach, key themes across the first line of defence Conduct agenda, areas of emerging risk, external developments and the roadmap for 2022. A briefng was received on the FCA’s new Consumer Duty consultation and emergingglobal developments regarding surveillance and transaction reporting • Tax update: Received and discussed a paper setting out improvements that had been made to the Group’s tax reporting, which included detail on transfer pricng. EY’s Tax Partner was invted to jon this discussonto add perspective • IFRS 9 models: Received and discussed updates on the Group’s use of IFRS 9 ECL models. In May 2021, discusson focused on non-performing models and the remediaton work under way to rectify the performance issues. It was acknowledged that the impact of COVID-19 would likely challenge the credit behaviours built into the Group’s models, resulting in more of the existng models falling into the non-performing category. In December 2021, the Committee noted the signficant progress being made with regardto the remediaton ofnon-performing models • Major disputes and signficant non-financalcrimecompliance-related regulatory government investgations: Received and discussedtwo updateson major disputesand signficant non-Financal Crime Compliance-related regulatory government investgations facing theGroup • MiFID IIImplementationand Signficant Transaction ReportingObligatons (STORs): Receiveda paper on the Group’s compliance with all obligatons withn MiFID II and the Group’s STORs, their current risk profile and remediaton plans • Finance resourcing: Reviewed and discussed a paper providng assurance that: the Accounting and Financal Reportingfunctionis adequately andappropriatelyresourced; thequalifcations, experience and trainng of colleagues is appropriate; and the budget allocated is sufficent to maintan external reporting obligatons • 2020 Audit Quality Assurance Review (AQR) Inspection Report: Reviewed and discussed the AQR Inspection Report issued in May 2021 for KPMG’s audit of the Group’s financal statements for the year-ended 31 December 2019. Ahead of this, the Committee Chair held discussons with the FRC and KPMG on the key findngs, which were also shared with the Committee • FRC’sobservationson the Group’s 2020 Annual Report: Reviewed and discussed the Group’s responses to the FRC’s observations on the Group’s 2020 Annual Report • Volcker compliance report: Noted thechange in BoardCommittee responsiblitesin respectof the VolckerRule #### Activties during the year continued ![]() 120 Standard Chartered – Annual Report 2021 Directors’ report Corporate governance Group Statutory Auditor,EY Provided oversight of the work undertaken by EY as the Group’s Statutory Auditor. In particular, the Committee: • reviewed and discussed the risks identfied by EY’s audit planning, seeking and receivng assurance that these risks have been addressed properly in the audit strategy • satisfed itself that EY has allocated sufficent and suitably experienced resources to address these risks and reviewed the findngs from the audit work undertaken • sought and received assurance that no undue pressure has been asserted on the level of audit fees, to ensure that there is no risk to audit work being conducted effectively and independently • conducted an annual performance and effectiveness review of EY. Input was received from Committee members,chairs of subsidary audit committees, the Group ManagementTeam, regional/country chief financal officers, members of the Group Finance Leadership Team and the GIA Management Team. The results of this input was discussed by the Committee. Overall, it was felt that EY is considered to be effective, objectve and independent in its role as the Group’s Statutory Auditor. The Committee agreed to propose to the Board that the re-appointment of EY as the Group’s Statutory Auditor for a further year be recommended to shareholders at the 2022 AGM. This recommendation was made without any influence from a third party and free from any contractual obligaton to do so, includng for the avoidance of doubt, any contractual term described in Article 16(6) of the Audit Regulation • reviewed and discussed EY’s audit planning report and any updates, audit results reports and interm reviews • received and discussed a paper setting out EY’s control themes and observations from the 31 December 2020 year-end audit. EY’s Technology Risk Partner was invted to jon this discusson • reviewed and discussed EY’s 2021 approach to the private Written Auditor Report to the PRA for the year ended 31 December 2021. The Committee met privately with EY at the end of certain Committee meetings, without management being present. Phil Rivett met regularly with the EY partners leading the Group’s audit during the course of the year. The Company complies with the Statutory Audit services for Large Companies Market Investigaton (Mandatory Use of Competitve Tender Process and Audit Committee responsiblites) Order 2014. EY has been the Group’s Statutory Auditor for two years. In accordance with the Audit Practices Board’s requirements, the lead audit engagement partner has held the role for two years. The lead engagement partner, David Canning-Jones, has a background of auditng banks and understands the markets in which the Group operates. Following the 2017 audit tender, EY was re-appointed as the Group’s Statutory Auditor for the financal year ending 31December 2021. Non-audit services • Responsible for setting, reviewng and monitorngthe appropriateness of the provisonof non-audit services, applying the Group’s policy on the award of non-audit services to the External Auditor, while taking into account the relevant ethical guidance • In 2021, the Group spent $3.9 millon on non-audit services provided by EY and $5.3 millon on audit- related services such as quarterly and half year reviews and regulatory reporting Further details on non-audit services provided by EY can be found in Note 38 on page 417 and the Group’s approach to non-audit services on page 190 Internal controls • Discussed reports from GIA that provide GIA’s view on the system of internal controls across all risk types, business and country functions, includng summary highlghts of the most signficant matters identfied by GIA and areas of thematic interest that have arisen as part of the audits and warrant the Committee’s attention. On a quarterly basis, GIA reports on any overdue remediaton of findngs. The Board Risk Committee, the Board Financal Crime Risk Committee and the CSC discussed separate reports from the Group Head of Internal Audit on GIA’s appraisal of controls across key risks, subject to each Committee’s oversight. Collectively, the reports received by these Committees provided assurance that there are effective internal controlswithn theGroup. • Throughout the year, the Committee continued to probe that the Group’s internal controls infrastructure was not being adversely impacted by working from home (WFH) arrangements. Further details on internal controls can be found on page 185 #### Activties during the year continued ![]() 121 Standard Chartered – Annual Report 2021 Directors’ report Group Internal Audit In 2021, GIA moved back to a more business as usual approach, utilsing a 6 + 6 months Audit Plan with a detailed review and refresh at six months to ensure the 2021 Audit Plan remained relevant and focused on the Group’s changing risk profile. In Group markets where COVID-19 impacts were felt more heavily during the year, such as the Delta variant impact on India from May 2021, GIA focused, as required, on the revised approach that had been adopted during 2020, utilsing short, sharp reviews to provide timely opinons on the Group, incorporating agile princples into ways of working. The Committee was updated with these required changes in a timely manner. This enabled the Committee to be provided with assurance that the Group’s response to and operations during COVID-19remained appropriate for our shareholders, customers and colleagues and aligned to the Group’s Here for good brand promise. The Committee sought and received assurance from management that this agile approach was adding value to the business, continued to focus on the effectiveness of controls and processes, and factored in emerging risks. The Committee also monitored, on an ongoing basis, that travel restrictons and WFH arrangements were not impactng the quality or integrty of audit work or the internal controls infrastructure of the Group. In 2019, an external assessor, Grant Thornton (selected by the Committee from a competitve request for proposal process), conducted an external quality assurance review on the GIA function, which assessed the requirements of GIA against key professional and regulatory bodies governing the practice of internal audit. While it was recognised that GIA “generally conforms” to the requirements of these standards, some recommendations were made. During the course of 2020, the Committee received updates on progress against these recommendations and in 2021 it noted that all actions were closed with no further additonal work required. In 2021, for the most signficant matters identfied by GIA, business and/or regional management were invted to attend Committee meetings to provide updates on the steps being taken to enhance the control environmentand address internal auditfindngs. The Committee: • reviewed the adequacy of resourcing and proposed work plans for GIA and is satisfed that these are appropriate in light of proposed areas of focus, expertise and skills that are required • assessed the role and effectiveness of the GIA function, and reviewed and monitored GIA’s progress against the 2021 Audit Plan and the review and monitorng of post-audit actions. Changes to the Audit Plan, in particular COVID-19-related changes, and people changes, were also discussed by the Committee • reviewed and approved GIA’s 2022 Audit Plan and budget • reviewed and approved the refreshed GIA Charter • received and discussed reports from the Global Head, Audit Quality Assurance (QA) on the QA function’s view of the control environment in GIA • scrutinsed any long overdue GIA issues and requested management to develop risk reduction plans for items with long closure periods to be monitored by GIA. The Committee is satisfed with the independence of the GIA function. Over the course of the year, Phil Rivett met regularly with the Group Head of Internal Audit and the GIA Management Team. Phil Rivett will engage with the incomng Group Head of Internal Audit, due to take up the role as Group Head of Internal Audit with effect from 1 April 2022. Group compliance Regular compliance reporting to the Committee sets out the work carried out by the CFCC function, signficant compliance and regulatory risks and issues facing the Group, and key actions being taken to address andmitgate these matters. In 2021, the Committee was updated on and discussed: • key supervisory areas of focus, regulatory updates and forward-looking themes, the status of the Group’s core collegeregulatory relationshpsand enforcement matters • the importance of continung to strengthen the Group’s risk culture • the function’s operating model, includng an overview of the CFCC budget and organisatonal changes to simplfy the function. In conjuncton with the Board Financal Crime Risk Committee, the Committee has discussed the Group’s Risk and CFCC Productivty Programme, and the Financal Crime Surveillance Operations (FCSO) Transformation • conduct, with a focus on WFH arrangements and the risk and control environment in place in response toCOVID-19 • updates from CFCCAssurance. The Committee reviewed a paper on compliance resourcing and confirmaton was received from management that the function is adequately resourced and that a close watch was being kept on this, given the buoyant external hirng market in some of the Group’s territores. The Committee also reviewed the 2022 Compliance Plan, budget and priorties. Phil Rivett met regularly throughout the year with the Group Head, CFCC. The Board Financal Crime Risk Committee received reports on financal crime compliance-related matters. #### Activties during the year continued ![]() 122 Standard Chartered – Annual Report 2021 Directors’ report Corporate governance Speaking Up Speaking Up is the Group’s confidental and anonymous whistleblowng programme (the Programme). The Programme has been designed to comply with the Group’s UK lead regulators’, the PRA and the FCA, WhistleblowngRules. Our whistleblowngchannels are available toanyone –colleagues, contractors, suppliers and members of the public – to raise concerns confidentally and anonymously. The Committee reviewed and discussed an annual report on the operation and effectiveness of the Programme which was subsequently tabled to the Board. The report provided the Committee with assurance of the Group’s ongoing compliance with the Whistleblowng Rules. The Committee discussed the linkages between Speaking Up and data withn the Group’s My Voice (employee engagement survey) results and the focus areas for 2022. In 2021, the Committee Chair received updates on Speak Up issues and incdents as necessary. Further details on Speaking Up can be found on page 72 Interaction with regulators Typically, the Committee meets with the PRA on an annual basis, without members of management being present. The purpose of such meetings is to enable a discusson between the Committee and the PRA concerning areas of focus for both the Committee and the PRA. This meeting did not occur in 2021 due to COVID-19 restrictons; however, it is anticpated that this will resume once things return to normality. Phil Rivett attended trilateral meetings with EY and the PRA over the course of the year and also met with the PRA in his capacity as Audit Committee Chair. Linkages with subsidary audit committees There are strong linkages and interactons in place between the Committee, regional hub audit committees and banking subsidary audit committees. In 2021, Phil Rivett attended a Standard Chartered Bank (Hong Kong) Limted(SCB HongKong)audit committeemeeting anda Standard CharteredBank(Singapore) Limted (SCB Singapore) audit committee meeting. The audit committee chair of SCB Hong Kong and SCB Singaporerespectively attended oneStandard Chartered PLCAudit Committeemeeting.This practicewill continue in 2022 to reinforce these important linkages. Phil Rivett hosted an annual video-conference call with the chairs of subsidary audit committees and INEDs in March 2021. Details of this call can be found on page 115 Committeeeffectiveness review During 2021, an internal Board and Board Committee effectiveness review was faciltated by the Group Company Secretary. Key observations from the 2021 internal effectiveness review The feedback on the Committee’s functionng and effectiveness was positve and it specifcally highlghted: • The Committee has maintaned a high standard of work, and the Committee Chair is well prepared and effective in ensuring open discussons • In terms of compositon, it was felt that there is a good balance of banking, accounting and control skills • The contributons of EY, as the Group’s Statutory Auditor, were well rated • Suggestions were provided on potential topics for trainng sessions 2022 Action Plan The 2022 Action Plan for the Committee reflects suggestions from the evaluation and continues to build on the solid progress made last year: • Consider includng anannual Committee strategysession to review specifc issues or forthcoming changes • Consider a dedicated session on internal controls and additonalexpectations for the Committee arisngfrom the BEIS consultation • Consider scheduling additonal trainng on audit aspects relating to Climate, Net Zero and Data Risk #### Activties during the year continued ![]() 123 Standard Chartered – Annual Report 2021 Directors’ report #### Board Risk #### Committee I am pleased to present the Board Risk Committee’s report for the year ended 31 December 2021. The Committee was again very active this year and engaged across a wide rangeof risk management issues. Froma regulatory perspective, the Committee has helda number of discussonson important topics. These includedthe Bank ofEngland’s(BoE) ResolvabiltyAssessment Framework, the Climate BiennalExploratoryScenario (CBES) stress test, operationalresilenceincludng ImportantBusiness Servicesand ImpactTolerance Statements, theBoE Solvency stress testand the Interbank Offered Rate (IBOR) transiton. In particular, the Committee invested time and focus to review, discuss, probe and challenge the Group’s Resolvabilty Assessment Report, includngthekey assumptions madeby management, ahead of the Board-approved submisson to the BoE in October 2021. Resolvabilty will remain akey area of focus, scrutiny and discusson for the Committee and the Board throughout 2022. Simlarly, the Committee reviewed, discussed and challenged the CBES submisson to the BoE. As a result of this, the Committee requested management toconsider how the outcomesfromthis useful exercise can be leveraged further by the Group and incorporated into existngrisk management and stress testing processes, which management has takenonboard. Climate Risk remains an important area of focus for the Committee and the Group more broadly. ICS remained a key priorty in 2021, with continued reporting from management in the first, second and third lines of defence. The ICS Board Risk Appetite metrics have been pivotal this year in enabling the Committee to track the progress being made and delve deeper into areas that require continued focus. ICS remains an ongoing priorty for the Committee. There has been a good level of representation from the businesses and functions at Committee meetings, and also from a regional and countrylevel,which has enabled the Committeeto explore how risks are being managed on the ground in this ever-changing environment. In particular, the risks associated with working from home (WFH) have been assessed in a number of different areas, given the impacts of COVID-19 and also the Group’s transiton to a hybrid working model. The Committee met virtually throughout 2021, due to COVID-19 restrictons; however, regular meetings and careful review of all agendas and papers have ensured that the Committee has been able to focus on the right areas and maintan engagement in the virtual environment. Outside of Committeemeetings, Iheld regular calls with the Group Chief Risk Officer (GCRO), a wide range of other members of the Risk function, and the senior management of the Group, to ensure that I was kept abreast of key risks and emerging developments as they occurred, which in turn, ensured that Committee members were notifed of signficant events in a timely manner. In March 2021, we held a blue sky thinkng/horizon scanning session, which considered the potential risks that the Group might be or could become exposed to. This session informed ourforward-looking agenda and resulted in the Committee reviewng papers and holding deeper discussons involvng key markets such as: China, includng the outlook for the Chinese banking sector and challenges faced; operational stabilty issues and remediaton under way in Hong Kong; and Korea, includng the Group’s mortgage portfolio. All of these discussons focused onthe controls in place to manage the key risks and impacts arisng from COVID-19. We also covered matters such as Digtal Asset Risk, Interest Rate Risk includng the Group’s structural hedging programme, Exchange Rate Risk and Credit Fraud Risk. We have just held our 2022 blue sky thinkng/horizon scanning session, which willassistin priortisng our2022 agenda. In 2021, the Committee held informal sessions covering Model Risk and x-valuation adjustment (XVA). These briefng sessions were opened up to all Board members, and provided dedicated time and space to engage on thesetopicsin a more informalsetting. Cognisant ofthe rapidly evolving external environment, the Committee continues todiscuss keymacroeconomicand geopolitcal risks and challenges faced by the Group, and assess how these are being managed and mitgated by management. The following pages provide insght and context into the Committee’s work and activties during the year. Naguib Kheraj Chair of the Board Risk Committee Committee compositon Scheduled meetings Ad hoc N Kheraj (Chair) 8/8 2/2 D P Conner 8/8 2/2 G Huey Evans, CBE 8/8 1/2\* M Ramos 8/8 2/2 P G Rivett 8/8 2/2 DTang 8/8 2/2 CTong 8/8 2/2 \*Gay Huey Evans was unable to attend one ad hoc meeting due to a prior business commitment Other attendees at Committee meetings in 2021 included: theGroup Chairman; Group Chief Executive; Group Chief Financal Officer; Group Chief Risk Officer; Group General Counsel; Treasurer; Group Head, Conduct, FinancalCrime & Compliance; Group Head of Internal Audit; the Group’s Statutory Auditorand Group Company Secretary. As part of their ongoing engagement plans in 2021, Byron Grote attended one Committee meeting, ChristneHodgsonattended discussons onspecifc topicsand Jasmine Whitbread attended two Committee meetings and discussons on Resolvabilty. Sir Iain Lobban, Cyber Adviser to the Board, regularly attends discussons on Information and Cyber Security (ICS) Risk and technology. EY attended all Committee meetings in 2021. As part of, and in additon to,somescheduledCommittee meetings, the Committee held privatemembers-onlymeetings. The Committee’s membership comprises INEDs who have a deep and broad experience of banking and the risk factors affecting the Group. Biographcaldetails of the Committee members can be viewed on pages 91 to 94 Main responsiblites of the Committee The Committee isresponsible for exercisng oversight, on behalf of the Board, of the key risks of the Group. It reviews the Group’s Risk Appetite Statement and Enterprise Risk ManagementFramework (ERMF) and makesrecommendations to theBoard.Its responsiblites alsoinclude reviewng the appropriateness and effectiveness of the Group’s risk management systems, considerng the implcations of material regulatory changeproposals,reviewng reports on princpalrisks, includng Climate Risk, to the Group’s business, and ensuring effective due dilgence onmaterialacquistions anddisposals. The Committee reports to the Board on its key areas of focus following each Committee meeting. The Committee has written Terms of Reference that can be viewed at sc.com/termsofreference “The Committee was again very active this year and engaged across a wide range of riskmanagement issues” ![]() 124 StandardChartered – Annual Report 2021 Directors’ report Corporate governance #### Activties during the year Risk Appetite Reviewed and challenged the formulation of the Group’s Risk Appetite Statement, in order to assure that it is effective in setting appropriate boundaries in respect of each Princpal Risk Type. Considered and recommended the Group’s Risk Appetite to the Board for approval. During 2021, the following key proposed changes were made to the Risk Appetite effective in 2022: • Board and Group Management Team (MT) Risk Appetite: In order to increase clarity and focus, it was proposed that the Risk Appetite be split into Board and MT Risk Appetite, in order to streamline the volume of risk metrics considered by the Board and better align to peers. All breaches would continue to be reported to the Committee in line with the current approach, in order that the Committee and Board continue to have visbilty of this • Integration of new categories of risks: Consideraton was given to specifc parameters for Climate, Digtal Asset and Third-Party risks , and additonal metrics for Technology & Innovation. Discusson is under way on the incluson of Digtal Asset related metrics. Monitored actualexposures relative to Risk Appetite limts usingregular Board RiskInformation reports. Tracked a broad range of risk metrics that are reported to the Committee periodcally. The Board Financal Crime Risk Committee reviews the Risk Appetite Statement and metrics for Financal Crime Risk, excluding Fraud Risk. Further details of the Group’s Risk Appetite are set out on page 260 Enterprise Risk Management Framework (ERMF) The ERMF setsout the princplesand standardsfor risk managementacross the branchesand subsidaries of the Group. The Committee: • reviewed proposed material changes to the ERMF, arisng from the 2021 annual review, and recommended these changes to the Board for approval • considered the approach and key outcomes of the 2021 annual effectiveness of the ERMF. Affirmaton was received from the GCRO that the Group’s risk management and internal control framework is materially effective and improvement areas were highlghted for management attention. Princpal Risk Types The Group’s Princpal Risk Types are reported on at each scheduled Committee meeting, through a Board Risk Information report, which accompanies the GCRO’s report. In additon, the Committee had deeper discussons onthe topics set out below. Princpal risks are risks inherent in the Group’s strategy and business model. Princpal Risk Types are formally defined in the ERMF, which provides a structure for monitorng and controlling these risks through the Board-approved Risk Appetite. Further details on Princpal Risk Types are set out on pages 44, 261 and 264 to 279 • Operational and Technology Risk The Group defines Operational and Technology Risk asthe potential forloss resulting from inadequateor failed internal processes, technology events, human error, or from the impact of external events (includng legal risks). The Committee: • discussed updates on Technology Risk reduction and the intiatves under way to manage and reduce Technology Risk • received a paper setting out an analysis of whether the cumulative impact of COVID-19 and the Group’s change programmes have the potential to increase the risk of operational errors outside of the Group’s Risk Appetite. Discusson focused on the impacts of WFH and controls in place, given the expectations of a hybrid working model • discussed a paper setting out a status report on Operational and Technology Risk • discussed a paper setting out how the Group compares to peers with regard to system recovery capabilties • received updates on the Group’s approach to Information Technology (IT) governance and management’s plans to strengthen this. As part of the blue sky thinkng/horizon scanning session in Q1 2021, emerging technology risks and opportunites were discussed usingan external consultant for input • receivedand discussed apaper on technology obsolescence. ![]() 125 Standard Chartered – Annual Report 2021 Directors’ report Princpal Risk Types continued • Model Risk Model Risk is the 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. The Committee: • reviewed and discussed the key risks and issues relating to Model Risk management throughout 2021 • attended teach-in sessions on regulatorymodelsand Model Risk to obtain adeeperunderstanding of the Group’s approach toModelRisk management. • ICS Risk ICS Risk is 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on assets and/or informaton systems. The Committee: • discussed regular reports from management withn the first, second and third lines of defence, on the work under way to strengthen the Group’s defences and create stronger control frameworks, focusing on what had gone well and what could have gone better throughout the year. Such reports enabled the Committee to probe that the Group’s three lines of defence are aligned in advancing the Group’s ICS strategy and key priorties. Senior managers from the business were invted to these discussons to provide on-the-ground perspective and detail on any challenges faced • discussed regular reports on the Group’s Transformation and Remediaton Portfolio and ICS Risk profile • discussed and monitored the progress of key risk reduction intiatves across key control domains • reviewed and discussed ICS Board Risk Appetite metrics and controls testing, which have been pivotal in enabling the Committee to track the progress being made and delve deeper into areas that require continued focus • reviewed and discussed an external report on the Group’s ICS programme and management’s response • continued to probe the sufficency of funding and resource to support the Group’s ICS programme, cognisant of COVID-19 impacts and other books of work under way in the Group. Sir Iain Lobban, who is one of the external adviser members of the Board Financal Crime Risk Committee and Cyber Adviser to the Board, joned Committee meetings for these discussons, together with the Group Chief Operating Officer; Group Chief Information Officer; the Group Chief Information Security Officer and Chief Operating Officer, Trust, Data and Resilence; and the Group Chief Information Security Risk Officer. Committee members also regularly attend meetings of the Group’s Cyber Security Advisory Forum. • 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 the Group’s normal activties. Liqudity Risk is the risk that the Group may not have sufficent stable or diverse sources of funding to meet its 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. The Committee receives a Treasurer’s report, at each scheduled meeting, which covers market developments, capital, liqudity and funding, recovery and resolution planning, regulatory updates and rating agency updates. During the year, the Committee considered and discussed the Group’s capital and liqudity positon and the regulatory environment, includng the approval of the Group’s Internal Capital Adequacy Assessment Process (ICAAP) submisson to the PRA, in order to satisfy itself that the Group’s approach to capital planning iscomprehensive, rigorous and consistent with boththe current regulatory requirementsand the likely anticpated outlook. The Committee also considered and discussed the Group’s Internal Liqudity Adequacy Assessment Process (ILAAP) for submisson to the PRA, 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 (see section on stress testing forfurther details). Further details on Treasury Risk are set out on pages 269 and 270 #### Activties during the year continued ![]() 126 Standard Chartered – Annual Report 2021 Directors’ report Corporate governance Princpal Risk Types continued • Credit Risk Credit Risk is the potential for loss due to failure of a counterparty to meet its agreed obligatons to pay the Group. The Committeereceived and discussed updates onCredit Risk. Thesediscussons were further enhanced through deep dives into various country and business/client segments, details of which are set out in examplesof deeper discussons onspecifctopics. The Committee specifcally focused on the Credit Risk impact of COVID-19. • TradedRisk Traded Risk is the potential for loss resulting from activties undertaken by the Group in Financal Markets. The Committee: • received and discussed a paper setting out the major Traded Risk developments and changes which had occurred in the Financal Markets business over the last year. Focus was placed on the Traded Risk environment and controls in place • received and discussed a paper setting out the major Traded Risk developments and changes which had occurred in the Treasury Portfolios over the last year. Focus was placed on the decison-making process for realisatons • attended a teach-in session on XVA to obtain a deeper understanding of why XVA is needed and how it impacts Financal Markets tradingoperations. Stress testing The objectve of stress testing is to support the Group in assessing that it: • does not have a portfolio with excessive risk concentration that could produce unacceptably high losses under severe but plausiblescenarios • 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 Committee provided oversight, challenge and, where required, approval for: • the scenario and stress test results for the 2021 Group ILAAP stress test • the scenarios and results for the 2021 Group ICAAP stress test and reverse stress test • the results forthe BoE Solvency stress test • the results for the Group’s Recovery Plan stress test • the Group’s Recovery Plan • the results for the Climate Biennal Exploratory Scenario (CBES) stress test. Further details of stress testing are set out on page 260 and 261 Internal controls Discussed reports from the Group Head of Internal Audit which provided summaries of Group Internal Audit’s (GIA’s) appraisals of controls across key risks, subject to the Committee’s oversight, together with the key risk issues identfied by GIA’s work and management actions put in place to address the findngs. The Audit Committee, BoardFinancal CrimeRisk Committee andthe Culture andSustainablity Committee (CSC) discuss separate reports from the Group Head of Internal Audit on GIA’s appraisal of controls across key risk types, subject to each respective Committee’s oversight. Collectively, the reports received by these Committees provide assurance that there are effective internal controls withn the Group. Remuneration as a risk management tool Considered advice provided by the GCRO to the Remuneration Committee concerning the risk factors to be taken into account by the Remuneration Committee in determinng incentves for the Group Chief Executive and other colleagues. Such advice assists the Remuneration Committee in its assessment as to whether the Group’s remuneration policy, practices and procedures are consistent with and promote sound and effective risk management, and do not encourage risk-taking that exceeds the level of tolerated risk of the Group. Further details concerning the Group’s approach to using remuneration as a risk management toolis set out inthe Directors’ remunerationreport. #### Activties during the year continued ![]() 127 Standard Chartered – Annual Report 2021 Directors’ report Regulatory Resolvabilty The Committee held a number of discussons on resolvabilty over the course of the year, includng scheduling an ad hoc meeting, to enable dedicated time and space to discuss this important matter. All Board members were invted to attend resolvabilty discussons, along with the chairs and board risk committee chairs of the Group’s material subsidaries in China, Hong Kong, Korea and Singapore. The Committee Chair, Group Chairman and Audit Committee Chair also particpated in a number of additonal meetings related to resolvabilty with the internal team, external advisers and regulators. The Committee reviewed, discussed and challenged the Group’s Resolvabilty Assessment Report, ahead of approval by the Board for submisson to the BoE. In particular, focus and challenge was placed on the key assumptions made by management, how feedback provided by external consultants, the BoE and GIA had been addressed, and the mechanisms planned and timng for the Group’s holistc testing. Resolvabilty will remain a key priorty for 2022. Climate BiennalExploratory Scenario stress test The Committeereviewed, discussed and challenged theGroup’s CBES stress test results, aheadof submisson to the BoE. All Board members were invted to attend this discusson. In particular, focus and challenge was placed on the key learnings from this exercise, the linkages to the Group’s net zero approach and how data collected for this exercise would be used from a modelling perspective. The Committee requested management to consider how the outcomes from the CBES stress test could be leveraged further by theGroupand incorporated into existng risk managementand stresstesting processes. Further detail on Climate Risk can be found on pages 278 and 279 IBOR transiton Received updates from an industry and Group perspective on the IBOR transiton. The Committee continues to seek assurance that this transiton programme remains on track and is adequately resourced. This will continue to be discussed in 2022. BCBS 239 Princples In May 2021, the Committee received and discussed an update on the outcome of the BCBS 239 self- assessment as of end 2020 and the roadmap for compliance with BCBS 239. At the end of the year, the Committee received an update on the trajectory of the BCBS 239 Programme, includng the progress madeand challengesfaced. The Committee will receive an update on the level of compliance (as at 31 December 2021), once the outcome of the self-assessment is available on 28 February 2022. Group regulator communicatons The Committee discussed key communicatons from the PRA and FCA, where risk and resolvabilty were the main themes. Examples of deeper discussons into specifc topics • Blue sky thinkng/horizon scanning: Discussed a horizon scan of Technology Risk, with input from an external consultant, and agreed the deep dive topics to be discussed by the Committee in 2021 • China Bank exposure management: Received and discussed a paper covering the outlook for the Chinese banking sector and the Group’s risk management approach. Some of the challenges faced by the Chinese banking sector were discussed and the Group’s relationshp and engagement with a number of these banks • Credit portfolio management (CPM): Discussed an overview of CPM activties, includng leveraged protection transactions (LPTs). Cognisant of the PRA’s industry-wide concern with regard to ‘cliff risk’ in LPTs, the Committee noted the Group’s conservative proportion and processes in place to mitgate the associated risks and confirmed its support of the Group’s strategy in place to manage this • Hong Kong operational stabilty issues: Discussed a paper setting out an analysis of system incdents in Hong Kong and targeted remediaton, alongside stabilty intiatves under way. In conjuncton with relevant management, the chairs of Standard Chartered Bank (Hong Kong) Limted board and board risk committee were invted to this discusson to provide historcal background and perspective • Koreadeepdive (includngmortgage portfolio): Received and discussed a paper setting out an overview of the key risks associated with the business activties in Korea. In conjuncton with relevant management, the chair of Standard Chartered Bank Korea Limted was invted to this discusson to provide context on the controls in place to manage the key risks • Corporate, Commercial & Institutonal Banking (CCIB) Riskdeepdive: Receivedand discussed papers covering the CCIB Risk review, Aviaton deep dive and Early Alert process and its effectiveness. The impacts and challenges posed by COVID-19 were focused on and market idosyncratic risk was discussed • Consumer, Private & Business Banking (CPBB) Risk review: Received and discussed papers covering the CPBB Risk review and managing risks arisng from partnership-driven business models. Focus was placed on partnership governance and the risks arisng from and associated with partnerships. The Committee will remain focused on this in 2022 • CPBB Fraud Risk deep dive: Received and discussed a paper updating on the CPBB Fraud Risk landscape. Discusson focused on payment fraud and how this had been exacerbated by COVID-19. Furthermore, how trainng for colleagues is being conducted and how the risks associated with WFH are being managed werediscussed #### Activties during the year continued ![]() 128 Standard Chartered – Annual Report 2021 Directors’ report Corporate governance Examples of deeper discussons into specifc topics continued • Operational resilence – ImportantBusiness Services and ImpactTolerance Statements: In line with regulatory objectves, reviewed and recommendedthelist of identfied Group Important Business Services to the Board for approval. The Committee also reviewed and provided feedback on the Group’s Impact Tolerance Statements, which will return to the Committee in February 2022, for further review and discusson • Interest Rate Risk deep dive: Discussed a paper setting out the importance of Interest Rate Risk, the key drivers of this risk and how the Group manages its structural Interest Rate Risk. The Committee confirmed its support of the Group’s structural hedging programme • Approach to crypto assetsmanagement: Received and discussed a paper setting out the Group’s approach towards emerging opportunites and governance in digtal assets. Discusson focused on the governance of digtal assets and the pace of change in regulatory developments with regard to digtal assets • Third-Party Risk management with a focus on ICS Risk: Received and discussed a paper on the Third Party Risk Management Framework and Third-Party ICS Risk. Discusson focused on controls testing, no-right-to-audit third parties and the security onboarding process • Management, control and governance of SC PLC: Received and discussed a paper on the measures to enable effective management, control and governance of Standard Chartered PLC, ahead of submisson to the Board for endorsement • Safety and Security Risk: Received an update on safety and security issues over the last 12 months. Discusson focused on how data security is being managed at drop-in offices and how the physical risks are being managed with regard to cash holdings in branches and cash vaults • UAE Risk review: Received and discussed a paper covering the material risks to the UAE portfolio, cognisant of COVID-19 impacts and changes in GDP. In particular, Climate Risk and Credit Risk were focused on • Structural Foreign Exchange Risk deep dive: Received and discussed a paper setting out the importance of Structural Foreign Exchange Risk, the key driver pertainng to the risk and impendng changes to the Group’s hedging strategy with regard to capital requirements • EnterpriseRisk review : Reviewed progress reports from the Liqudity Risk review function and Credit Risk review function, which set out key themes from the 2021 reviews and the review plan for 2022 Committeeeffectiveness review During 2021, an internal Board and Board Committee effectiveness review was faciltated by the Group Company Secretary. Key observations from the 2021 internal effectiveness review The feedback on the Committee’s functionng and effectiveness was positve and it specifcally highlghted: • Overall performance has made further progress during the year, and the Committee Chair is well prepared and effective in ensuring clear priortisaton and meeting management • In terms of compositon, this was considered to be strong, with good regional representation and dedicated members with banking risk experience • Committee members would like papers to provide greater clarity around key issues • Committee members provided feedback on key areas of focus and topics for future trainng sessions 2022 Action Plan The 2022 Action Plan for the Committee reflects suggestions from the evaluation and continues to build on the further progress made last year: • Consider how best to include key suggested areas of focus withn the forward-looking rolling agenda, includng continued focus on resolvabilty • Keep under review the quality and length of papers and ensure they provide greater clarity on drawing out the key issues • Schedule trainngsessions toinclude models, second order risks from climate change and emerging technology risks #### Activties during the year continued ![]() 129 Standard Chartered – Annual Report 2021 Directors’ report Risk informaton provided to the Committee The Committee is authorised to investgate or seek any informaton relating to an activty withn its terms of reference, receives regularreports on risk management, and tracks a wide range of risk metrics through a Board Risk Information report. This report provides an overview of the Group’s risk profile against the Group’s Risk Appetite Statement. The GCRO’s report covers the macroeconomic environment, geopolitcal outlook, material disclosures and ongoing risks. Coverageof Princpal Risk Typesand regulatory matters are also included inthis report. Regular updates on COVID-19 impacts, country risk and geopolitcal tensions have been reported on and discussed throughout the year. The Committee has the authority to request and receive relevantinformatonconsistentwith the requirements of BCBS 239 that will allow the Committee to fulfil its governancemandate relating to risks to whichtheGroup is exposed, and alert senior management when risk reports do not meet its requirements. Risk management disclosures The Committee has reviewed the risk disclosures in the Annual Report and the Half Year Report, and has also reviewed the disclosures regarding the work of the Committee. Interaction with the Group Chief Risk Officer The Committee Chair meets indvidually with the GCRO regularlyin between formal Committeemeetings. These meetings allow open discusson of any matters relating to issues arisng from the Committee’s formal discussons and inform the forward-looking agenda. Interaction with management The Committee is mindful of the need to hold management directly accountable when issues have arisen and have been reported by the GCRO. Senior management has attended Committee meetings for deeper discussons in such instances. The Committee Chair also meets indvidually with senior leaders of the Risk function. Interaction with regulators Typically, the Committee meets with the PRA on an annual basis, without members of management beingpresent. The purpose of such meetings is to enable a discusson between the Committee and the PRA concerning prudential-focused topics. This meeting did not occur in 2021 due to COVID-19 restrictons; however, it is anticpated that this will resume once things return to normality. Naguib Kheraj attended calls with the PRA and the BoE over the course of the year. Interaction betweenBoard committees on risk-related issues In the few instances where it does not have primary oversight for a given type of risk, the Committee interacts closely with other BoardCommittees wherethe remit of theseother Committees clearly covers risk-related matters. For example, the Audit Committee has oversight of the Group’s internal financal controls and regulatorycompliance; theBoard Financal Crime Risk Committee has oversight of the responsiblites in relation to financal crime compliance- related matters; and the CSC has oversight of culture and sustainablity-related matters. The interacton assists the Committee in ensuring that it is well informed on discussons held, and the close collaboration of the Committee Chairs helps to ensure that there are no gaps and any potential for unnecessary duplicaton isavoided. Risk function resourcing The Committee has sought and received assurance that the Risk function is adequately resourced toperform its function effectively. The Committee reviewed and discussed a paper setting out an overview of the changes to the Risk function in 2021, management’s assessmentof the adequacyof people resources and the forward-looking view of the Risk function. Linkages with subsidary board risk committees In conjuncton with the Chair of the Board Financal Crime Risk Committee, Naguib Kheraj co-hosted an annual video-conference call with the chairs of subsidary board risk committees and INEDs in July 2021. Naguib Kheraj also attended a board risk committee of Standard Chartered Bank (Hong Kong) Limted as an observer. The board risk committee chairs of our subsidaries in China, Hong Kong, Koreaand Singapore attended a number ofStandard Chartered PLC Board Risk Committee discussons on matters such as resolvabilty and Hong Kong operational stabilty. The chair of Standard Chartered Bank (Singapore) Limted attended one Standard Chartered PLC Board Risk Committee meeting asan observer. Details of this call can be found on page 115 ![]() 130 Standard Chartered – Annual Report 2021 Directors’ report Corporate governance In an ever-changing world, it is important that the Group, as well as the Committee, keeps pace and this year the Brand, Values and Conduct Committee continuedits evolution to ensure ongoing alignment with the Group’s strategic priorties. This evolution resulted in a change of name to the Culture and Sustainablity Committee, the Committee’s remit now represents the Group’s heightened focus on deliverng sustainablity as a strategic priorty. The Committee willmonitor the developmentand implementaton of the framework to align financal services with net zero emissons by 2050 and will oversee the Group’s progress to deliver on intermedate targets. The Committee will keep under review the Group’s overall sustainablity strategy based on the three pillars of the sustainablity framework: Business, Operations and Communites, and will assess progress against the Group’s externally committed targets, sustainablity aspiratons and delivery against key sustainablity priorties. While the Committee has retained its oversight of the Group’s culture, includngvalues, diversty and inclusonand employee engagement and workforce polices; oversight of brand positoning now sits withn the remit of the Management Team. The Audit Committee has taken responsiblity for ConductRisk. The latest chapterof the Group’stransformationagenda includes a focus on becoming truly purpose-led, by definng three Stands of focus: Accelerating Zero (the ClimateStand), Liftng Particpation (the Equality Stand) and Resetting Globalisaton (theGlobalisaton Stand). The Stands are not an add-on or separate from the strategy, but instead are aligned and executed through the strategy and business priorties. During the year, the Committee reviewed and supported the Management Team’s proposals on how the Stands would beembedded across the organisaton and willcontinue to monitor the progressof leaders in deliverngon the Stands. This year, theCommitteeorganised anadditonal session to focus on climate change. This session provided Committee members the opportunity togain furtherinsght into theglobal challenges faced in achievng net zero and, in particular, the challenges faced by the Group given its unique footprint across emerging markets. To achieve success will mean signficant change for all and the Committee will have a key role to play in supporting delivery of the Group’s targets as well asmonitorng progress of culturalchange across the organisaton in orderto achievethistarget. The Committee oversees theGroup’s commitment toupholding human rights and this year reflected on how the Group should respond to humanrights issuesin jursdictons across our footprint. The Committee hosted a session on ethics and ethical decison-making that was delivered by a pre-eminent industry expert in this field. All Board directors were invted to attend this thought-provoking session. The Committee continued to focus on the Group’s culture and its diversty and incluson intiatves, and I am pleased to report that the Group has achieved its commitment to the UK HM Treasury Women in Finance Charter with over 30 per cent women in senior leadership roles. The Group has, this year, further expanded its commitment to increasng representation ofunderrepresented groupsin senior leadership roles andtheCommitteewill continueto monitor the delivery and outcomes of these intiatves. During the year, we agreed that the Group must ensure all generations of colleaguesare fully engaged, motivated and supported during pivotallife stagesin order to fully contribute to the success of the organisaton. As such, the Committee supported the launch of a new intiatve that addresses generational diversty in order toincreasetheretention and development of oldercolleagues as well as to become an employer of choice for younger generations. The Committee also reflected on the inclusve leadership intiatve which empowers employees to challengecognitve biasto enable such biases to be raised and addressed. The Committee was encouraged to see such management intiatves that will ensure that the Group’s culture continuesto evolveto support delivery of strategic priorties. The following report provides further insght into the Committee’s work during the year. Jasmine Whitbread Chair of the Culture and Sustainablity Committee Committee compositon Scheduled meetings J M Whitbread (Chair) 5/5 C M Hodgson, CBE 5/5 N Okonjo-Iweala\* 1/1 DTang 5/5 D Conner 5/5 \*Ngozi Okonjo-Iweala stepped down from the Committee on 28February 2021. Other attendees at Committee meetings in 2021 included: The Group Chairman; Group Chief Executive; Group Head, Human Resources; Group Head Corporate Affairs, Brand & Marketing; and Group CompanySecretary. Biographcaldetails of committee members can be found on pages 91 to 94 . Main responsiblites of the Committee The Committee isresponsible for exercisng oversight and advice to the Board on the Group’s culture and key sustainablity priorties. The Committee reports to the Board on its key areas of focus following eachCommittee meeting. The Committee has written Termsof Reference that can be viewed at sc.com/termsofreference #### “ The Committee’s remit now #### represents the Group’s heightened #### focus on deliverng sustainablity #### as a strategic priorty” Cultureand #### Sustainablity #### Committee ![]() 131 Standard Chartered – Annual Report 2021 Directors’ report #### Activties during the year Remit of the Committee As a result of output from the Board and committees’ effectiveness review undertaken at the end of 2020, and in light of refreshed strategic priorties, the Committee reflected on its purpose and remit and proposed a number of changes to its Terms of Reference, includng a change of name, in order to align with emerging priorties. The Board approved the revised Terms of Reference on 25 May 2021. The Committee has retained oversight of how the Group develops and manages its culture (includng its values, diversty and incluson, employee engagement, and workforce polices and practices). The Committeecontinues to monitor the Group’s sustainablity strategy, includng execution,and will review progress against the Group’s external commitments. This responsiblity includes monitorng the development and implementaton of the framework to align financal services with net zero emissons by 2050 and deliver intermedate targets, the first being in 2023, consistent with that plan. Sustainablity – climate The Committee held a session on net zero and discussed the challenges faced both globally and by the Group as a result of the Group’s unique footprint in many emerging markets. It reviewed and provided challenge to management’s plan and targets set out in order for the Group to achieve its net zero target by2050. Environmental, social and governance (ESG) matters The Committee: • received an update on the delivery of the Group’s community engagement strategy. This included an update on the ‘Futuremakers by Standard Chartered’ programme, the work of the Standard Chartered Foundation (SCF) and employee volunteering projects • discussed theGroup’s thematic positonstatements on humanrights,sector statements, the framework and how the framework should be applied in a practical sense to support decison-making and escalation of issues to the Board • discussed how the Group could stay abreast of emerging best practice in governance around human rights • monitored the Group’s compliance with its public commitments in relation to ESG matters, includng the sustainablity aspiratons,and resultant scores from ESG analysts andindces. Stands The Committee commenced a series of conversations with senior leaders on how the Stands would be embedded across the organisaton. A number of deep dives are planned for 2022. Culture, diversty and incluson The Committee: • discussed the My Voice employee survey results and the action plans to be developed by management once thedata had been interpreted • reviewed the Group’s approach to diversty and incluson and discussed the intiatves being developed in order tocreate a more inclusve workplace Conduct In the first half of 2021, prior to its change in remit, the Committee: • received an update on Conduct Risk and a demonstration of the Conduct Dashboard • Chair held a session with the Audit Committee Chair to transiton responsiblity for the oversight of Conduct Risk Board –workforce engagement and workforce polices and practices The Committee has responsiblity for overseeing the Board’s engagement framework with the workforce and ensuring workforce polices and practices remain consistent with the Group’s valued behaviours, in order to satisfy certain provisons in the UK Corporate Governance Code. This year the Group recognised the need to continue adapting working practices to meet the needs of the workforce during the ongoing COVID-19 pandemic while enhancing our Board-workforce engagement. New hybrid working arrangements were introduced across a number of key markets, with further roll-out planned. The Committee has committed to reviewng the success of hybrid working arrangements and has requested a series of deep dives on the impact of hybrid working arrangements, productivty and work-life balance to be scheduled in due course. Technology has continued to play a central role in ensuring interactve and two-way engagement between colleagues and Board members across the global footprint at a time when travel remains unprecedentedly restricted. The Committeehasoverseen the following activty: • Continued tosupport changesto working practices during the ongoingpandemic, includng investment in wellbeing support, and the ‘Future Workplace, Now’ project to capitalse on the strategic opportunites created by the pandemic and address employee questions about future flexiblity and ways of working • The Board hosted six regional engagement meetings covering the Africa cluster; the Middle East, North Africa and Pakistan; India and South Asia; Europe and the Americas; the Asia cluster; and Greater China and North Asia, faciltated by an online Q&A platform and polling tools, to enable Board members to engage with colleagues in an interactve manner with as much two-way dialogue as possible. The themes covered during the sessions varied from region to region, covering people-related topics such as new ways of working, diversty and incluson, remuneration and work-life balance, as well as strategic topics such as the Bank’s share price, investment strategy, digtalisaton, geopolitcal environment and banking competiton. ![]() 132 Standard Chartered – Annual Report 2021 Directors’ report Corporate governance Committeeeffectiveness review As part of the 2021 internal Board evaluation, a review of the Committee’s effectiveness was conducted. Overall, members agreed that the Committee continued to perform well and that the transiton to the refreshed remit had been effective. Progress against the actions set out in the Committee’s 2021 Action Plan has been positve; a summary of the progress against each of the actions is set out below. Progress against the 2021 Action Plan: • During the year, the Committee particpated in a two-hour session on net zero provided by Boston Consulting and Baringa Partners. This provided committee members with the opportunity to gain further insght into the global challenges faced in achievng net zero and, in particular, the challenges faced by the Group given its unique footprint across emerging markets • The Committee hosted a session on ethics and ethical decison-making that was delivered by a pre-eminent industry expert in this field. All Board directors were invted to this session. In additon, a number of speakers are also being lined up for 2022 and beyond • As a result of the Committee’s revised remit, responsiblity for Conduct and the conduct dashboard were transferred to the Audit Committee. The Committee Chairs held a handover session with management present and the Audit Committee Chair had a fulsome Conduct Riskinducton Key observations from the 2021 internal effectiveness review • The Committee had increased its focus on culture and sustainablity and held insghtful discussons on culture and values, community engagement strategy, the Stands, sustainablity and ESG. Committee members had also appreciated the deep dive sessions on the roadmap to net zero and human rights • The Chair was rated as very effective and members noted the Chair’s dilgence and thoughtfulness with regards to the agenda, preparationfor the meetings and valuable input into draft Committee papers • Members rated the Committee compositon as good with members being committed and engaged and offering different perspectives • The Committee was well supported by the Sustainablity and Human Resources (HR) Teams, and Committee papers were usually thorough and of a high quality 2022 Action Plan The 2022 Action Plan for the Committee reflects suggestions from the evaluation drawn together with the Committee’s forward-looking agenda for next year: • Continue to monitorimprovements on risk cultureand also developments on auditng culture more generally • Arrange for external speakers to provide the Asia/China perspective on topicswithnthe Committee’sremit • Focus on the delivery of the Bank’s net zero plans Workforce engagementframework: howwe engaged during 2021 Regional calls hostedby Board members Continuaton of wellbeingsupport intiatves Continued dialogue on ways of working and Future Workplace, Now MyVoice employee engagement survey Speak Up data Board – workforce engagement and workforce polices and practices ![]() 133 Standard Chartered – Annual Report 2021 Directors’ report Governanceand #### Nominaton Committee During the year, the Committee has been focused on the medium to long-term compositonof the Board, cognisantthat a number of the Board’s independent non-executive directors(INEDs) willbe reaching their nine-year tenure over the course of the next few years. At the beginnng of the year, we carried out a comprehensive formal assessment of search firms that could assist the Committee in undertaking thisnext phase ofthe Board’s successionplanning. This process resulted in the appointment of Russell Reynolds to assist us in identfying candidates with a diverse range of skills, experience, backgrounds, gender and capabilties to enhance the Board’s effective oversight of the strategy. Maria Ramos joned the Board at the start of January 2021, and has extensiveCEO, banking, commercial, financal, policy and internatonal experience. Maria’s inducton onto the Board and the Board Risk and Audit committees, although conducted almost entirely virtually, remained robust and effective and Maria is adding signficant value to the Board and committee discussons. Further insght into Maria’s inducton programme can be found on pages 106and 107. In light of Naguib Kheraj’s decison to step down from the Audit and Remunerationcommittees in the summer, weundertook arefresh of the committees’ membership andrecommended the appointment of Maria to the Remuneration Committee. In additon to the signficant focus on Board and committee succession planning we also spent a great deal of time discussng succession readiness and plans for the executive directors, the Management Team and other key senior executives, as well as programmes under way to develop talent internally. Despite the number of roles which have recently been filled externally, we looked at and assured ourselves that all key roles have credible successionplans with suitable flexiblity forthe immedate to longer term. Detail of the Committee’s annual review of the Board Diversty Policy and its assessment of progress against it can be found on pages 135 and 136. Following the realignment of the Policy last year, no further changes were recommended in 2021; however, we did discuss the importance of further balancing female representation on the Board and theFinancal Conduct Authority’s (FCA)consultation onchanges to the Listng Rules in this area and agreed to keep our current target under review. As part of the Committee’s governance oversight role, we continued to receive updates from the three regional CEOs who each have responsiblity forthe subsidary governance processes acrosstheir regions, and provide a holistc view of the governance framework and challenges faced across the Group’s footprint. The Committee also spent timereviewngthe governancestructures around thegrowing SC Ventures entites. Once again the Committee oversaw progress made in meeting the actions recommended in last year’s internally conductedBoard effectiveness review and agreed the approach for another internally run evaluation this year. Details of both are set out on page 108. We also spent time discussng the progress the Committee has made against those actions highlghted in its own effectiveness review. A summary of those reflections and of this year’s Committee effectiveness review and actions for 2022 can be found on page 137. Dr JoséViñals Chair of the Governance and Nominaton Committee Committee compositon Scheduled meetings Ad hoc J Viñals (Chair) 4/4 2/2 N Kheraj 4/4 2/2 C M Hodgson 4/4 2/2 J Whitbread 4/4 2/2 P G Rivett 4/4 2/2 Other attendees at Committee meetings in 2021 included: The Group Chief Executive; Group Head, HR; and Group Company Secretary. Biographcaldetails of the committee members can be viewed on pages 91 to 94 Main responsiblites of the Committee The Committee has responsiblity for keeping the size, structure and compositon of the Board and its committees under review. As part of the Committee’s succession planning for the Board, it takes into account the Group’s strategy and challenges, and makes recommendations to the Board in respect of any adjustments to the Board’s compositon. The Committee also: keeps under review the leadership needs of, and succession plans for, the Group in relation to both executive directors and other senior executives; has oversight of the process by which the Board, its committees and indvidualdirectors assess theireffectiveness; keeps the diversty of the Board under review and monitors progress towards achievng its objectves in this area; considers any potential situatonal conflicts of interest declared by Board members; considers the impactof material changes to corporate governanceregulation and legislatonaffecting the Group; and has oversight of the Group’s approach to subsidary corporate governance. The Committee reports to the Board on its key areas of focus following eachCommittee meeting. The Committee has written Terms of Reference that can be viewed at sc.com/termsofreference #### “ During the year, the Committee #### has been focused on the medium to long-term compositon of #### the Board” ![]() 134 Standard Chartered – Annual Report 2021 Directors’ report Corporate governance #### Activties during the year Board and senior talent succession planning • Undertook a comprehensive and thorough formal assessment of search firms to assist the Committee in undertaking thenext phase of its Boardsuccession planning. Followinga long and short-listng process, Russell Reynolds was chosen as the successful firm. Russell Reynolds is a signatory to the voluntary code of conduct for executive search firms. Russell Reynolds also supplies senior resourcing to the Group • Engaged Russell Reynolds to review the market for future INED candidates with deep global banking and financal services experience, strongunderstanding of theremuneration environment,signficant commercial experience and with representation from our key markets • Discussed the compositon of the Board and considered the orderly succession of current INEDs and the skills, knowledge, experience, diversty (in the widest sense) and attributes required of future INEDs, both immedately and in the medium to longer-term. In considerng the Board’s succession, the Committee takes into account the length of tenure of the INEDs, and the importance of regularly refreshing the Board membership • Systematically reviewed a number of INED long and short lists throughout the year to identfy potential candidates with a diverse range of skills, experience, knowledge and perspectives • Maintaned oversight of the progress made by Phil Rivett and Maria Ramos against their tailored Board and committee inducton programmes • Provided oversight of the detailed executive and senior management (level below Management Team) succession plans, alongside other critcal roles, includng the oversight of a process of external market mapping of key management roles • Reviewed succession plans for the committee chair roles, identfying appropriate indviduals with the necessary skills and attributes to provide emergency cover as required, as well as on a longer-term basis, includng acknowledging and addressing wheregaps exist. Out of this processthe Committee recommended to the Board the appointment of Maria Ramos as a member of the Remuneration Committee Board compositon as at 31 December 2021 Gender diversty Board Female  Male  Executive Female  Male  INED (includng Chair) Female  Male   % (2020: 31%)  % (2020: 36%)  % (2020: 0%) INED tenure(includng Chair) 3 1–3 years 27% 1 0–1 year 9% 2 3–6 years 18% 5 6–9 years 46% International experience Banking, risk,finance and accounting experience amongst INEDs Representation from key markets Experience Nationalty: The nationaltyof our directors does notin itself demonstrate the diversty of the Board’s compositon. Between them, the directors have signficant experience ofeither livng, working ormanaging operationsacross the markets in which we operate. Ethnicty: Ouraspiraton is forour Board to reflect the diversty of our footprint. Our global ethnicty categories represent the breadth of diversty across our markets. Twenty-threeper cent of the Board are from anethnic minorty background.  %  %  % Further detailson the work of the Governance and Nominaton Committee can be found below 1 2 4 1. White10 directors 2. Chinese2 directors 3. Black0 director 4. South Asian1 director ![]() 135 Standard Chartered –Annual Report 2021 Directors’ report Board and committees’ effectiveness review • Provided oversight of the Board and committees’ internal evaluation, faciltated by the Group Company Secretary, and monitored progress against the 2021 Action Plan, which addressed the key observations from the 2020 effectiveness review. Two particular outputs included the recommendation that the Terms of Reference of the Brand, Values and Conduct Committee were refocused, givng more weight to environmental, social and governance (ESG) matters and renaming it the Culture and Sustainablity Committee, and the recommendation, subject to a number of milestones being met, that the Board Financal Crime Risk Committee is folded into a combinaton of the Audit Committee, Board Risk Committee and the Board in 2021 or early 2022 • Discussed the observations and recommendations which flowed from the 2021 internally faciltated Board and committees’ review and discussed the shape of the Board’s 2022 Action Plan Details of this year’s Board and committees’ evaluation, includng the process which we followed, observations from the review and the resulting 2022 Action Plan can be found on page108 Board Diversty Policy • Reviewed progress made in 2021 against the agreed objectves set out in the Board Diversty Policy • Conducted a review of the Board Diversty Policy to ensure that it continued to drive diversty in its broadest sense, while continung to take account of best practice, specifcally in the area of gender, social and ethnic backgrounds, knowledge, personal attributes, skills and experience • Discussed the Board’s commitment to ensure a minmum of 33 per cent female representation on the Board. Cognisant of the FCA consulting on raisng ambitons in this area, which includes a proposed target of at least 40 per cent female representation on boards, the Committee took the decison to wait for the outcome of this consultation and its proposal in respect to gender targets and ethnicty before recommendingany further changesto the Policy ortargets Further details of progress the Board has made against the key objectves set out in the Board Diversty Policy are set out below Corporate governance • Recommended the extension, for a further 12 months, of Sir Iain Lobban’s appointment as independent advisor to the Board and its committees on cyber security and cyber threats Conflicts of interest • Conducted anannual review of the directors’ existng and previouslyauthorisedpotential and actual situatonalconflicts ofinterestand considered whetherany circumstances wouldnecessitate the authorisaton being revoked or amended. Alsonoted directors’ otherdirectorshps andbusiness interests taken during the year in the context of time commitment, overboarding and the PRA limts on directorshps as well as other regulatory requirements in this area Assessment of the non-executive directors’ independence • Considered the independenceof each of the non-executive directors, taking into account any circumstances likelyto impar, orwhich could impar,their independence.Noted the thoroughprocess undertakento assess indvidualdirector performance and effectiveness, takingthese reviewsinto account along with tenure and succession plans in making its recommendation to appoint the INEDs for a further year Subsidary governance • Received updates from the three regional CEOs on the Group’s approach to subsidary governance. Received assurance of effective oversight and compliance with the Group’s Subsidary Governance Policy and discussed material regulatory trends, intiatves, and consideratons likely to impact the current or future governance of the Group’s banking subsidaries; the key actions arisng from banking subsidary board effectiveness reviews; and linkages between banking subsidaries and the Group • Discussed governance projects withn SC Ventures and, in particular, the approach to governance of the Venture entites • Approved the appointment of a new Chair to Standard Chartered Bank (Singapore) Limted, a regional hub board Terms of Reference • Conducted a review of the Committee’s Terms of Reference during the year, taking into account the responsiblites, obligatons and best practice princples it has in the UK and Hong Kong Implementation of the Board Diversty Policy The Committee conducted its annual review of the Board Diversty Policy (the Policy) during 2021, to ensure that it continues to promote and drive diversty in its broadest sense, while continung to take account of best practice intiatves, includng the Parker Report into ethnic diversty, the Hampton Alexander Review on women in leadership positons and the UK Corporate Governance Code 2018. We strive to maintan a diverse Board, recognisng the benefits of having a Board made up of indviduals with a diverse mix of gender, social and ethnic backgrounds, knowledge, personal attributes, skills and experience. We also aim to reflect the Group’s aspiratons in relation to its employees and its values and to positon the Group as a global leader in these areas. This diversty provides a range of perspectives which we believe contribute to the effective Board dynamics. While positve progress has been made in improvng the balance of female directors on the Board in recent years, female representation on the Board remains just below the current industry target of 33 per cent. We are cognisant of the growing pressure on boards to set longer-term and more ambitous gender aspiratons, includng moving towards 40per centfemale representation or gender parity and as a Committee we spent time discussng the FCA’s consultation onchanges to theListng Rules inthisarea. While acknowledgingthe importance of genderdiversty around the board table and ultimately gender parity on the Board, we also recognise the importance of balancing gender diversty withn the broader context of diversty, which is particularly relevant given the Group’s diverse geographical representation. While we remain committed to do more to increase the gender diversty on the Board, the Committee took the decison not to raise its target in this area above the current 33 per cent, pending the outcome of ongoing external consultations and toensure progress is sustainable. #### Activties during the year continued ![]() 136 Standard Chartered – Annual Report 2021 Directors’ report Corporate governance Aligned to the Policy’s broad ambiton, this year we report on the progress made against the seven objectves, includng the two additonal commitments made at the end of 2020, which the Board remains committed to in order to further enhance progress in this area: • increasng the representation of women on the Board with an aim to have a minmum of 33 per cent female representation • adopting an ethnicty aspiratonof a minmum of 30 per cent from an ethnic minorty background • ensuring that our Board reflects the diverse markets in which we operate • ensuring that the Board is comprised of a good balance of skills, experience,knowledge,perspective andvaried backgrounds • ensuring that weconsider the Group’s aspiratons in relation to disablity, sexual orientaton, gender identty and gender expression • engaging only search firms that are signed up to the Voluntary Code of Conduct for executive search firms • reporting annually on the diversty of the executive pipelne as well as the diversty of the Board, includng progress being made on reaching the Board’s gender and ethnicty aspiratons Details of the Board’s diverse compositon are set out on pages 91 to 94 of this report, and that of the Management Team can be found on pages 95 to 97 Details of the Group’s wider Diversty and Inclusion strategy, includng gender balance across the Group and targets for ethnic representation can be found on pages 55 to 59 of this report A copy of the full Board Diversty Policy can be viewed at sc.com/boarddiverstypolicy and further details on the Group’s approach to Diversty and Inclusion can be viewed at sc.com/diversty-and-incluson Progress against the key objectves set out in the Board Diversty Policy is set out below. Board Diversty Policy objectves Progress Increasing the representationof women on the Board with an aim to have a minmum of 33 per cent female representation Increasing gender representation on the Board remains an important focus of the Board’ssuccession planning process, ensuring that femalecandidates are fairly represented on long and short lists. The Board changes in 2021 (appointment of Maria Ramos and the retirement of Ngozi Okonjo-Iweala) ensured that the percentage of female representation on the Board remained unchanged at 31 per cent. The Board continues to strive to ensure greater female representation and is cognisant of the intiatves to further raise aspiratons in this area. Adopting an ethnicty aspiraton of a minmum of 30 per cent from an ethnic minorty background Following changes to the compositon of the Board in early 2021, representation from ethnic minorty backgrounds dropped from 30 per cent to 23 per cent as a result of Ngozi Okonjo-Iweala’s departure from the Board in February 2021. We remain committed to our ethnicty aspiraton and to ensuring a broad representation of our directors from across our markets. Ensuring that our Board reflects the diverse markets in which we operate What sets Standard Chartered apart is our diversty of people, cultures and networks. The Board has representation from across the regions in which we operate, includng the UK, North America, Asia and Africa. Many of the INEDs have additonal experience of having worked and lived in many of the Group’s markets. As part of the Committee’s succession planning in 2021, it has considered a signficant number of potential future INEDcandidates who are representative of some of our key regions and markets, with a particular focus on ASEAN. Ensuring that the Board is comprised of a good balance of skills, experience, knowledge, perspective and varied backgrounds Throughout theyear the Committee has focusedon identfying the collective experience, skills and attributes required both immedately and in the medium to longer term. TheCommittee has systematically reviewedcandidate longlists and shortlists to identfy potentially suitable INED candidates. Areas of particular focus in 2021 included: • corporate insttutionaland commercialbanking • technology risks • remuneration • previous CEO/CFO experience • ASEAN experience • regulatory understanding Ensuring that weconsiderthe Group’s aspiratons in relation to disablity, sexualorientaton, genderidentty and gender expression We remain committed to all aspects of diversty as we undertake any Board succession process. Engaging only search firms that are signed up to the Voluntary Code of Conduct for executive search firms We continue to engage only search firms signed up to the Voluntary Code of Conduct. During 2021 the Committee conducted a review of its key requirements from its search firm and after a tender process appointed Russell Reynolds to assist in identfying and buildng a pipelne of high-quality potential INED candidates for the next stage of its Board succession process. Russell Reynolds is signed up to the Voluntary Code and is committed to supporting our ambitons to widen all aspects of diversty on the Board. Reporting annually on the diverstyof the executive pipelne as well as the diversty of the Board, includng progress being made on reaching the Board’s gender and ethnicty aspiratons. The Committee takes an active role in reviewng the succession planning for the executive, Management Team and senior management one level below the Management Team. We continue to improve our reporting of Board and senior talent succession planning as well as reporting on the importance of a diverse Board as a means of capturing differng perspectives and enhancing discusson. ![]() 137 Standard Chartered – Annual Report 2021 Directors’ report Committeeeffectiveness review As part of the 2021 internal Board evaluation, a review of the Committee was conducted. Broadly, members felt that the Committee had made good progress in a number of areas this year, highlghting progress with executive and non-executive succession plans, more thorough reviews of inducton plans and oversight of progress, and a more systematic review and tracking of Board and Committee effectiveness review action plans. A summary of the key observations and the subsequent recommendations can be found below. Progress against the actions set out in the Committee’s 2021 Action Plan has been positve; a summary of the progress against each of the actions is set out below. Progress against the 2021 Action Plan: • Continued to enhance and tailor the Board inducton programme for new Board and Committee members, providng greater oversight of progress. Maintaned asignficant programme of ongoing trainng for directors during the year • While effort was made during the year to continue buildng in time withn the Board calendar for members to meet internal high-potential indviduals in person, continued COVID-19 restrictons impacted Committee members’ abilty to reach as many across the business as they had hoped. Despite this, many of the indviduals continued to have exposure to the Board through presentations to the Board and its committees. In person contact will resume once vists to markets allow for interacton and more informal sessions • As part of the Committee’s succession planning process, provided oversight of an external market mapping of candidates for keymanagementroles • Refreshed the Board skills matrix, to assist the succession planning process, givng particular focus to the succession plans for the Chairs of the Board committees Key observations from the 2021 internal effectiveness review The feedbackfromthe 2021 internally conducted Governance and Nominaton Committee effectiveness review was broadly positve. The overall feeling was that good progress had been made in many areas, includng succession for key executive roles and plans for non-executivesuccession, oversight and progress against inducton plans, and a more systematic review and tracking of Board and committee effectiveness review action plans. Some of the key findngs highlghted that: • the Committee was well chaired and that communicatons and follow-ups on the outcomes from meetings hadimproved • the newsearch consultant had strengthened the identficaton process of new INEDs as part of succession planning; however, there was a feeling that further pace and decisveness could be inected into the process • the Committee saw a benefit to spending more time on ensuring suitable successionplans are in placefor key Management Team roles, with a greater focus on enhancing an internal pipelne of candidates • the Committee is broadly happy with its compositon, which it considered to be balanced and collegiate with a good cross-section of skills and diversty of views and perspectives. However, there was a sense that the Committee would further benefit from additonal CFO and financal services experience • the Committee was keen to have further external insght on the senior talent pool in the global banking sector 2022 Action Plan The 2022 Action Plan for the Committee reflects suggestions from the evaluation and continues to build on the solid progress made last year: • Schedule a session with an external party to gain some external insght on the broader senior talent pool in the global banking sector • Schedule a focused session on Management Team succession plans, particularly focused ona number of keypositons • Ensure the pace is maintaned in the INED succession planning process, focusing on increasng the level of banking/CEO experience • Continue to review emergency succession plans for key Boardroles ![]() 138 StandardChartered – Annual Report 2021 Directors’ report Corporate governance #### Board Financal Crime #### Risk Committee As Chair of the Board Financal Crime Risk Committee, I am pleased to present the Board Financal Crime Risk Committee’s report for the year ended 31 December 2021. The Committee is pleased to note the progress made against the Group’s oversight of financal crime priorties, includng the expiry of the Group’s 2019 US Deferred Prosecution Agreements and completion oftheGroup’s Financal Crime (FC)-related remediaton programmes. While this progress is notable, we shall not become complacent and recognise that Financal Crime Risk (FCR) remains an important ongoing risk fortheGroup. The Committee has kept a close watch on the progress being made to enhance financal crime compliance (FCC)-related technology. The Group began work to upgrade core data and technology infrastructure for Customer Due Dilgence and FC in 2013, and the Committee was pleased to note at the end of 2021 that the major enhancements have now beendeployed toall relevantmarkets across the Group. The Committee was assured that the Group continues to assess how to improve the effectiveness of its tools and considernext-generation surveillance andFC monitorng infrastructure and machine learning. The Committee has received and discussed the FCR environment, controls inplace and ongoing risks fora number of the Group’s key markets includng: India, Bangladesh, Germany and the US. The local CEOs were invted to attend these discussons, which provided opportunites for theCommittee toprobe how the challenges are being managed onthe ground. Following discussons held in 2020, the Committee discussed the Group’s Risk and CFCC Productivty Programme, with Audit Committee members being invted to jon this discusson. Focus was placed on the need to ensure that the right balance is struck between achievng cost-efficenciesand maintaning effective risk management. A key priorty for the Committee this year has been the Financal Crime Surveillance Operations (FCSO) Transformation Programme, which was discussed at each meeting. This Transformation Programmeis responsible for transferring agreed in-scope surveillance activties from the second line of defence to the first line, with the objectve of moving risk management closer to the source ofriskand topromote better decison-making. The Committee has regularlydiscussed externaldevelopments, emerging risks and threats, includng how COVID-19-related FCR is evolving. Furthermore,focus has beenplaced on theimpactsof colleagues working from home (WFH) and the associated risks. Regular reporting from management and Group Internal Audit (GIA) has provided assurance as to the effectiveness of controls in place, which will be important as the external environment normalises and as the Group transitons to a hybrid working model. The Committee has continued to monitor the Group’s control capabilty and probed that the Group is well protected against FCR. At the request of the Committee, a paper on FCR in new technologies includng crypto assets was received and discussed. The capabilties, skills and resources required to manage these risks were discussed and managementwas ableto provide assurancethat opportunites are being assessed in a measured way, ensuring that all relevant stakeholders are engaged. Furthermore, a paper was received on the Group’sSanctions Compliance Programme. The Committee sought and received assurance that the Group continues to build this programme to be sustainable and adapt to the evolving risks that the Group faces. The Committee also discussed a paper on the Group’s Anti-Bribery and Corruption (ABC) Programme, includng an analysis of key risks andmanagement actions. The Group continues to partner to lead the fight against financal crime through informaton-sharing andpublic-private partnerships. Despite restrictons on physical meetings during COVID-19, the Committee was pleased tonote that management continuedto particpate in informaton partnerships and industry work to address FCR, includng through United for Wildlfe hosted webinars focusing on illegal wildlfe trade (IWT), the work of the Wolfsberg Group of which the Group is an active member, and with public-private partnerships in multiple markets. The Committee fully supported these virtual forums to enabletheGroupto continue to playa leading role in FCC sharing intiatves. The following pages provide insght and context into the Committee’s work and activties during the year. Gay Huey Evans Chair of the Board Financal Crime Risk Committee Committee compositon Scheduled meetings G Huey Evans, CBE (Chair) 4/4 D P Conner 4/4 C M Hodgson, CBE 4/4 N Kheraj 4/4 CTong 4/4 External adviser members B H Khoo 4/4 Sir Iain Lobban 4/4 Other attendees at Committee meetings in 2021 included: the Group Chairman; Group Chief Executive; Group Head, Conduct, FinancalCrime & Compliance; Group General Counsel; Group Chief Risk Officer; Global Head, Financal Crime Compliance, Conduct & Compliance Frameworks; Group Head of Internal Audit; Global Head, Disputes & Government Investigatons; and Group CompanySecretary. As part of their ongoing engagement plans in 2021, Phil Rivett attended twoCommitteemeetings, MariaRamos attended three Committee meetings and Byron Grote attended the majorty of one Committee meeting. As part of, and in additon to,eachscheduledCommittee meeting, theCommittee heldprivate members-onlymeetings. The Committee’s membership currently comprises five INEDs and two independent external adviser members who are neither directors nor employees of the Group, but who provide a valuable external perspective and have extensive experience in counter-terrorism, cyber security and internatonal security. Biographcaldetails of the Committee members can be viewed on pages 91 to 94 Main responsiblites of the Committee The Committee provides oversight of the effectiveness of the Group’s polices, procedures, systems, controls and assurance arrangements designed to identfy, assess, manage,monitor and prevent and/or detect money laundering, non- compliance with sanctions, bribery, corruption and tax crime by third parties. The Committee reports to the Board on its key areasof focusfollowingeach Committee meeting. The Committee has written Termsof Reference that can be viewed at sc.com/termsofreference “The Committee is pleased to note the progress made againstthe Group’s oversight of financalcrime priorties” ![]() 139 Standard Chartered – Annual Report 2021 Directors’ report #### Activties during the year Completion of technology remediaton programme • Exercised oversight of the activty required to comply with the requirements of the various FCC-related resolutions withthe US and UKauthorites and discussedmaterial risks and businessstrategy plans pertainngto the Group’s businesses intheUS Assessment of financalcrime risk control environment • Discussed reports on FCR faced by the Group across a number of client segments and geographies, with members of country and regional management attending meetings to provide perspective • Assurance was sought and received on the actions under way to strengthen controls in relation to FCR • Reviewed reports on GIA’s work and opinon on the Group’s control environment relating to FCR. Discussons included the grading of audit reports across FCC risk themes, gaps and deficencies that have been identfied. Assurance was sought and received concerning management’s response and resulting management actions. Given WFH arrangements due to COVID-19 lockdowns, the Committee probed how GIA is managing its audits and sought assurance that appropriate controls were being maintaned • Discussed an annual report from the Group’s Money Laundering Reporting Officer covering: responsiblites across theGroupfor anti-money laundering systems and controls andthe structure withn which they operate; an overall assessment of the FCC programme; an assessment of the operation of systems and controls; a summary of businessissues andstrategy; conclusions and recommendations for action; reporting from the Nominated Officer • At each meeting, received a report from the Global Head of FCC, Conduct and Compliance Frameworks setting out status reports on the FC programme, FC objectves, regulatory matters, signficant investgations, externalthreats and technologyenhancements beingrolled out across the Group • At the request of the Committee, a paper setting out the key extant and emerging FC risks from technology-enabled financal innovaton, focusing on the Group’s digtal assets strategy was discussed • Discussed the Group’s ABC Programme focusing on the key risks and actions taken by management to address these. In particular, discusson focused on the control processes for intermedaries and new partnerships, forexample, with SC Ventures-related intiatves • Discussed a paper setting out the nature of FCR inherent in the CCIB business, potential new FCR in light of CCIB’s strategy, mitgating actions and remainng challenges Financal crime future threats • Discussed external development and emerging threats at each Committee meeting • Reviewed and provided feedback on the main areas of FCR threat for the Group, with the Committee providng insghts on what is being seen elsewhere. In particular, discussed how the threat of COVID-19- related FC is evolving • Received and discussed papers providng an assessment of the underlying FC threats arisng with most frequency in recent and ongoing signficant investgations. Discusson focused on how management is responding to the various thematic risks and horizon scanning emerging risks Group Risk Appetite Statement in relation to financalcrime • Reviewed and recommended to the Board the Group’s Risk Appetite Statement, metrics and thresholds in relation to FCR • Regularly reviewed metrics measuring against the FC Risk Appetite CFCC function • Regularly discussed theengagement of people and theimpactsof the FCSOTransformation Programme and actions to manage the risks and implement change Financal crime compliance- relatedmatters • Received and discussed updates on signficant FCC-related matters Active engagement in industry and public-private intiatves • Discussed reports on FCC-related public-private informaton-sharing intiatves to which the Group contributes, in order to protect the integrty of the global financal system and improve the effectiveness of the contributons of financal insttutions in fightng financal crime • Discussed howthe Group contributes toindustry thinkng on reform and informaton-sharing partnerships in a number of markets, as well as working with internatonal fora such as the Wolfsberg Group • Discussed the Group’s role in partnering with industry peers, non-governmental organisatons and government officals, to engage in coordinated efforts to combat some of the world’s most pernicous crimes, includng human traffickng, terrorism, IWT and thetransnational organisedmoney laundering network Ongoing engagement • The Group particpated in a number of United for Wildlfe hosted webinars, which brought together experts and stakeholdersto share knowledgeand perspective on thesechallenges andwhatthe financal sector can do to combat these issues and discuss emerging IWT trends and threats Linkages with subsidaries • In conjuncton with the Chair of the Board Risk Committee, Gay Huey Evans co-hosted an annual video-conference call with the chairs of subsidary board risk committees and INEDs in July 2021 Details of this call can be found on page 115 ![]() 140 StandardChartered – Annual Report 2021 Directors’ report Corporate governance Committeeeffectiveness review During 2021, an internal Board and Board Committee effectiveness review was faciltated by the Group Company Secretary. Key observations from the 2021 internal effectiveness review The feedback on the Committee’s functionng and effectiveness was positve and it specifcally highlghted: • The Committee has performed well with sustained focus on the key challenges faced for FCC. The Committee Chair is wellprepared and manages the agendaeffectively • Good progress had been made in completing oversight of the key milestones and priorties agreed in last year’s effectiveness review, and commentary was provided on the future role and focus of the Committee • A suggestion was made that additonal FCR trainng be offered to Committee and non-Committee members 2022 Action Plan The 2022 Action Plan for the Committee reflects suggestions from the evaluation: • Consideraton will be given to the future role and focus of the Committee, ensuring that FCR continues to have sufficent oversight • Additonal FCR trainng for Committee and non- Committee members to be organised in 2022 ![]() 141 Standard Chartered – Annual Report 2021 Directors’ report #### Directors’ #### remuneration report Committee compositon Scheduled meetings C M Hodgson, CBE (Chair) 5/5 B E Grote 5/5 N Kheraj (Stepped down as Member of the Committee on 5 July 2021) 2/2 M Ramos (Appointed as Member of the Committee on 5 July 2021) 3/3 J M Whitbread 5/5 Biographcal details of the Committee members can be viewed on pages 92 to 93 Other attendees for relevant parts of Committee meetings in 2021 included: Group Chairman; Group Chief Executive(CEO); Group Chief Financal Officer (CFO); Group Chief Risk Officer; Group Head, HR; Global Head, Performance, Reward and Benefits; Group General Counsel;GroupHead, Conduct, Financal Crime and Compliance; Group CompanySecretary. Main responsiblites of the Committee The Committee isresponsible for settingthe governance framework for remunerationfor all employees, ensuring alignment with our culture, the requirements of the UK Corporate Governance Code and any other relevant regulations. Key responsiblites ofthe Committee include: • Oversight of the Group’s Fair Pay Charter includng the developmentand implementaton ofworkforce remuneration polices and practices that are consistent with sound andeffectiveriskmanagement to support the Group’s strategic priorties and enable long-term sustainable success. • Approval of Group discretonaryincentves, includng adjustment for current andfuture risks. • Together with the Board, determinng and agreeing the remuneration framework and polices for the Group Chairman,executive directors and other senior executives, using the Fair Pay Charter princples, taking into account wider workforce remuneration, and ensuring the alignment of reward with culture and conduct. The Committee has written terms of reference that can be viewed at sc.com/termsofreference #### “ Deliverng competitve reward #### in recogniton of resilent #### performance achieved in #### challenging circumstances” Summary of 2021 remuneration decisons • Following signficantly reduced remuneration outcomes in 2020, Group discretonary incentves for 2021 are $1,367 millon; up 38 per cent on 2020 and slightly up on 2019, reflecting resilent performance in 2021. • Annual incentve awards for the executive directors are directly linked to the Group scorecard with an outcome of 57 per cent of the maximum. • Salary increases of 2.7 per cent will be implemented in April 2022 for both executive directors, in line with the average salary increase for the Group’s UK workforce and below the average salary increase for the Group (4.8 per cent). • A new directors’ remuneration policy is proposed for implementaton in 2022, subject to shareholder approval at the AGM. There are no material changes as the policy continues to support the delivery of our strategy. • Greater alignment is introduced between reward and the Group’s strategic priorties, includng our Stands, through direct links to annual and long-term incentve measures. Introduction On behalf of the Remuneration Committee, I am pleased to present our directors’ remuneration report for the year ended 31 December 2021. The report provides an overview of the Committee’s work in the year on remuneration for the executive directors and the wider workforce. During 2021 we have continued to support colleagues through the COVID-19 pandemic,recognisng thefatigue and ongoing challenges created by the prolonged nature of the criss. We are sensitve to the diffculties many continue to face and are investng heavily in our people and culture, being committed to developing the bank for the new economy – one that is inclusve, collaborative and innovatve. Across more than 50 markets we have built a bank with diverse experience, capabilties and culture. We arededicated to making remuneration decisons that are fair, transparent and competitve in order to enable a future-ready workforce and builda workplace thathelps our colleagues perform at their best. Our Fair Pay Charter continues to guide our performance and reward decison-making globally. Our 2021 Fair Pay Report provides an update on the progress made and summarises how we meet the princples of our Fair Pay Charter. Highlghts this year include taking the first steps to incorporate livngwages intoour supply chain andcontinung to increase consistency of benefits across our markets. The 2021 Fair Pay Report can be viewed at sc.com/fairpaycharter As part of this report we are presenting our new directors’ remuneration policy (the policy) which, if approved, will apply from the date of the 2022 AGM for up to three years. No material changes are proposed to the policy as the Committee is confident that it remains fit for purpose and continues to support the delivery of our strategy. In arrivng at this conclusion,we have consulted withshareholders and considered the experience of our wider stakeholder group. A summary of the proposed changes is included below and the full policy is set out on pages 161 to 166. ![]() 142 Standard Chartered – Annual Report 2021 Directors’ report Directors’ remunerationreport Our performance in 2021 Throughout the year, the Group has demonstrated resilent performance against achallenging backdrop. Underlying profit before tax is up 55 per cent on 2020, driven by low levels of credit imparment and good progress across our strategic priorties. Return on tangible equity (RoTE) is up 300 basis points to 6.0 per cent and the Group remains strongly capitalsed, with the Common Equity Tier 1 (CET1) ratio at 14.1 per cent, demonstrating resilence. The formulaic Group scorecard outcome was 64 per cent with 37 per cent based on financal achievements includng effective cost management, low levels of credit imparment and growth in high-performing liablites and 27 per cent based on non-financal achievements, includngdigtal adoption, increased innovaton,speed tomarket (from idea formation to clientdelivery) anddelivery on our commitment to the Women in Finance Charter. Group-wide remuneration 2021 annual discretonary incentves Following signficantly reduced discretonary incentves and limted pay increases in 2020, remuneration outcomes have increased in 2021 in line with performance. The Group scorecard assessment of 64 per cent was used as a starting point for determinng discretonary incentves. The Committee also considered carefully risk, control and conductmatters, reviewng material issues and fines,includng the penalty received from the Prudential Regulation Authority (PRA) in respect of liqudity reporting issues. Considerng allfactors, andto ensure the outcome reflects underlying performance, theCommittee determined that a reduction of 7 percentage points was appropriate, resulting in an outcome of 57 per cent for the purposes of discretonary incentves. This results in aggregate incentves of $1,367 millon, which is 38 per cent higher than 2020 and slightly above 2019. Further detail is set out on page 153. 2022 salaries At the start of 2021 we limted salary increases in recogniton of the prevailng circumstances. However, through the year we saw an increase in competiton for talent in the global labour market. In response to this, and wage inflaton across several of the markets we operate in, our average global salary increase is 4.8 per cent for 2022. Executivedirector remunerationin 2021 Annual incentves for executive directors Annual incentves for Bill and Andy reflect the Group scorecard outcome with potential to adjust upwards or downwards based on personal performance. For 2021, the Committee determined that the annual incentve for Bill and Andy should be unadjusted from the Group outcome, at 57 per cent of the maximum. In 2020, the Group scorecard outcome was 37 per cent, which was then reduced by Bill’s and Andy’s voluntary waiver of the cash portion (i.e. 50 per cent), resulting in an overall annual incentve outcome of 18.5 per cent of the maximum. The 2021 scorecard results in annual incentve outcomes for the executive directors that are 54 per cent higher than 2020 (before the voluntary waiver of the cash portion) and slightly lower than 2019, which is a more comparable year given the material impact of COVID-19. 2019–21 LTIP awards vesting in March 2022 The 2019–21 long-term incentve plan (LTIP) awards are due to vest in March 2022. Following an assessment of the performance conditons, the expected levels of vesting are: • RoTE – 0% vesting • Total shareholder return (TSR) – 0% vesting • Strategic priorties – 23% vesting We have not adjusted the performance targets as a result of the pandemic. The value delivered by the 23 per cent vesting outcome and included in the single total figure of remuneration is based on a share price of £4.55 (the three- month average to 31 December 2021) compared with the share price of £6.11 at grant in 2019. This reduces the award outcome value by 25 per cent. Single total figure of remuneration for 2021 The 2021 annualincentveand expected 2019–21LTIPvesting results in a 2021 single figure for Bill of £4,657,000 and for Andy of £2,979,000. This represents a year-on-year increase of 19 and 21 per cent respectively, which partially reflects the impact of the executive directors’ voluntary waiver of the cash portion of their annual incentve in 2020. 2021 single totalfigure of remuneration (£000) 4,657 3,926 5,932 2021 BillWinters 2020 2019 2,979 2,452 3,636 2021 AndyHalford 2020 2019 0 1,0002,0003,0004,0006,0005,000 Salary (cash and shares) Pension Benefits Annual incentve LTIP 19%increase for BillWinters in 2021 21% increase for Andy Halford in 2021 Executive directors’ shareholdings A signficant portion of Bill’s and Andy’s total remuneration is delivered in shares which will be released over the next eight years. The deferral, retention and recovery provisons of their pay reinforce continued alignment with shareholder interests and the Group’s long-term performance. As of 31 December 2021, both Billand Andyhad exceeded their shareholding requirements as outlined below. Executivedirector shareholdings (%ofsalary) 416% 250% BillWinters AndyHalford 279% 200% 0 100%50%150% 200% 250% 300% 350% 450% 400% Actualshareholding Shareholdingrequirement ![]() 143 Standard Chartered – Annual Report 2021 Directors’ report Directors’ remuneration policy The Committee is seeking shareholder approval for a new remuneration policy for the executive directors, as the term for the existng policy comes to an end at the 2022 AGM. We have undertaken an extensive review of the existng policy, includng consulting with our majorshareholders, and we believe it remains appropriate to support the delivery of our strategy. As such, no signficant change to the overall structure or quantum of the current executive directors’ remuneration is being proposed in the new policy. Further detail is set out on pages 160 to 166. As a reminder, at the AGM in 2019 the directors’ remuneration policy received the support of 63.8 per cent of shareholders. The Committee re-engaged with shareholders toseek feedback and address concerns relatingto the pension allowance. Following these discussons, with effect from 1 January 2020, the pension allowance for the current executive directors was reduced from 20 per cent of salary to 10 per cent of salary, alignng with UK employees. The subsequent directors’ remuneration reports received shareholder support of 97.0 per cent and 98.6 per cent at the 2020 and 2021 AGMs respectively. Two developments to the directors’ remuneration policy are proposed to align with market practice, which has evolved since 2019: • Without changing the value of the maximum opportunity, the calculation of variable pay will be based on salary (cash and shares) only and will no longer include the pension allowance. This is purely a presentational change. Basis of calculation Maximum opportunity Annual incentve LTIP Current: fixed pay –salary and pension 80%120% Proposed: salary 88% 132% • The post-employment shareholding requirement willbe increased to 100 per cent of the shareholding requirement for two years following the cessation of employment. In additon, to recognise market practice and the views of some of our shareholders, the pension allowance for new directors will be based on the cash element of salary only. The Committee considered carefully whether the pension allowance for Bill and Andy should also be based on the cash element of salary only. However, the pension reductions in 2020 had a direct impact on the variable pay opportunity (8 per cent lower for both Bill and Andy) in additon to the reduction in fixed pay. Therefore, to avoid further reducing the opportunity, we believe the current policy (10 per cent of salary) continues to be appropriate for Bill and Andy and remains consistent with the approach for the rest of the UK workforce. In making this decison, the Committee also took into account the highlevel of shareholder support expressed for the current arrangements at the 2020 and 2021 AGMs, and in recentengagement sessions. Executivedirectors’ remuneration in 2022 For 2022, the assessment of personal performance will be embedded into the annual incentve scorecard assessment, accounting for a maximum weightng of 10 per cent. Financal measures will continue to make up 50 per cent of the annual incentve scorecard. Further detail is set out on page 169. Under the remuneration policy, the Committee considers salary increases annually for the executive directors and takes account of increases in scope or responsiblity, the indvidual’s development in role, market competitveness, and salary increases across the Group. This is in line with the approach takenfor all Group employees. Taking into account the average 2022 salary increase awarded to the Group’s UK and global workforce, the Committee has determined that an increase is appropriate. The Committee has awarded salary increases of 2.7 per cent to Bill and Andy, from £2,370,000 to £2,434,000 and from £1,515,000 to £1,556,000 respectively. This is the second salary increase awarded to Bill and the third to Andy since their appointments in 2015 and 2014 respectively. 2022-24 LTIP awards to be granted in March 2022 After considerng 2021 performance, 2022–24 LTIP awards will be granted to both Bill and Andy with a value of 120 per cent of fixed pay, in line with our current policy. Subject to performance over the next three years, awards will vest pro rata over years three to seven with an additonal retention period of 12 months after vesting. Performance will be assessed based on RoTE with a CET1 underpin, TSR relative to a peer group, and the achievement of measures that are aligned with the Group’s strategic priorties. Last year we adjusted the weightngs of the performance measures and included a standalone sustainablity pillar to recognise its importance. This year we are retainng this pillar and increasng the focus on the broader impact of client activty, rather than on our internal operations. To enhance the alignment between executive remuneration and our strategy, measures relating to all three Stands are included in the 2022–24 LTIP. More informaton on our Stands is set out on pages 24 and 25. Discussons with shareholders were held inJanuary 2022 on the development of these performance measures and targets, and were factoredinto final decisonsmade by the Committee. Further details on the 2022–24 LTIP and the performance targets are set out on pages 157 and 158. This directors’ remuneration report is subject to two shareholder votes at the 2022 AGM: • An advisory vote on the applicaton of the existng directors’ remuneration policy in 2021. • A bindng vote on the proposed directors’ remuneration policy which, if approved, will apply from the date of the AGM. The policy sets out the framework for directors’ remuneration for up to three years. In the rest of this report we present the disclosures required by regulations, aswell asadditonal informaton toexplain how remuneration for our executives aligns with our strategy, shareholder interests and wider workforce pay. All disclosures in the directors’ remuneration report are unaudited unless otherwise stated. Disclosuresmarked as audited should be considered audited in the context of the financal statements as a whole. In making remuneration decisons for 2021 and beyond, we have been mindful of the experience of our wider stakeholder group. I would like to thank personally our shareholders and my fellow Committee members for theirongoingsupport and engagement as we sought tostrike the appropriate balance. Christne Hodgson Chair of the Remuneration Committee ![]() 144 Standard Chartered – Annual Report 2021 Directors’ report Directors’ remunerationreport #### Remuneration at a glance FinancalKPIs Profit before tax $ m 55% Return on tangible equity . % 300bps Underlying basis Common Equity Tier 1 ratio . % 28bps Above our target range of 13-14% Total shareholder return (.) % 2.0% Executivedirectors’ remuneration Non-financalKPIs Diversty and incluson: women in senior roles . % 1.3ppt Sustainablity Aspiratons met or on track . % 4.5ppt Group-wide remuneration 0 200 400 600 800 1,000 1,200 1,400 202120202019 1,278 990 1,367 Totaldiscretonary incentves, 2019–2021 ($m) Share ownership as % of salary (at 31 December 2021) 416% 279% 200% 250% Bill Winters Requirement Actual Andy Halford 1,189 2,086 760 1,333 57%ofmaximum Bill Winters AndyHalford 2021 annual incentve (£000) 696 3,128 445 2,000 23%of maximum Bill Winters AndyHalford 2019–21LTIP outcome (£000) 4,657 7,986 2,979 5,107 58% of maximum 2021 outcome Bill Winters AndyHalford 2021 single figure (£000) Maximum opportunity 2021Group scorecardoutcome Financals / % Clients / % Enablers / % 2021 Groupscorecard outcome % Risk and controls / % Sustainablity / % Discretonaryreduction to formulaic outcome #### ppt 1 1Considerngall factors, the Committee determined that a reduction of 7percentage points (ppt) to the formulaicoutcome (64 per cent) was appropriate, resulting in an outcome of 57 per cent for the purposes of discretonaryincentves ![]() 145 Standard Chartered – Annual Report 2021 Directors’ report Summary of the proposed new executive directors’ remuneration policy Our policy on remuneration for directors was last reviewed in 2018 and approved by shareholders at the May 2019 AGM. During 2021 we have carried out a review of executive director remuneration and at our May 2022 AGM we will propose a new directors’ remuneration policy. Taking into account feedback received from our major shareholders and proxy advisers, the Committee considers that the current directors’ remuneration policy remains appropriate and continues to support the delivery of our strategy. Therefore, no signficant changes to the overall structure or quantum of the current executive directors’ remuneration packages are being proposed. The key elements of the proposed policy and an explanation of the proposed changes are set out below. Full details of the new directors’ remuneration policy are set out on pages 160 to 166. Element Current policy Proposedchanges topolicy andrationale Fixedremuneration Salary Delivered part in cash (paid monthly) and part in shares (20 per cent released annually over five years) No change Why? Deliverng salary part in cash and part in shares continues to reinforcelong-term alignment with shareholders. Pension Maximum of 20 per cent of salary, implemented at 10percent of salary for current executive directors Paid as a cash allowance and/or contributon toa defined contributon scheme Change: Maximum will reduce to 10 per cent of salary in line with current implementaton. Why? With effect from 1 January 2020, the pension allowance for the current executive directors was reduced from 20 per cent of salary to 10 per cent of salary. This reduced the variable pay opportunity by 8 per cent for both Bill and Andy. To avoid a further reduction in remuneration, pension for the current executive directors is being maintaned as a percentage of the cash and share elements of salary. Change: For new directors pension will be based on the cash element of salaryonly. Why? To recognise feedback from shareholders and to align further with market practice. Benefits A range of benefits are provided which support directors to carry out their duties effectively No change Why? Core benefits continue to be aligned with the wider workforce. Variableremuneration Totalvariable remuneration cannotexceed regulatory limts Annual incentve Based on the Group scorecard of financal and strategic targets and personal performance, measured over one year Maximum opportunity of 80 per cent of fixed pay (defined as salary and pension) to be delivered as a combinaton of cash andshares subjectto holding requirements Change: The annual incentve opportunity will be re-expressed as a percentage of salary only, changing from a percentage of fixed pay. The maximum opportunity, as a percentage of salary, will be 88 per cent and results in the same value of opportunity. Why? The basis for calculation of variable remuneration is changing to align withmarket practice and torecognise shareholder preference. Long-term incentve plan (LTIP) Share awards to be granted annually and subjectto performancemeasured over three years Maximum opportunity of 120 per cent of fixed pay (defined as salary and pension) with phased vesting over three to seven years and subject to holding requirements Change: The LTIP will be re-expressed as a percentage of salary only, changing from a percentage of fixed pay. The maximum opportunity, as a percentage of salary, will be 132 per cent and results in the same value of opportunity. Why? The basis for calculation of variable remuneration is changing to align withmarket practice and torecognise shareholder preference. Shareholding requirements Executive directors are required to hold a specifed level of shares expressed as a percentage of salary During the current policy the requirements have been 250 per cent of salary for the CEO and 200 per cent of salary for the CFO No change Why? The shareholding requirements remain appropriateand aligned to the interests of shareholders and market practice. Post- employment shareholding requirement 100 per cent oftheshareholding requirement in place for one year and 50 per cent of the requirement in place for the second year following cessation of employment Change: The post-employment shareholding requirementwill be 100 per cent of the shareholding requirement for the full two years following the cessation of employment. Why? The requirements are changing to align with market practice and shareholder guidance. Leaver provisons On a case-by-case basis, the Committee has the discreton todisapply the proration of vesting LTIP awards for time not served during theperformance period (e.g.in retirement situatons) when specifc critera are met No change Why? This provison is being retained to provide the Committee flexiblity, if the specifc critera set out in the full policy on page 165 are met, to enable smooth leadership transiton and to retain alignment of the retirng executives with the long-term interests of the Group and shareholders. ![]() 146 Standard Chartered – Annual Report 2021 Directors’ report Directors’ remunerationreport #### Remuneration alignment How does remuneration for our executive directors align with ourstrategy? Remuneration decisons made across the Group and by the Committee align with our strategy and Stands, our stakeholders’ interests in our delivery of long-term sustainable value and with the wider workforce in line with the princples set out in our Fair Pay Charter. The table below sets out how we have aligned the measures and targets in our Group annual and long-term incentves with our strategy and Stands, and other reward elements that achieve further alignment. Group annual and long-term incentve performance measures Other rewardelements Strategic priorties Clients Network • Improve client satisfacton rating • Deliver network income growth in Corporate, Commercial & Institutonal Banking • Grow digtal ventures values • Grow affluent wealth client activty • Targets inindvidual balanced scorecards Affluent Mass retail Sustainablity and Stands • Progress against the Group’s aim to achieve net zero for 2050 • Deliver strong progress towards our green and transiton finance target • Lift particpation of small businesses through increasng access to financal services • Support companies to improve working and environmental standards • Employeevolunteering • Futuremakers Strategic enablers People and culture • Drive culture of innovaton to generate new revenues • Adopt new ways of workingthatresult in quicker decison-making and delivery • Develop human capitalby improvngemployee engagement, diversty and incluson • Fair Pay Charter • Livng wages • Gender pay reporting • Salary ranges • Recogniton New ways of working Innovation Shareholder returns • Operating profit • Return ontangible equity • Totalshareholder return • All employee share schemes • Holding periods • Shareholding requirements Risk and controls • Improve effectiveness of risk and control governance • Successfully deliver milestones withn the cyber risk management plan • Deferral • Malus and clawback • Indivdualperformance adjustments Howdoes remuneration for our executive directors align with shareholder interests? The diagram below, based on the new directors’ remuneration policy, shows how a portion of Bill’s salary, annual incentve and long-term incentve is paid in shares which are released up to eight years following grant, so that the final component of pay granted in 2022 is released in 2030. This creates strong alignment between the interests of executives and shareholders to create long-term value. On a maximum opportunity basis, Bill’s total remuneration is delivered 67 per cent in shares (includng those subject to performance conditons) and 33 per cent in cash. Annual incentve and LTIP shares are subject to clawback for up to 10 years from grant 20% 20% LTIP Shares 20222023 2024 20252026202720282029 2030 20% 20% Annual incentve Cash and shares Vesting basedon performance measured over 3 years LTIP shares vestpro rata over years 3 to 7 with additonal retention period of 12 months 50% 50% Benefits Pension 100% Salary Cash and shares 100% 10% 10% 10% 10% 10% 50% Salary shares released pro rata over 5 years LTIP shares Annual incentve shares Salary shares Annual incentvecash Salary cash 20% ![]() 147 Standard Chartered – Annual Report 2021 Directors’ report How does remuneration for our executive directors align with the wider workforce? Our approach to remuneration is consistent for all employees and is designed to create alignment with our Fair Pay Charter princples which apply globally. Pay structure varies according to location. The table below demonstrates remuneration alignment between the executive directors and our UK workforce, being the most relevant market. All UKemployees Executivedirectors andthe Management Team Executive directors only Salary Pension Annual incentve LTIP Shareholding requirement • Salary is a contractually fixed amount and is set based on role, skills and experience. • Salary is reviewed annually against relevant market benchmarks for both the executive directors and otherUK employees. • Theexecutive directors’ salaries are paid in a combinaton of cash and shares to align with shareholder interests. • For UK employees, salary is paid 100 per cent in cash in line with the market. • Pension is set at 10 per cent of salary for both the executive directors and other UK employees, aligned with the provisons of the UK Corporate Governance Code. • In line with the UK Corporate GovernanceCode, only salary is pensionable. • Benefits and incentves are not pensionable. • All UK employees are eligblefor an annual incentve. • Annualincentves are based on Group performance (measured against the annual Group scorecard)and indvidual performance. • Thesame Group scorecard is used to determine incentves for executive directors and otherUK employees. • Annualincentves are subjectto risk adjustment provisons. • LTIP awards are granted to senior executives who have the abilty to influencethe long-term performance of the Group. • The grant of awards is dependent on performance in the year and the vesting of awards is dependent on performance over a three-year post-grant period. • Vested shares are subject tofurther retention periods. • LTIP awards are subject torisk adjustment provisons. • Executive directors have ashareholding requirement of 250 per cent of salary for the CEO and 200 per cent for the CFO. • Executive directors have a post- employment shareholding requirement. Under the proposed policy, the shareholding requirement will be equal to the full shareholding requirement for two years. Benefits Sharesave • The core benefits offered to executive directors and other UK employees are the same: private medical insurance,life assurance, income protection, accidental death and disablity insurance and a cash benefits allowance. • Executive directors receive a lower cash benefits allowance than other UK employees, as a percentage oftheir salary. • Executive directors have the use of a vehicle and driver. This is a role-based provison due to security and privacy requirements. • The CEO is entitled to a contributon to the preparation of his annual tax returns owing to the complexity of his tax affairs, in part due to travel requirements for Group business. • Employeesare eligblefor tax return preparation in the year of an internatonal relocation owing to the complexity of their returns in those years. All UK employees are eligbleto particpate in the Sharesave plan, which enables employeesto share in the success of the Group at a discounted share price. ![]() 148 Standard Chartered – Annual Report 2021 Directors’ report Directors’ remunerationreport The Committee is responsible for overseeing the remuneration of all employees, which includes determinng the framework and polices for the remuneration of the Group Chairman, the executive directors and other senior management. The Committee also oversees workforce remuneration and the alignment of reward, culture and the strategic priorties. The Committee has written terms of reference that can be viewed at sc.com/termsofreference Shareholder voting The table below shows the votes cast 1 at our AGM in May 2021 on the 2020 directors’ remuneration report. The resolution on the directors’ remuneration policy at the May 2019 AGM received a bindng vote in favour of 64 per cent. For Against Withheld Advisory vote on the 2020 remuneration report 596,685,018 (98.59%) 8,508,938 (1.41%) 7,673,691 1 Number ofvotes is equalto number of sharesheld Advice to the Committee The Committee was assisted in its consideratons by PwC, who was formally reappointed by the Committee as its remuneration adviser in June 2021 following a review of potential advisors and the quality of advice received. It is the Committee’s practice to undertake a detailed review of potential advisers every three to four years. PwC is a signatory to the voluntary Code of Conduct in relation to remuneration consulting in the UK. PwC also provides professional services to the Group in the ordinary course of business includng assurance, advisory,tax advice and certain services relating to Human Resources. The Committee considered PwC’s role as an adviser to the Group and determined that there was no conflict or potential conflict arisng. The Committee is satisfed that the advice the Committee receives is objectve and independent. Thetotal fee paid to PwC (on an agreed fee basis) was £137,450 which includes advice totheCommittee relating toexecutive directors’ remunerationand regulatory matters. The Group Chief Financal Officer and Group Chief Risk Officer provided the Committeewith regular updates onfinance and risk matters,respectively. The Committee recognises and manages any conflicts of interest when receivng views from executivedirectors or senior management onexecutive remuneration proposals and no indvidual is involved in decidng their own remuneration. Committeeeffectiveness review This year the Board effectiveness review comprised an internally faciltated, questionnare-based evaluation for the Board and its Committees completed by every Board member. Key observations from the 2021 internal effectiveness review The review outcomes for the Remuneration Committee, which are summarised below, were very positve: • Members highlghted the good process around preparation for the 2022 policy vote. • Members rated the Committee compositon as strong with agood understanding of remuneration. The Committee welcomes the additon of Maria Ramos and theskills and experienceshe brings. • Information received by the Committee is considered clear and comprehensive. Meetings are considered efficent and proactively managed with well-structured agendas. • Management incentves areconsidered well aligned with the Group’s strategic aims and investor expectations, with metrics clearly defined and measurable. 2022 Action Plan The 2022 Action Plan for the Committee reflects suggestions from the evaluation and continues tobuild on the further progress made last year: • Implement the 2022 directors’ remuneration policy for executive directors. • Continue to review the implementaton of the Group’s Fair Pay Charter and alignment of workforce polices and practices with its princples. • Monitor market trends to ensure that the Group’s remuneration remains competitve, in the context of improvng performance andproductivty. • Continue to assess the alignment between Group incentves and the delivery of the strategy and our desired performance-orientated, innovatve culture, underpinned by conduct and sustainablity. • Oversee compliance with the PRA and Financal Conduct Authority (FCA)remuneration rules, includng applicable elements of the CapitalRequirements DirectveV. • Consider jont horizon-scanning sessions with the Culture and Sustainablity Committee. #### The Remuneration Committee ![]() 149 Standard Chartered – Annual Report 2021 Directors’ report Committee activties in the year 18-Jan 01-Feb 28-Jul 05-Oct 29-Nov Executivedirectors’ remuneration Review of the directors’ remuneration policy and implementaton Fixed and variable remuneration Senior management remuneration Recruitment and terminaton Fixed and variable remuneration All employee remuneration Group-wide discretonary incentves Outcomes from the annual performance and reward review Incentiveperformance measures, targets and outcomes Group-wide reward, the Fair Pay Charter and gender pay gap Reward governance Consideraton ofrisk, control and conductmatters Identifcation of material risk takers Engagement withstakeholders and regulatory, investor and politcal matters The Committee held an additonal strategy meeting to discuss the Group’s approach to compensation costs and the impact of UK/EU remuneration rules on competiton for talent with domestic banks notsubject to the same regulatory requirements. The Committee dealt with certain less material matters on an ad hoc basis through email circulaton. Understanding the views of our workforce The Committee recognises the importance ofseekingfeedback from colleagues onremuneration to inform decison- making. This year, 92per cent of colleagues responded to the Group’s engagement survey, which sought tounderstand colleague sentiment in respect of reward, flexible working and wellbeing. Key insghts were presented to the Committee for discusson, and results were shared with the workforce along with a summary of actions being taken. The Board engages with and listens to the views of employees. In 2021, six interactve engagement sessions took place virtually, with particpation frommore than 2,600 colleagues. A rangeof people-related topics were discussed, includng new ways of working, diversty and incluson, remuneration and work-life balance. Further informatonon our workforce engagement framework isincluded in our Culture andSustainablity Committee report on pages 130 to 132. ![]() 150 Standard Chartered – Annual Report 2021 Directors’ report Directors’ remunerationreport Our Fair Pay Charter As we navigate new ways of working, our Fair Pay Charter enables us tocontinue to build aculture of sustainable high performance where everyone can be at their best and feel their contributons are fairly rewarded. Our Fair Pay Charter princples guide performance and reward decison-making globally and continue to be our compass in developing a reward strategy that responds to colleagues’ changingneeds. In February 2022 we publish our third Fair Pay Report which explains how our reward practices currently meet our princples andsummarises progress madeto enhance alignment in 2021. Progress against the Fair Pay Charter in 2021 We are proud of the progress we have made against the princples of our Charter since its launch in 2018. Implementation continues as new ways of working evolve; work in 2021 has been in the following areas: • On an annual basis we complete assurance activty to ensure that all colleagues are paid a livng wage, as measured by the benchmarks in place through our work with the Fair Wage Network. • We have taken intial steps to integrate fair pay into our supply chain, which is a multi-year undertaking. This year we published the Standard Chartered Supplier Charter which sets out how suppliers can develop their understanding of livng wagesand encouragesthe adoption of fair pay practices. • 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 toemployees, includng access to increased credit facilties. • During the pandemic, we have raised limts on medical benefits in several markets in Asia and Africa and the Middle East to supplement state coveragefor COVID-19 treatment, and procure vaccines for colleagues and their dependents in support ofgovernment-led intiatves. • To improve the transparency and fairness of fixed pay decison-making, we providepeople leaders with Group- wide princples guided by market data and salary ranges. We have continued to expand the coverage of salary ranges in 2021, up to 76 per cent. This reduces the potential risk of bias by shiftng focus away from an indvidual’s past or current compensation. • We continue to improve consistency in our benefits approach forcolleagues across 50 markets. Flexible benefits was launched in Malaysia in March 2021, enabling greater freedom of choice based on indvidual circumstances. Fair Pay Charter princples 1 We commit to pay a livng wage in all our markets and seek to go beyond compliance with minmum wage requirements. 2 We provide an appropriate mix of fixed and variable pay and a core level of benefits to ensure a minmum level of earnings and security to colleagues and to reflect the Group’s commitment to wellbeing. 3 We support colleagues in working flexibly, in ways that balance both business needs and theirpersonal circumstances, andprovide colleagues withthe opportunity to selectthecombinaton and level of benefits that is right for them. 4 Pay is well adminstered with colleagues paid accurately, on time and in a way that is convenient for them. 5 We provide a competitve total fixed and variable pay opportunity that enables us to attract, motivate and retain colleagues based on market rates for their role, location, performance, skills and experience. 6 The structure of pay and benefits is consistent for colleagues based on their location and role, with a clear rationale for exceptions. 7 We are committed to rewarding colleagues in a way that is free from discrminaton on the basis of diversty, as set out in our Group Code of Conduct. 8 We ensure pay decisons reflect the performance of the indvidual, the business they work in and the Group, and recognise the potential, conduct, behaviours and values demonstrated by each indvidual. 9 We set clear expectations for how colleagues are rewarded and the princples guidng decisons, includng clear personal objectvesand feedback. 10 We provide clear communicaton of pay and performance decisons, and seek feedback and input from colleagues on ourpay structures and outcomes. #### Group-wide remuneration in 2021 ![]() 151 Standard Chartered – Annual Report 2021 Directors’ report A bank for the new economy Flexible working We are focused on how we adapt and remain future-ready in response to the evolving nature of work and changing expectations from clients and colleagues. In 2020, we committed to implementng ahybrid working approach, combinng virtual and office-based working with greater flexiblity in working patterns and locations, balancing colleague preference andbusiness demands. As we emerge from the pandemic, the office is becoming a space where we will go to connect, collaborate, innovate and learn with others – clients and colleagues alike. At the root of these changes is an appetite for autonomy, flexiblity and choice.We aretransformingourspacesinto communites curatedto enhance business performance,connectivty, collaboration and wellbeing. We have also created a Near Home solution to implement colleagues’hybrid working arrangements, givngchoices about when,where and how we work. Driven bythecontinuaton of pandemic-related restrictons and by our new flexible working intiatve, based on the results of the 2021 My Voice survey, 42 per cent of colleagues were working fully from home, 26 per cent fully from the office, and 32 per cent a combinaton of home and office (hybrid). In 2021, our flexi-working model went live in 28 markets: 73 per cent of colleagues in these markets agreed formal flexi-working arrangements. The Group’s remainng countries will transiton over 2022 and 2023. We continueto monitor feedback received andprovide support to colleagues working both in the office, at home, or both. Plans are in place to collect insghts from the programme inorder to support leadership decisons. To identfy ways to work more effectively, insghts will be sought to understand how work is being performed in the new hybrid world and whether there is a correlation with performance, productivty,people andculture. Redefinng performancemanagement Simlar to last year, there was no formulaic link between performance ratings and annual incentve outcomes for colleagues. People leaders continuedto have theflexiblity to adjust outcomes for indviduals with very strong performance and for indviduals whose performance fell short of expectations, with management reviewsof decisons for fairness andconsistency. As we continue to transform the Group to achieve our strategic ambitons, we are making changes to the way we manage and recognise performance in 2022, to help create the culture needed for success. Our new approach to performance and talentmanagement hinges upon continuous performance conversationsand will further support our princpleof clear communicatonof expectations and regular, real-time feedback. We will place greater emphasis on recognisngoutperformance 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 facets of our new approachwith a population of first adopters, which helped us refine the design and implementaton. Upskillng/reskillng In today’s rapidly changing world, we want to build a workforce forthe future by enabling colleagues to develop their skills and their own career path in a more transparent, agile and inclusve way. To enable this, we have been experimentng with an internal virtual marketplace where colleagues canconnect skills, experience and aspiratons with suitableshort-term, on-the-job learning opportunites, creating possiblites for upskillng and reskillng. We will roll out our internal virtual talent marketplace to the rest of the Group in 2022. Wellbeing Our ambiton is to create a workplace and culture that has a positve impact on colleague wellbeing, enabling colleagues to manage their wellbeing proactively and bring their best selves to work. Initatives launched in the first year of our three-year wellbeing strategy have started to have a positve impact. The number of colleagues experiencng a high level of work-related stress reduced between 2019 and 2020, and nearly three-quarters of allcolleagues feel comfortable sharing these concerns with their people leaders. To understand more about the cause of work-related stress, we introduced new questions into the 2021 engagement survey, enabling us to take further meaningful action. In 2021 the following wellbeing intiatves were progressed: • Launch of Mental Wellbeing Philosophy and Aspiratons, to underpin ourthree-yearwellbeing strategy, to support colleagues indevelopingtheskills needed for the future, (e.g.buildng resilence, supporting others andinclusve leadership). • Embedding Unmind, a digtal applicaton and platform that enables colleagues toassess their wellbeing needs and receive personalised recommendations and coaching on simple steps to develop healthier habits. • Partnering with clincal psychiatrsts and psychologists to launch the Buildng Resilence programme, helping colleagues to understand the neuroscience of common mental health issues, teaching how to build resilence to cope with disruptonand rapidchange. • Expansion of the mental health first aider (MHFA) programme, increasng the number of trained MHFAs to offer in-country coverage to 98 per cent of the our colleagues. • Launch ofWellbeing Experiments to spark fun, incluson and collaboration around wellbeing at team level. The experiments align with our focus on preventative and proactive wellbeing support in order to create healthier and more sustainable habits for the future. • Drivng local intiatves through Wellbeing Weeks in countries and regions. We are increasng the prominence of wellbeing further in 2022 with an emphasis on financal wellbeing intiatves. Priorties includeencouraging uptakeamongst colleagues of new and existng wellbeing programmes; further listenng and measurement of intiatves through feedback channels; and increasedlocalisaton to maximse effectivenessin countries and regions. ![]() 152 Standard Chartered – Annual Report 2021 Directors’ report Directors’ remunerationreport #### Directors’ remuneration in 2021 This section, which is subject to an advisory vote at the 2022 AGM, sets out how remuneration was delivered to the executive directors in 2021 under the remuneration policy approved by shareholders in 2019. It also sets out the 2021 fees paid to the Group Chairman and the independent non-executive directors (INEDs). Annual incentve awards for the executive directors(audited) Annual incentve awards for executive directors are based on the assessmentof the Group scorecard andan assessment of indvidual performance. The Group scorecard is used for all eligble employees, includng theexecutive directors, to maintan alignment and a shared sense of purpose. For Bill and Andy, the Committee considered Group performance, indvidual performance, and risk, control and conduct-related matters (with input from Risk and other control functions). The Committee follows a three-step process for determinng annualincentve awards. 1.Consider eligbilty: The Committee considered that each director had exhibted an appropriate level of conduct and was deemed to have met the gateway requirement to be eligble for an incentve. 2.Evaluate performance against the Group’s scorecard: The Group reported steady progress against both financal and strategic measures inthe scorecard, demonstrating resilent performance throughout 2021 despitea challenging backdrop. Underlying profit before tax is up 55 per cent on 2020, helped by low levels of credit imparment and strong underlying business momentum. RoTE is up 300 basis points to 6.0 per cent and the Group’s capital remains strong, with the CET1 ratio at 14.1 per cent, demonstrating resilence. Full details of the scorecard outcome can be seen on page 145. 3. Assess personal performance and finalse awards: As outlined in the policy, the Committee can make an upwards or downwards adjustment to the scorecard outcome for personal performance (usually in the range of +/- 10 per cent),consistent withthe approach for other employees who are eligble to be consideredfor discretonary incentves. When considerngwhether such an adjustment is appropriate, the Committee considers areas of responsiblity together with progress againstkey objectves for the year and personal contributon to the Group scorecard outcome. Assessment of personal performance and finalsed awards Bill Winters A summary of key achievements against Bill’s personal objectves is set out as follows: • Throughoutthe challenging circumstances of 2021, Billhas demonstrated exceptional leadership,navigatngthe Group and its colleagues through this uncertain period with skill and determinaton. • Bill has delivered steady progress on financal performance, although it is noted that there is the need to continue to improve the RoTE to achieve a signficantly better valuation. This should be accompanied by further strengthening of the Group’s risk and control framework in light of the evolving landscape. • Bill remains committed to the achievement of the Group’s ambitous medium and long-term goals; a key priorty for Bill during 2021 has been delivery against the strategic priorties. Progress has been made in pushing forward the agenda on our Stands and setting the roadmap for achievng our net zero ambiton. • Bill continues to driveinnovatonand collaboration, ensuring that new ways of working are becoming gradually embedded across the organisaton to support this. • During 2021, Bill has been focused on strengthening the Management Team through key strategic hires. • Bill consistentlyrole-models our valued behaviours inhis interactons with the Management Team and Board. His transparency and loyalty inspre a shared sense of purpose and vison during challenging times. The Committee determined that neither an upwards nor downwards adjustment to the overall Group scorecard outcome was appropriate for 2021. Bill’s annual incentve is aligned with the Group scorecard outcome at 57 per cent of the maximum opportunity, which equates to £1,188,792 and is 46 per cent of fixed pay (15 per cent in 2020 and 44 per cent in 2019). Andy Halford A summary of key achievements against Andy’s personal objectves is set out as follows: • Andy has played an instrumental part in achievng steady progress across a range of financal and strategic objectves which has in turn enabled the Group to demonstrate resilent performance despite continung adverse operational andeconomic challenges. • Andy has been key to the delivery of new ways of working, enabling our drive for productivty by improvng the synchronisaton of financals with the concept of client- centred end-to-end processes. • Andy continues todemonstrate strong leadership inthe restructuring of the Group’s legal entites and the delivery of a radical change programme withn the Property function. • Andy has supported structural improvements in Treasury management with further work planned. • Andy has been a great partner to the Management Team, providng balanced perspectives across strategy, investment, productivty andtransformation intiatves. Andy consistently demonstrates objectvity, transparency and integrty. • Andy will continue to refine our dialogue with stakeholders to effectively communicate our strategy and execution progress. Consistent with that, Andy will continue to evolve internal performance measures to align with our strategic priorties. The Committee considered Andy’s performance against his key objectves in the year and areas for further improvement, determinng that neither an upwards nor downwards adjustment to the overall Group scorecard outcome was appropriate for 2021. Andy’s annual incentve is 57 per cent of the maximum opportunity, which equates to £759,924 and is 46 per cent of fixed pay (15 per cent in 2020 and 44 per cent in 2019). ![]() 153 Standard Chartered – Annual Report 2021 Directors’ report Assessment of the 2021 Group scorecard Financalmeasures 1 Weightng Threshold (0%) Target Maximum(100%) Achievement Outcome Income 10% $15.8bn $14.5bn $15.1bn $14.7bn 2% Costs 10% $10.0 bn $10.8bn$10.4bn $10.3bn 5% Operating profit 5% $3.5bn $2.9 bn $3.2bn $3.9bn 5% RoTE 2 with a CET1 3 underpin of the higher of 13% or the minmum regulatory requirement 20% 4.7% 3.8% 4.3% 6.0% 20% Growth of high-quality liablites 4 5% $15.9bn $5.3bn $10.6bn $19.9bn 5% Other strategic measures 5,6 Weightng Target Assessment of achievement Outcome Clients (network, affluent, mass) 10% • Improve clientsatisfacton rating • Deliver growth inqualifed clients across Private Banking, Priorty Banking and Premium Banking, and Wealth Management activty across top 11 affluent countries • Deliver network incomegrowth in Corporate, Commercial & Institutonal Banking • Deliver client growth in key digtalpartnerships, platforms and technologies • Client satisfactontargets exceeded acrossall segments • Affluent growth slightly behind target due to slower growth in assets under management and Wealth Management active clients in Hong Kong and Taiwan • Slow Network income growth despite pipelne deals and tactical actionsadopted to deepen network opportunites • Strong client growth in digtal banking intiatves in Hong Kong and Africa offset by delays with launch of the Nexuse-commerce platform 5% Sustainablity 10% • Progress against our Paris Agreement client commitment • Reduce and offset emisson waste from flights, properties and suppliers • Established the methodology and targets tosupport our path to net zero by 2050 • Strong performance inemisson reduction largelydriven by the impact of COVID-19 restrictons on flight and property emissons 7% Enablers (innovaton, new ways of working and people) 15% • Drive culture of innovaton to generate new revenues • Adopt new ways of working that result inquicker decison-making and delivery • Develop human capital by improvngemployee engagement and diversty and incluson • Innovation targets exceeded primarly due to successful partnerships (e.g. Ali Pay, Asia Miles), and new business proof of concepts • New ways of working and digtal adoption targets exceeded, includng thesuccessful roll-out ofthe client onboarding portal, Chatbot and Digtal Client Assist • Employee net promoter and incluson metrics reduced in 2021 followingthe strong outcomesin 2020 during the onset of thepandemic • Senior female diversty of 30.7%, ahead of the 30% target 12% Risk and controls 15% • Maintan effective risk and control governance • Successfully deliver milestones withn the cyber risk management plan • Further improvement required on timelness of risk treatment plans and related risk reduction • Good progress in cyber risk reduction, but some delays in achievng plannedmilestones 3% Total 100% Total scorecardassessment 64% The Committeeconsidered carefully risk, control andconduct matters, reviewng material issuesand fines, includng the penalty received from the PRA in respect of liqudity reporting issues. Considerng all factors, the Committee determined that a reduction of 7 percentage points was appropriate, resulting in an outcome of 57% for the purposes of discretonary incentves. Final Group scorecard outcome for determinng annual incentves for executive directors and other employees 57% 1Total income and operating profit are on an underlying basis. Certain items are presented as restructuring and other items that are excluded from the underlying results of the Group. These are income, costs and imparment and resulting operating profit relating to identfiable business units, products or portfolios from the relevant dates that they have been approved for restructuring, disposal, wind-down or redundancy. This includes realised and unrealised gains and losses from management’s decisons to dispose ofassets, as well as residual income, directcostsand imparment ofrelated legacy assetsof those identfiablebusiness units, products or portfolios. See Note 2 page 318 2Underlying RoTE represents the ratio of the current year’s profit available for distrbution to ordinary shareholders, to the weighted average ordinary shareholders’ equity less the averagegoodwilland intangblesfor the reporting period. Underlying RoTE normally excludesregulatory finesbut, forremuneration purposes, this would be subject to review by the Committee 3The CET1 underpin was dynamically set at the higher of 13 per cent or the minmum regulatory level at 31 December 2021. In additon, the Committee has the discreton to take into account at the end of the performance period any changes in regulatory capital and risk-weighted asset requirements that might have been announced andimplementedafter the start ofthe performanceperiod 4Initative that targets growth of efficent and regulatory friendly deposits to improve quality of our funding mix (liablites) to support the Group’s growth aspiratons 5A maximum/minmum performance threshold was set for each performance measure. For strategic measures, the Committee used its judgement to determine scorecard outcomes withn this range (with a higher than 50 per cent outcome for performance above target and a lower than 50 per cent outcome for below target performance) 6The Committee considered the performance against the ESG metrics withn the people and purpose element of the annual incentve scorecard and 2019–21 LTIP strategic measures, as well as the Group’s wider progress on ESG metrics, and determined that the outcomes were appropriate and that the incentve structures do notraise ESG risks by motivatng irresponsblebehaviour. ![]() 154 Standard Chartered –Annual Report 2021 Directors’ report Directors’ remunerationreport Performance outcome for 2019–21 LTIP awards (audited) The single total figure of remuneration table shows that LTIP awards will vest in March 2022 with an estimated value of £696,000 and £445,000 for Bill and Andy, respectively. These LTIP awards were granted to Bill and Andy in 2019 with a face value of 120 per cent of fixed pay, to incentvise the continued execution of the strategy over the three-year period 2019 to 2021. The awards are share-based and subject to the satisfacton of stretching performance measures over three years. The conduct gateway requirement must be met before any awards vest. The awards are then subject to RoTE and relative TSR targets and a qualitatve and quantitatve assessment of the strategic measures. The Committee concluded that Bill and Andy exhibted appropriate conduct during the performance period and therefore the conduct gateway was met. The threshold RoTE target has not been achieved and the relative TSR threshold target will be measured in March 2022 but is estimated not to have been achieved and, therefore, there will be no vesting of the 66.6 per cent of the awards subject to these measures. The Committee considered performance against the proof points as set out in the table below and determined that the overall vesting of the LTIP would be 23 per cent. The table below sets out the performance required, the 2019–21 performance achieved and the LTIP vesting outcome. The share price used to estimate the value of vesting of the 2019–21 LTIP awards is lower than the share price on the award date of £6.11 and, therefore, the value attributable to share price growth is nil. The value of the awards vesting is reduced by 25 per cent when compared with the value at grant. No discreton has been applied to the vesting outcome of the LTIP in respect of performance targets or share price movement. The awards will vest pro rata over 2022 to 2026 and the shares will be subject to a 12 month retention period post-vesting. Malus and clawback provisonsapply. Measure Weightng Performance for minmum vesting (25%) Performance for maximum vesting (100%) Assessment of achievement Vesting outcome RoTE 1 in 2021 with a CET1underpin One-third 8% 11% RoTE 6.0% and CET1 14.1% therefore 0% vesting 0% Relative TSR performance against peer group One-third Median Upper quartile Performance currently estimated below median. TSR performance will be measured in March 2022 0% Strategicmeasures One-third Improved performance against our strategic priorties 23% Total 2019–21 LTIP awards vesting outcome 23% Strategicmeasure Proof point Assessment Deliver our network and grow our affluent business Improve client satisfacton rating Client satisfactonmetricsacross Corporate, Commercial & InstitutonalBanking, Private Bank and Retail Bank have met or exceeded targets across each year of the plan Deliver client growth in target segments Corporate, Commercial & Institutonal Banking network income growth and affluent wealth outcomes were slightly behind targets across the three - year period Capitalse on China opportunites includng through renminb and mainland wealth growth Strong performance in China with increased revenue and client growth, and maintaned positon as the number one ranked foreign bank for Bond Connect trading Develop Africa through digtal growth, increasng the number of clients and improvng client satisfacton Harnessing of digtal opportunites in Africa has led to increased client growth, includng the creation of mobile investment options for mass and emerging affluent clients. Client satisfacton targets have been achieved Maintan credit quality Targets exceeded, evaluated with reference to exposure orignated over the period and thecredit quality of new business Transform and disrupt with digtal Use partnership, platforms and technologies toimprove client experience Launch of Nexus e-commerce platform delayed due to the impact of COVID-19. Strong performance in digtal banking intiatves in Hong Kong and Africa Deliver progression through growth in digtal volumes Targets met for digtally intiated transactions in Corporate, Commercial & Institutonal Banking. Targets exceeded for digtal sales growth in Consumer, Private& Business Banking Purpose and people Enhance compliance and financal crime compliance controls Continungprogress made includngthe increased use oftechnology, data and analytics in enhancing effectiveand sustainablefinancalcrime compliancecontrols Successfully deliver cyber risk management planmilestones Good progress in cyber risk reduction, but some delays in achievng planned milestones Develop human capital by improvngdiversty, employee engagement andculture of incluson metrics and by deliverngconduct plans Employee net promoter and incluson metrics have increased over the period despite a reduction from 2020 to 2021. Strong progress in senior female diversty which has increased to 30.7% in 2021 1RoTE was based on profit attributed to ordinary shareholders, adjusted, on a tax-effected basis, for profits or losses of a capital nature, restructuring charges, amounts consequent to investmenttransactionsdrivenby strategic intentand infrequent/exceptional transactions that are signficant or material in the context of the Group’s normal business earnings for the period. The CET1 underpin was set at the higher of 13 per cent or the minmum regulatory level as at 31 December 2021 (taking intoaccount anytransiton rules or material changes inregulatory rules) ![]() 155 Standard Chartered – Annual Report 2021 Directors’ report Single total figure of remuneration for 2021 (audited) The following table sets out the single total figure of remuneration for 2021 for the CEO and the CFO. The single figure consists of salary, pension, benefits and annual incentves receivable in respect of 2021 and the estimated values of 2019–21 LTIP awards vesting. The LTIP value is based on the outcome of awards made in 2019 and does not include the forward-looking awards to be made in March 2022, in respect of 2021 performance and based on further three-year performance measures, due to vest in early 2025. The single figure for Bill and Andy represents a year-on-year increase of 19 and 21 per cent respectively, which partially reflects the impact of the executive directors’ voluntary waiver of the cash element of their 2020 annual incentve, which reduced the award by 50 per cent. £000 Bill Winters AndyHalford 2021 2020 2021 2020 Salary 2,370 2,370 1,515 1,504 Pension 237 237 152 150 Benefits 165 225 107 113 Totalfixedremuneration 2,772 2,832 1,774 1,767 Annual incentve award 1,189 386 760 246 Vesting of LTIP award Value of vesting awards based on performance 696 708 445 439 Value of vesting awards based on share price growth – – – – Totalvariable remuneration 1,885 1,094 1,205 685 Single totalfigure of remuneration 4,657 3,926 2,979 2,452 Notes to the single total figure of remuneration table Salary • For executive directors part of salary is paid in cash and part is paid in shares, to align with shareholder interests. • The salary shares are subject to a retention period with 20 per cent released annually over a period of five years. • The number of shares allocated is determined by the monetary value and the prevailng market price of the Company’s shares on the date of allocation. • Bill’s salary is paid 50 per cent in cash and 50 per cent in shares and Andy’s salary is paid 67 per cent in cash and 33 per cent in shares. • Andy’s salary was increased three per cent effective 1 April 2020. Pension • Pension is set as a percentage of salary and can be delivered as a contributon to the UK pension fund or paid as a cash allowance. • Pension for Bill is delivered as a cash allowance and a £4,000 contributon to the UK pension fund, and for Andy the pension is delivered as a cash allowance. • In line with the UK Corporate Governance Code, only salary is pensionable. Benefits • The core benefits provided to executive directors and other UK employees are the same: private medical insurance, life assurance, income protection, accidental death and disablity insurance and a cash benefits allowance. • Executive directors receive a lower cash benefits allowance than other UK employees as a percentage of their salary. In additon, Bill has the use of a vehicle and driver. In line with princple six of our Fair Pay Charter, this is a role-based provison given their executive role and the associated security and privacy requirements. • Executive directors occasionally use a private vehicle for travelling and their partners may travel to accompany attendance at Board or other simlar events. The Group covers any tax liablity that arises on these benefits. • Bill is entitled to a contributon to the preparation of his annual tax returns owing to the complexity of his tax affairs, in part due to travel requirements for Group business. • The benefits figures refer to UK tax years 2020/21 and 2019/20 respectively. • The decrease in Bill’s benefits figure reflects a reduction in the use of a vehicle and driver in the 2020/21 tax year, partially offset by a payment for sale of holiday under our flexible benefits plan. Fixed remuneration • Fixed remuneration is the total of salary, pension and benefits. Annual incentve • Executive directors’ annual incentve awards are delivered 50 per cent in cash and 50 per cent in shares, subject to a minmum 12 month retention period. • The detail of how directors’ annual incentve awards are determined is set out on page 152. Awards are subject to clawback for up to 10 years. • The executive directors elected to voluntarily waive the cash element of their 2020 annual incentve which reduced the award by 50 per cent (£386,000 for Bill and £246,000 for Andy). Vesting of LTIP awards • 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 are expected to vest. The final assessment of 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 is £0.7m to Bill and £0.4m to Andy. The final value will be restated in the 2022 directors’ remuneration report based on final TSR performance and the share price at vesting. Awards are subject to malus and clawback for up to 10 years from grant. Further details on the performance outcome for the 2019–21 LTIP are provided on page 154. • The value of the LTIP 2019–21 awards vesting is reduced by £238,000 and £152,000 for Bill and Andy, respectively, when compared with the value at grant. The values of the LTIP 2018–20 vesting awards for 2020 have been restated based on the actual share price of £5.03 when the awards vested in March 2021. ![]() 156 Standard Chartered – Annual Report 2021 Directors’ report Directors’ remunerationreport LTIP shares Annual incentve shares Salary shares Annual incentvecash Salary cash Bill Winters’ 2021 single total figureof remuneration Annual incentve andLTIP shares are also subject to clawback for up to 10 years from grant 2019–21LTIP 696 20222021 Total: 4,657 £000 2023 2024 202520262027 2021 annual incentve 1,189 LTIP shares vestpro rata over years 3 to 7 with additonal retention period of 12 months Benefits 165 Pension 237 Salary 2,370 237 237 237 237 237 1,185 237 165 Salary shares released pro rata over 5 years Variable remuneration Fixed remuneration 139.2 139.2 139.2 139.2 139.2 594.5 594.5 Executive directors’ shareholdings andshare interests includng share awards (audited) Executive directors are required to hold a specifed level of shares, to be built up over a reasonable time frame from the date of appointment as an executive director (or, if later, from the date of any change to the terms of the shareholding requirement). Shares that count towards the requirement are benefically owned shares, includng vested share awards subject to a retention period, and unvested share awards for which performance conditons have been satisfed (on a net-of-tax basis). The shareholding requirement for 2021 was expressed as a percentage of salary, set as 250 per cent of salary for the CEO and 200 per cent of salary for the CFO. As of 31 December 2021, both Bill and Andy exceeded their shareholding requirement. Shares purchased voluntarily from their own funds are equivalent to 59 and 42 per cent of salary for Bill and Andy, respectively. The following table summarises the executive directors’ shareholdings and share interests: Shares held benefically 1,2,3 Unvested share awardsnot subject to performance measures (net of tax) 4 Totalshares counting towards shareholding requirement Shareholding requirement as a percentage of salary Salary 2 Value ofshares counting towards shareholding requirement as a percentage of salary 1 Unvested share awards subject to performance measures B Winters 2,031,032 166,883 2,197,915 250% £2,370,000 416% 2,223,907 A Halford 838,344 104,348 942,692 200% £1,515,000 279% 1,406,768 1All figures are as of 31 December 2021. There were no changes to any executive directors’ interests in shares between 31 December 2021 and 16 February 2022. No director has either: (i) an interest in company preference shares or loan stocks of any subsidary or associated undertaking of the Group; or (i) any corporate interests in Company ordinary shares. The closing share price on 31 December 2021 was £4.484. 2The benefical interests of directors and connected persons in the shares of the Company are set out above. The executive directors do not have any non- benefical interests in the Company’s shares. None of the executive directors used shares as collateral for any loans. 3The salary and shares held benefically include shares awarded to deliver the executive directors’ salary shares. 4As Bill and Andy are both UK taxpayers: zero per cent tax is assumed to apply to Sharesave (as Sharesave is a UK tax qualifed share plan) and 47 per cent tax is assumed to apply to other unvested share awards (marginal combined PAYE rate of income tax at 45 per cent and employee National Insurance contributons at two per cent) – rates may change. ![]() 157 Standard Chartered – Annual Report 2021 Directors’ report LTIP awards for the executive directors to be granted in 2022 The size of the LTIP award has been determined on Group and indvidual performance during the year. Awards for the 2021 performance year will be granted to Bill and Andy in March 2022 with a value of 120 per cent of fixed pay (£3.1 millon and £2.0 millon, respectively), the maximum amount under the 2019 directors’ remuneration policy. The amount that the executive directors will receive at the end of the three-year performance period will be based on the level of performance achieved against the performance measures and the future share price. The performance measures and targets are aligned with our strategic priorties, and wehave also incorporated measures that reflect our three Stands – our long-term ambitons on societal challenges: Accelerating Zero; Liftng Particpation; Resetting Globalisaton. We are retainng the standalone sustainablity measure introduced last year and increasng the focus on the broader impact of client activty, rather than on our internal operations. The sustainablitymeasureshave beenselected carefully from our broaderrange of sustainablity aspiratons based on their level of impact for the Group and wider society and abilty to drive financal returns in the medium term. Details ofthe sustainablity and otherstrategic measures and targets are shown in the table below and are disclosed prospectively, except where the internal targets are considered commerciallysensitve. Details of achievement against targets will be disclosed retrospectively at the end of the performance period. The RoTE target range for 2022–24 LTIP awards is 7 to 11 per cent which retains a 4 percentage point range as for the prior year award, but is further stretched by 1 percentage point at both the threshold and maximum target levels. This reflects the progress in RoTE achieved in 2021 and our target to deliver returns above 10 per cent in the medium term. The peer group ofcompanies selected for the calculation of the relative TSR performance are companies with generally comparable business activties, size or geographic spreadto Standard Chartered or companies with which we compete for investor funds and talent. The peer group is intended to be representative of our geographicpresenceand business operations. The companies that make up the peer group are reviewed annually, prior to each new LTIP grant. The TSR peer group for the 2022–24 LTIP awards will be the same as for the 2021–23 LTIP and is detailed below. TSR is measured in sterling for each company and the TSR data is averaged over a month at the start and end of the three-year measurement period which starts from the date of grant. Remuneration regulations for UK banks prohibt the award of divdend equivalentshares on vesting. Thenumberof shares awarded in respect of the LTIP will take into account the lack of divdend equivalents (calculated by reference to market consensus divdend yield) such that the overall market value of the award is maintaned. These awards will vest in five annual tranches beginnng after the third anniversary of the grant (i.e. March 2025 to March 2029) subject to meeting the performance measures set out below at the end of 2024. All vested shares are subject to a 12 month retention period. The performance measures for the 2022–24 LTIP awards are set out in the table below. ![]() 158 Standard Chartered – Annual Report 2021 Directors’ report Directors’ remunerationreport Performance measures for 2022–24 LTIP awards Measure Weightng Amount vesting (as a % of total award) Threshold performance targetMaximumperformance target 1.RoTE 1 in 2024 with a CET1 2 underpin of the higher of 13% or the minmumregulatory requirement 30% Maximum –30% Threshold –7.5% Below threshold – 0% 7% 11% If RoTE reaches 7 per cent then 7.5 per cent of the award vests. If RoTE reaches 11 per cent then 30 per cent of the award vests. If RoTE is between the threshold and maximum, vesting is calculated on a straight-line basis between these two points. 2. Relative TSR against the peer group 30% Maximum –30% Threshold –7.5% Below threshold – 0% Median Upper quartile Relative TSR is measured against a peer group of companies. If the Group’s TSR performance is at least equivalent to the median ranked company then 7.5 per cent of the award vests. If the Group’s TSR performance is at least equal to the upper quartile ranked company then 30 per cent of the award vests. Between these points, the Group’s TSR is compared with that of the peer companies positoned immedately above and below it and straight-line vesting applies. 3. Sustainablity 15% Maximum– 15% Minmum – 0% • Implement roadmap to achieve aim of net zero by 2050 • Progress towards target of $300bn in green and transiton finance between 2021 and 2030 aligned with our Green and Sustainable Product Framework and Transiton Finance Framework • Progress on goal for clients in carbon-intensve industres to have a strategy to transiton their business in line with the Paris Agreement 4. Other strategic measures 25% Maximum –25% Minmum – 0% Stands • Lift particpation of small businesses through increasng access to financal services • Support companies to improve working and environmental standards Clients • Improve client satisfacton rating evidenced in surveys and internal benchmarks • Deliver growth in affluent wealth client activty and increase the number of active personal clients • Deliver network income growth in Corporate, Commercial & Institutonal Banking • Grow value of Digtal Ventures Enablers (innovaton, new ways of working and people) • Improve proportion of new revenues • Increase senior femalerepresentationto 34% • Improve employee engagement and increase our culture of incluson score (internal index) • Improve employee perception of innovaton Risk and controls • Improve effectiveness of risk and control governance • Successfully deliver milestones withn the informaton and cyber security risk management plan 1Underlying RoTE represents the ratio of the current year’s underlying operating profit attributable to ordinary shareholders to the weighted average ordinary shareholders’ equity less theaverage goodwilland intangbles forthe reporting period. Underlying RoTE normally excludesregulatory finesand certain other adjustments but, for remuneration purposes, such adjustments are subject to review by the Committee 2The CET1 underpin will be dynamically set at the higher of 13 per cent or the minmum regulatory level as of 31 December 2024. In additon, the Committee has the discreton to take into account at the end of the performance period any changes in regulatory capital and risk-weighted asset requirements that might have been announced and implemented after the start of the performance period, for example, in relation to Basel IV The peer group for the TSR measure in the 2022–24 LTIP is unchanged from the 2021–23 award and is set out below: Banco SantanderCredit Suisse KB Financal Group Bank of AmericaDBS GroupOversea Chinese Banking Corporation Bank of China Deutsche Bank Société Générale Bank of East Asia HSBC Standard Bank BarclaysICBC State Bank of India BNP Paribas ICICI UBS Citgroup JPMorgan Chase United Overseas Bank ![]() 159 Standard Chartered – Annual Report 2021 Directors’ report Total variable remuneration awarded to directors in respect of 2021 (audited) Bill Winters Andy Halford 2021 2020 2021 2020 Annual incentve (£000) 1 1,189 386 760 246 Annual incentve as a percentage of fixed pay 46% 15% 46% 15% LTIP award (value of shares subject to performance conditons) (£000) 3,128 3,128 2,000 2,000 LTIP award as a percentage of fixed pay 120% 120% 120% 120% Totalvariable remuneration (£000) 4,317 3,514 2,760 2,246 Totalvariable remuneration as apercentageof fixed pay 166% 135% 166% 135% 1The 2020 annual incentve values reflect the voluntarily waivers of the cash element which reduced the awards by 50 per cent (£386,000 for Bill and £246,000 for Andy) LTIP awards for the 2021 performance year will be granted to executive directors in March 2022 and are based on 2021 fixed pay. Service contracts for executive directors Copies of the executive directors’ service contracts are available for inspecton at the Group’s registered office. These contracts have rolling 12 month notice periods and the dates of the executive directors’ current service contracts are shown below. The contracts were updated effective 1 January 2020 to reflect the changes made following the implementaton of the 2019 remuneration policy and the change to pension contributon. Executive directors are permitted to hold non-executive directorshp positons in other organisatons. Where such appointments are agreed with the Board, the executive directors may retain any fees payable for their services. Both executive directors served as non-executive directors elsewhere and received fees for the period covered by this report as set out below. Date ofStandard Chartered employmentcontract Details of any non-executive directorshp Fees retained for any non-executive directorshp (local currency) Bill Winters 1 January 2020 Novartis International AG CHF360,000 Andy Halford 1 January 2020 Marks and Spencer Group plc £102,857 Single figure of remuneration for the Chairman and independent non-executive directors’ (audited) The Chairman and INEDs were paid in monthly instalments during the year. The INEDs are required to hold shares with a nominal value of $1,000. The table below shows the fees and benefits received by the Chairman and INEDs in 2021 and 2020. The INEDs’ 2021 benefit figures are in respect of the 2020/21 tax year and the 2020 benefit figures are in respect of the 2019/20 tax year to provide consistency with the reporting of simlar benefits in previous years and with those received by executive directors. Fees£000 Benefits£000 4 Total£000 Shares benefically held as at 31 December 2021 5 2021 2020 2021 2020 2021 2020 Group Chairman J Viñals 1,250 1,250 17 43 1,267 1,293 30,000 Current INEDs D P Conner 1 255 273 1 1 256 274 10,000 B E Grote 170 170 – – 170 170 90,041 C M Hodgson, CBE 325 325 – 3 325 328 2,571 G Huey Evans, CBE 200 200 – 7 200 207 2,615 N Kheraj 328 360 – 4 328 364 150,571 N Okonjo-Iweala 2 23 135 1 7 24 142 – M Ramos 3 190 – – – 190 – 2,000 P G Rivett 225 119 – – 225 119 2,128 DTang 170 144 1 5 171 149 2,000 CTong 205 205 – 6 205 211 2,000 J M Whitbread 210 210 – 1 210 211 3,615 1David Conner’s fee includes his role on the Combined US Operations Risk Committee 2Ngozi Okonjo-Iweala stepped down from the Board on 28 February 2021. Her reported fee for 2021 of £23,000 is in respect of the period of 1 January 2021 to 28 February 2021. Her benefits for 2021 of £900 are in respect of the period from 6 April 2020 to 28 February 2021, in line with the approach to disclose INED benefits in respect of the relevant tax year 3Maria Ramos was appointed to the Board on 1 January 2021 4The costs of benefits (and any associated tax costs) are paid by the Group 5The benefical interests of Chairman and INEDs, and connected persons in the shares of the Company are set out above. These directors do not have any non-benefical interests in the Company’s shares. None of these directors used shares as collateral for any loans. No director had either: (i) an interest in the Company’s preference shares or loan stocks of any subsidary or associated undertaking of the Group; or (i) any corporate interests in the Company’s ordinary shares. All figures are as of 31 December 2021 or on the retirement of a director unless otherwise stated Independent non-executive directors’ letters of appointment The INEDs have letters of appointment, which are available for inspecton at the Group’s registered office. Details of the INEDs’ appointments are set out on pages 91 to 94. INEDs are appointed for a period of one year, unless terminated by either party with three months’ notice. ![]() 160 Standard Chartered – Annual Report 2021 Directors’ report Directors’ remunerationreport This section sets out the revised directors’ remuneration policy which will be put forward to shareholders at the 2022 AGM for a bindng vote and, if approved, will apply from 4 May 2022 for up to three years. The current remuneration policy for executive directors, the Chairman and independent non-executive directors was approved at the AGM held on 8 May 2019 and has applied for three years from that date. The policy has continued to support the delivery of our strategy. Changes made to the current policy since the 2019 shareholder vote At the AGM in 2019 the directors’ remuneration policy received the support of 64 per cent of shareholders. The Committee re-engaged with shareholders to seek feedback and address concerns relating to the pension allowance. Following these discussons, with effect from 1 January 2020 the pension allowance for the current executive directors was reduced from 20 per cent of salary to 10 per cent of salary, alignng with all UK employees. The subsequentdirectors’ remuneration reports received support from shareholders of 97.0 per cent and 98.6 per cent of shareholders at the 2020 and 2021 AGMs respectively. The Board and Committee conducted a detailed review of the policy in 2021 considerng the views of stakeholders, the strategic objectves of the Group, the remuneration framework applicable to all colleagues, market benchmarking and best practice. Following careful consideraton, the Committee decidedto retaina broadlyunchangedpolicy, making some small changes in order to align with market practice, increase shareholder alignment and reinforce sustained long-term focus on our strategic goals. Maintaning a simlar policy will continue to support the delivery of the Group’s purpose and strategy, reinforce the achievement of shareholder value creation, and ensurecontinued regulatory compliance. To recognise shareholder views and further align with market practice, the pension allowance for new directors will be based on the cash element of salary only. The Committee considered carefully whether the pension allowance for the current directors should alsobe based onthecash element of salary only. However, the pension reductions in 2020 had a direct impact on the variable pay opportunity (8 per cent lower for both Bill and Andy), in additon to the reduction on fixed pay. Therefore, to avoid further reducing remuneration, for the current directors the pension is not changing and will continue to be based on the cash and share elements of salary. The basis of calculation of variableremuneration will be re-expressed as a percentage of salary (cash and shares) only changing from a percentage of fixed pay (salary and pension). This is purely a presentational change with no impact onthe valueof opportunity. The Committee Chair maintans regular contact with the Group’s major shareholders on remunerationand informs the Committee of their views. In 2021, shareholders representing approximately 55 per cent of our share register and the main proxy advisory agencieswere engaged to discuss the proposals for the new directors’ remuneration policy. Consideraton was given to the views expressed and the proposedpolicy reflectsthe feedbackreceived. The remuneration of the Group Chairman, executive directors, senior management and all colleagues was considered in the development of the refreshed policy. Alignment with the wider workforce and with Group-wide remuneration arrangements was critcal in the development of the policy which is designed to reflect the Group’s purpose as well as following the princples of our Fair Pay Charter which guides reward decisons. During the review and development of the refreshed remuneration policy, no indvidual particpated in decisons thatwould impact the determinatonof their own remuneration. #### Directors’ remuneration policy ![]() 161 Standard Chartered – Annual Report 2021 Directors’ report Proposed executive directors’ remuneration policy The proposed executive directors’ remuneration policy, to be effective from the date of the Group’s AGM on 4 May 2022, for up to three years, is set out below. Fixed remuneration Salary Changes • No change topolicy. Purpose and link to strategy • Set to reflect the role, and the skills and experience of the indvidual, following the Group-wide princples which apply to all employees. Operation • Delivered part in cash and part in shares. • To maintan alignment with shareholders, the share element is released over a period of five years (20 per cent annually). • Reviewed annually in line with the wider workforce with potential increases applying from April. • Salary for new executive directors will be subject to the same policy. Maximum potential • Increases may be made at the Committee’s discreton to take account of circumstances such as: – increase in scope or responsiblity – indvidual’s development in role (e.g. for a new appointment where salary may be increased over time rather than set at the level of the previous incumbent or market level from appointment) – salary increases across the Group – alignment to market-competitve levels. Alignment with UK workforce • The process of setting and annually reviewng salaries against market informaton is in line with the approach for all employees. • For other employees, salary is delivered only as cash. Pension Changes • For new executive directors pension will be based on the cash element of salary only. This change is to recognise feedback from shareholders and to align with market practice. • For the current executive directors pension is not changing. This is to avoid a further reduction in fixed pay and variable pay opportunity following the reduction in pension implemented in 2020. • The maximum pension is being reduced from 20 per cent to 10 per cent, in line with implementaton for the current executive directors since January 2020. Purpose and link to strategy • The pension arrangements comprise part of acompetitve remunerationpackage and faciltate long-term retirementsavings for executive directors. Operation • Paid as a cash allowance and/or contributon to a defined contributon scheme. • Pension contributons may also be made in lieu of any waived salary (and the cash amount of any annual incentve). Maximum potential • For current executive directors, 10 per cent of salary. • For new executive directors, 10 per cent of the cash element of salary only. Alignment with UK workforce • The contributon rate of 10 per cent of salary is aligned with UK employees. Benefits Changes • No change topolicy. Purpose and link to strategy • A competitve benefits package to support executives to carry out their duties effectively. Operation • A range of benefits may be provided, includng standard benefits such as holiday and sick pay, and may also include the provison of a benefits cash allowance, a car and driver (or other car-related service), private medical insurance, permanent health insurance, life insurance, financal advice and tax preparation and tax return assistance. • Additonal benefits may also be provided where an executive director is relocated or spends a substantial portion of their time in more than one jursdicton for business purposes. Benefits may include, but are not limted to, relocation, shippng and storage, housing allowance, education fees and tax and social security costs. • Other benefits may be offered if considered appropriate and reasonable by the Committee. • Executive directors are reimbursed for expenses, such as travel and subsistence, and any associated tax incurred in the performance of their duties. • The executive directors may be accompanied by their spouse or partner to meetings/events. In exceptional circumstances, the costs (and any associated tax) will be met by the Group. Maximum potential • The maximum opportunity for benefits will vary according to the market, indvidual circumstances and other factors. • Set at a level that the Committee considers appropriate based on the role and indvidual circumstances. Alignment with UK workforce • Core benefits are aligned with the approach for all employees. • Some additonal, role-specifc benefits are provided as appropriate based on the roles and responsiblites of the executive directors. ![]() 162 Standard Chartered – Annual Report 2021 Directors’ report Directors’ remunerationreport Variable remuneration Annual incentve LTIP Changes • The basis for calculation of variable remuneration (annual incentves and LTIP awards) is changing from a percentage of fixed pay (salary and pension) to a percentage of salary only. This does not impact the total quantum opportunity. This is to align with market practice and to recognise feedback from shareholders. • This is a change from a maximum of 80 per cent of fixed pay to 88 per cent of salary. • This is a change from a maximum of 120 per cent of fixed pay to 132 per cent of salary. Purpose and link to strategy • Incentivse performance linkedto the Group’s strategyand aligned to shareholderinterests. Operation • Annual incentve awards are determined based on Group and indvidual performance over the preceding financal year. • Annual incentves are delivered as a combinaton of cash and shares subject to holding requirements and deferred shares. • LTIP awards aregranted annually with performance of the Group and of the indvidual considered in determinng the award level. • LTIP awards will be subject to long-term performance measures, measured over a period of at least three years. • LTIP awards are delivered in shares and are subject to holding requirements. • Deferral and vesting of the annual and long-term incentve awards are structured so that, in combinaton: – The proportion of variable remuneration that is deferred is no less than required by the relevant remuneration regulations (currently60 per cent). – The deferredremuneration vests no faster than permitted under therelevantremuneration regulations (currently pro rata over years three to seven after award). • The Committee can, in specifed circumstances, apply malus or clawback to all or part of annual incentve and/or any LTIP awards. Details on how malus and clawback operate currently are provided on page 176. • Deferred annual incentve awards and LTIP awards will be granted as conditonal share awards or nil-cost options. • On the occurrence of corporate events and other reorganisaton events, the Committee may apply discretonto adjust: – the vesting of deferred annual incentve awards and/or the number of shares underlying a deferred annual incentveaward – the vesting of LTIP awards and/or the number of shares underlying an LTIP award. Maximum potential • The maximum value of an annual incentve award granted to any executive director cannot exceed 88 per cent of that executive director’s salary (cash and shares). • The maximum value of an LTIP award granted to any executive director cannot exceed 132 per cent of that executive director’s salary (cash and shares). • For this purpose, LTIP awards may be valued in line with the relevant remunerationregulations. • The maximum value of the combined annual incentve opportunity and LTIP award cannot exceed regulatory limts. • Variable remuneration awards can be any amount from zero to the maximum. Performance measures • The determinatonof an executive director’s annual incentve is made by the Committee based on an assessment of a balanced Group scorecard containng a mix of financal and other long-termstrategic measures andpersonal performance. Financal measures will comprise at least 50 per cent of the annual scorecard. • The targets, together with an assessment of performance against those targets, will be disclosedretrospectively. • The Committee will review the scorecard annually and may vary the measures, weightngs and targets each year. • Discreton may be exercised by the Committee to ensure that the annual incentve outcome is a fair and accurate reflectionof business and indvidual performance and any risk-related issues (but it will not exceed the maximum opportunity). • The long-term performance measures may be a mix offinancal measures andotherlong-term strategicmeasures. • Financal measures will comprise at least 50 per cent of the performance measures. Weightngs and targets will be set in advance of each grant by the Committeeand disclosed prospectively,and performance against those measures will be disclosedretrospectively. • For financal measures, vesting will be on a slidng- scale basis between threshold and maximum with no more than 25 per cent vesting at threshold performance. Alignment with UKworkforce • The annual incentve plan is operated for all employees, paid in cash to certain limts with the remainng balance deferred over at least three years in shares and/or cash. • Members of the Management Team are also eligble for LTIP awards, assessed onthe same performance measures andtargets. ![]() 163 Standard Chartered – Annual Report 2021 Directors’ report Other Shareholding requirements Changes • No changeto policy. Purpose and link to strategy • A requirement for executive directors to hold a specifed value of shares for alignment with the interests of shareholders during employment. Operation • Executive directors are required to hold a specifed level of shares, to be built up over a reasonable time frame from the date of appointment as an executive director (or, if later, from the date of any changes to the terms ofthe shareholding requirement). • The shareholding requirement is expressed as a percentage of salary and is reviewed by the Committee as appropriate. • Shares that count towards the requirement are benefically owned shares includng the share element of salary, vested share awards subject to a retention period and unvested share awards for which performance conditons havebeen satisfed (on anet-of-tax basis). • On implementaton of the policy, in 2022, the CEO and the CFO will be required to hold 250 per cent and 200 per cent of salary in shares, respectively. Alignment with UK workforce • Formal shareholding requirements are operated for the executive directors only • However, other employees may hold shares as part of the deferral and retention requirements Sharesave Changes • No changeto policy. Purpose and link to strategy • Provides an opportunity for all employees to invest voluntarily in the Group. Operation • Sharesave is an all-employee plan where particpants (includng executive directors) are able to open a savings contract to fund the exercise of an option over shares. • Savings per month of between £5 and the maximum set by the Group which is currently £250. • The option price is set at a discount of up to 20 per cent of the share price at the date of invtation, or such other discount as may be determined by the Committee. • An equivalent cash or share plan is offered in some countries where Sharesave may not be offered (typically due to tax, regulatory or securites lawissues). Alignment with UK workforce • All employees are eligble to particpate on the same basis. Legacy arrangements Changes • No changeto policy. Purpose and link to strategy • Honour existng commitments. Operation • Any previous commitments or arrangements entered into with current or former executive directors will be honoured, includngremuneration arrangements entered intounder the previously approved directors’ remuneration policy. Externalroles Changes • No changeto policy. Purpose and link to strategy • To encourage self-development and allow for the introducton of external insght and practice. Operation • Executive directors may accept appointments in other organisatons subject to relevant Board approval. Executive directors tend to be limted to one non-executive directorshp in another listed company. Fees may be retained by the executive director. ![]() 164 Standard Chartered – Annual Report 2021 Directors’ report Directors’ remunerationreport Executive directors’ policy on recruitment The Committee’s approach to recruitment is to attract diverse experience and expertise by paying competitve remuneration that reflects our internatonal nature and enables us to attract and retain key talent from a global marketplace. Any new executivedirector’s remuneration package would include the sameelements andbe subject tothe same variable remuneration maximums as those for the existng executive directors with the exception of the pension provison. The policy is summarised below. Element Details Salary Set to reflect the role and the skills and experience of the candidate. Salary is delivered part in cash and part in shares with the shares being released to the executive director in equal tranches over five years. Benefits Dependent on circumstances but in line with the policy on page 161. Pension 10 per cent of the cash element of salary. Variable remuneration Dependent on circumstances but in line with the policy on page 162 and regulatory limts. Shareholding requirements In line with the policy on page 163. Buy-outawards • The Committee may considerbuying outforfeited remuneration andforfeitedopportunitesand/or compensating for losses incurred as a result of joning the Group subject to proof of forfeiture or loss. • The value of any buy-out award will not exceed, in broad terms, the value of the remuneration forfeited. • Any award will be structured withn the requirements of the applicable remuneration regulations, and will be no more generous overall than the remuneration forfeited in terms of the existence of performance measures, timng of vesting and form of delivery. • The value of buy-out awards is not included withn the maximum variable remuneration level where it relates to forfeited remuneration from a previous role or employer. Legacy matters Where a senior executive is promoted to the Board, his or her existng contractual commitments agreed prior to their appointment may still be honoured in accordance with the terms of the relevant commitment, includng vesting ofany pre-existng deferred or long-termincentve awards. Notes to the remuneration policy for executive directors Committee’sjudgement and discreton In additon to assessing performance and making judgements on the appropriate levels of annual incentve awards and LTIP awards, the Committee has certain operational discretons that it may exercise when considerng executive directors’ remuneration,includng butnot limted to: i.determinng whether a leaver is an eligble leaver under the Group’s share plans and treatment of remuneration arrangements i.amending LTIP performance measures following a corporate event to ensure a fair and consistent assessment of performance ii.decidng whether to apply malus or clawback to an award. Abilty for the Committee to amend the policy for emerging and future regulatory requirements The Committee retains the discreton to make reasonable and proportionate changes to the remuneration policy if the Committee considers this appropriatein order to respond tochanging legal or regulatory requirements or guidelnes (includng but not limted to any FCA or PRA revisons to its remuneration rules and any changes to regulations caused by, or following, the UK leaving the European Union). This includes the abilty to make adminstrative changes to benefit the operation of the remuneration policy and/or to implement such changes ahead of any formal effective date, ensuring timely compliance. Where proposed changes are considered by the Committee to be material, the Group will engage with its major shareholders and any changes would be formally incorporated into the policy when it is next put to shareholders for approval. ![]() 165 Standard Chartered – Annual Report 2021 Directors’ report Executive directors’ policy on contracts, outside appointments and payments on loss of office Executive directors’ service contracts Changes • No changeto policy. Purpose and link to strategy • Maximum of 12 months’ notice from the company and the executive director. Operation • May be required to work and/or serve a period of garden leave during the notice period and/or may be paid in lieu of notice if not required to remain in employment for the whole notice period. Compensation for loss of officein service contracts Changes • No changeto policy. Purpose and link to strategy • Dependent on an indvidual’s contract but in any event no more than 12 months’ salary, pension and benefits. Operation • Payable quarterly (other than the share element of salary which is released annually) and subject to mitgation if the executive director seeks alternative employment. • Not in additon to any payment in lieu of notice or if the indvidual remains in employment for the whole notice period. • In the event of a settlement agreement, the Committee may make payments it considers reasonable in settlement of potential legalclaims, includngpotentialentitlementto compensation in respect of statutory rights under employment protectionlegislaton. • The Committee may also include in such payments reasonable reimbursement of professional fees, such as legal fees and tax advice (and any associated tax), in connection with such arrangements. Career transiton support may also be provided. Treatment of variable remuneration on terminaton Changes • No changeto policy. Purpose and link to strategy • Variable remuneration isawarded at the Committee’s discreton. Operation • Eligble leavers (as determined by the Committee) may be eligble for variable remuneration although there is no automatic entitlement. • The Committee has discreton to reduce the entitlement of an eligble leaver in line with performance and the circumstances of theterminaton. • On a change of control, the amount is pro rata to the period of service during the year. The Committee may alter the performance period, measures and targets to ensure the performance measures remain relevant but challenging. Treatment of unvested awards on terminaton undertheshare plan rules Changes • No changeto policy. Purpose and link to strategy • The Committee has the discreton under the relevant plan rules to determine how eligble leaver status should be applied on terminaton. • The current approach is that eligble leaver status will generally be given in cases such as death, disablity, retirement and redundancy. Discreton is applied as to awarding eligble leaver status in cases of mutual separation. • In additon, eligble leaver status will be given (other than in cases of terminaton for cause) where the date of terminaton is five years or more after the date of grant. Operation • For eligble leavers, awards not subject to long-term performance measures vest in full over the orignal timescale and remain subject to the Group’s clawback arrangements. The Committee has discreton to reduce the level of vesting. • Awards subject to long-term performance measures will vest subject to those performance measures and on a pro rata basis (reflecting the proportion of the relevant financal performance period that the executive director has been employed) and remain subject to the Group’s clawback arrangements. • Vesting may be subject to non-solict and non-compete requirements. • Awards lapse for employees not designated eligble leavers. • On a change of control, awards become exercisable and vest to the extent performance measures are met (either at the change of control or later). The Committee may allow awards to continue or roll-over in agreement with the acquirer, taking into account the circumstances, and may alter the performance period, measures and targets to ensure the performance measures remain relevant. • The Committee has the flexiblity to disapply time proration on the vesting of LTIP awards in certain circumstances, assessed on a case-by-case basis, taking into account all of the circumstances at that time. The following minmum critera need to be met before the Committee can consider using this flexiblity: – The executive director has more than five years’ service on the Board. – The executive director is retirng from full-time employment in financal services and comparable roles in other industres. – The executive director has demonstrated satisfactory conduct andhas achievedtheirperformance objectves. – A clear, Board-approved, handover plan is in place to transiton to an identfied successor. • If the flexiblity were to be used, there would be no LTIP award in the final year of employment or additonal payments in lieu of notice. • If an indvidual leaves and subsequently takes up an executive role, unvested awards that had proration disappled will lapse and the executive will be expected to re-pay any vested awards. ![]() 166 Standard Chartered – Annual Report 2021 Directors’ report Directors’ remunerationreport Post-employment shareholding requirement Changes • Toalign with shareholder guidance and market practice, the post-employment shareholding requirement is increasng to 100 per cent of the shareholding requirement for two years following the cessation of employment. The requirement in the previous policy was 100 per cent of the shareholding requirement for one year and 50 per cent of the requirement for the second year following the cessation of employment. Purpose and link to strategy • To align executive directors’ interests with the Group’s long-term strategy and the interests of shareholders following employment there is a requirement for executive directors to hold a specifed value of shares after they have left the employment of the Group. Operation • On cessation of employment executive directors will be required to hold 100 per cent of the shareholding requirement in place for two years (or, if lower, the actual shareholding on departure). Chairman and independent non-executive directors’ remuneration policy The Board has reviewed the remuneration policy for independent non-executive directors (INEDs) and determined there would be no change to the fee structure. Fees Changes • No changeto policy. Purpose and link to strategy • Attract a Chairman and INEDs who, together with the Board as a whole, have a broad range of skills and experience to determine Group strategy and oversee its implementaton. Operation • The INEDs are paid fees for chairmanshp and membership of Board committees and for the Deputy Chairman andSenior Independent Directorroles. • Fees are paid in cash or shares. Post-tax fees may be used to acquire shares. • The Chairman and INED fees are reviewed periodcally. The Board sets INED fees and the Committee sets the Chairman’s fees. The Chairman and INEDs excuse themselves from any discusson on their fees. • INEDs may also receive fees as directors of subsidaries of Standard Chartered PLC, to the extent permitted by regulation. • Overall aggregate base fees paid to the Chairman and all INEDs will remain withn the limt stated in the Articles of Associaton (currently £1.5 millon per annum). • Fees are set at a level which reflect the duties, time commitment and contributon expected from the Chairman and INEDs. • Fees are reviewed and appropriately positoned against those for the Chairman and INEDs in banks and other companies of a simlar scale and complexity. • There are no recovery provisons or performance measures. Benefits Changes • No changeto policy. Purpose and link to strategy • Appropriate benefits package to support the Chairman and INEDs to carry out their duties effectively. Operation • The Chairman is provided with benefits associated with the role, includng a car and driver and private medical insurance, permanent health insurance and life insurance. Any tax costs associated with these benefits are paid by the Group. Any future Chairman based outside of the UK may receive assistance with their relocation consistent with the support offered to indviduals under the Group’s internatonal mobilty polices. • The Chairman and INEDs are reimbursed for expenses, such as travel and subsistence (and includng any associated tax), incurred in the performance of their duties, and may receive tax preparation and tax return assistance. • In exceptional circumstances the Chairman and INEDs may be accompanied by their spouse or partner to meetings or events. The costs (and any associated tax) are paid by the Group. Approach on recruitment for Chairman or INEDs Fees and benefits for a new Chairman or INED will be in line with the Chairman and independent non-executive directors’ remuneration policy. Service contracts and policy on payment for loss of office for the Chairman and INEDs Chairman The Chairman is provided a notice period of up to 12 months and is entitled to a payment in lieu of notice in respect of any unexpired part of the notice period at the point of terminaton. INEDs INEDs are appointed for a period of one year unless terminated earlier by either party with three months’ written notice. No entitlement to the payment of fees or provison of benefits continues beyond terminaton of the appointment and INEDs are not entitled to any payments for loss of office (other than entitlements under contract law, such as a payment in lieu of notice if notice is not served). ![]() 167 Standard Chartered – Annual Report 2021 Directors’ report Remuneration for the executive directors in 2022 will be in line with our new directors’ remuneration policy as detailed on pages 161 to 166 of thisreport, subjectto shareholder approval at the May 2022 AGM. The 2022 policy is also set out on our website: sc.com The key elementsof remunerationfor 2022 includesalary (delivered in cash and shares), pension, benefits, an annual incentve and an LTIP award. A portion of the executive directors’ salaries is paid in shares to strengthen shareholder alignment. Bill’s pension is delivered as a contributon to a defined contributon plan and as a cash allowance. Andy’s pension is delivered as a cash allowance. The pension allowance is set as a percentage of salary (both the cash and shares components). The Committee reviews the salaries of the executive directors on an annual basis, after considerng any changes to the scope or responsiblity of the role, the indvidual’s development in the role, alignment with market-competitve levels, and consideratonof the average salary increases made across the Group. Taking into account the average 2022 salary increase awarded to the Group’s UK and global workforce, the Committee determined to increase salary for Bill from £2,370,000 to £2,434,000 and to increase salary for Andy from £1,515,000 to £1,556,000 (increases of 2.7 per cent), effective from 1 April 2022. Details of fixed pay for Bill and Andy with effect from 1 April 2022 are set out below. £000 Bill Winters Andy Halford 2022 2021 % change 2022 2021 % change Salary 2,434 2,370 2.7 1,556 1,515 2.7 of which cash 1,217 1,185 2.7 1,043 1,015 2.7 of which shares 1,217 1,185 2.7 513 500 2.7 Pension 243 237 2.7 156 151 2.7 Total fixed pay 2,677 2,607 2.7 1,712 1,666 2.7 Proportion of total fixed pay paid in cash 55% 55% 0 70% 70% 0 Proportion of total fixed pay paid in shares 45% 45% 0 30% 30% 0 Illustration of applicaton ofthe2022 remunerationpolicy The charts below illustrate the potential outcomes under the proposed directors’ remuneration policy being put to shareholders for approval at the AGM in May 2022 (i.e. for awards that would be made in March 2023, based on 2022 performance and fixed remuneration with effect from 1 April 2022). The charts show potential remuneration outcomes for each executive director in four performance scenarios: minmum, on-target, maximum and maximum with 50 per cent share price appreciaton, in line with reporting requirements. The percentages shown in each bar represent the amount of remuneration provided by each element of pay. Also shown are the 2020 and 2021 single total figures of remuneration for Billand Andy. Executivedirector remuneration (£000) BillWinters 1,000 0 2,0003,0004,0005,0008,000 10,000 7,0006,00012,00011,0009,000 Fixed remuneration Annualincentve LTIP Minmum 2,842 100% On-target 5,520 51% 19% 30% Maximum 8,197 35% 26% 39% 9,804 29% 22% 49% 2020 singlefigure 2021 single figure 3,926 72% 10% 18% 4,657 59% 26% 15% Maximum +50% share priceincrease AndyHalford Minmum 1,819 100% On-target 3,595 51% 19% 30% Maximum 5,370 34% 25% 41% 6,462 28% 21% 51% 2020 singlefigure 2021 single figure 2,667 67% 9% 24% 2,902 61% 26% 13% Maximum +50% share priceincrease #### 2022 policy implementaton for directors ![]() 168 Standard Chartered – Annual Report 2021 Directors’ report Directors’ remunerationreport Defintions for the chart on page 167 showing potential remuneration outcomes for each executive director in four performance scenarios: Fixed remuneration All scenarios • Consists of total fixed remuneration – salary, benefits and pension • Salary – salary as of 1 April 2022 • Benefits – based on 2021 single figure, actual fixed remuneration in 2022 will be dependent on the cost of benefits • Pension – 10 per cent of salary as of 1 April 2022 Incentives Minmum • No annual incentve is awarded • No LTIP award vests On-target • Annual incentve of 50 per cent of target (44 per cent of salary) • LTIP award vests at 50 per cent total award (66 per cent of salary) Maximum • Annual incentve of 100 per cent of target (88 per cent of salary) • LTIP award vests at 100 per cent total award (132 per cent of salary) Maximum + 50% share price increase • Annual incentve of 100 per cent of target (88 per cent of salary) • LTIP award vests at 100 per cent total award (132 per cent of salary) • 50 per cent share price appreciaton in the value of the vested LTIP award since time of grant 2020 single figure Fixedremuneration • Salary – received in 2020 • Benefits – received in 2019/20 tax year • Pension – contributon/cash allowance received in 2020 Incentives • Annual incentve – received in respect of 2020 performance year (50 per cent cash portion waived) • LTIP – vesting of 2018–20 LTIP award 2021 single figure Fixedremuneration • Salary – received in 2021 • Benefits – received in 2020/21 tax year • Pension – contributon/cash allowance received in 2021 Incentives • Annual incentve – received in respect of 2021 performance year • LTIP – vesting of 2019–21 LTIP award Independent non-executive director fees The fee levels are based on market data and the duties, time commitments and contributon expected for the PLC Board and, where appropriate, subsidary boards. The Chairman and the INEDs are eligble for benefits in line with the directors’ remuneration policy. Neither the Chairman or the INEDs receive any performance-related remuneration. 1 January 2021 £000 1 January 2022 £000 Group Chairman 1 1,2501,250 Board Member 105105 Additonal responsiblites Deputy Chairman 7575 Senior Independent Director 4040 Chair Audit Committee 7070 Board Risk Committee 7070 Remuneration Committee 7070 Board Financal Crime Risk Committee 6060 Culture and Sustainablity Committee 6060 Membership Audit Committee 3535 Board Risk Committee 3535 Remuneration Committee 3030 Board Financal Crime Risk Committee 3030 Culture and Sustainablity Committee 3030 Governanceand NominatonCommittee 1515 1The Group Chairman receives a standalone fee which is inclusve of all services (e.g. Board and Committee responsiblites) ![]() 169 Standard Chartered – Annual Report 2021 Directors’ report 2022 annual incentve scorecard Our annual incentve scorecard reflects our strategic priorties, refreshed at the beginnng of 2021. The targets are set annually by the Committee and take into account the Group’s annual financal plan and strategic priorties for the next few years which reflect the evolving macroeconomic outlook. The Committee will also consider progress demonstrated against the Stands in the determinaton of the overall scorecard outcome. For 2022, to simplfy the process, the Committee has determined to embed the assessment of personal performance into the annual incentve scorecard assessment, accounting for a maximum weightng of 10 per cent. Financal measures continue to make up 50 per cent of the annual incentve scorecard. Previously, personal performance was assessed independently following the assessment of the scorecard when the Committee could apply an adjustment of +/- 10 percentage points to the award outcome. Strategic and personal measures are assessed by the Committee using a quantitatve and qualitatve framework. The Committee considers such targets to be commercially sensitve and that it would be detrimental to the interests of the Group to disclose them before the end of the financal year. As such, targets will be disclosed retrospectively in the 2022 Annual Report alongsidethe level of performance achieved. Step 1: Conduct gateway requirement to be met in order to be eligble for any annual incentve Appropriate level of indvidual valued behaviours and conduct exhibted during the course of the year Step 2: Measurement of performance against financal and other strategic and personal measures Financalmeasures Weightng Target Income 1 10% • Targets tobe disclosed retrospectively Costs 10% Operating profit 5% RoTE 2 with a CET1 3 underpin of the higher of 13% or the minmumregulatory requirement 20% Growth of high-quality liablites mix 4 5% Other strategic measures Weightng Target Clients (network, affluent, mass, ventures) 12% • Improve clientsatisfacton and client experience rating • Deliver growth in qualifed clients across Affluent, Private Banking, and Wealth Management activty across top 11 affluent countries and increase the number of active personal clients • Deliver network income growth in Corporate, Commercial & Institutonal Banking • Grow value of Digtal Ventures Sustainablity 8% • Progress against the Group’s aim to achieve net zero by 2050 • Improve community engagement through employee volunteering particpation Enablers (innovaton, new ways of working andpeople) 8% • Grow proportion ofdigtally intiated transactions anddigtal salesadoption • Improve end-to-end speed todeliver change (from idea formation to commercialsation) • Develop human capital by improvng employee engagement, diversty and incluson Risk andcontrols 12% • Improve risk and control governance effectiveness • Successfully deliver milestones withn the informaton and cyber risk management plan Personalperformance measures Weightng Target Indivdualobjectves 10% • For Bill, this includes executing plans to accelerate the delivery of key financal targets and maintaning focus on innovaton and our core business products • For Andy, this includes development of the Resolvabilty Assessment Framework and evolving internal performance measures to align with our strategic priorties 1The 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 andinvestors would ordinarly identfy separately when assessing underlying performance period byperiod 2Underlying RoTE represents the ratio of the current year’s underlying operating profit attributable to ordinary shareholders to the weighted average ordinary shareholders’ equity less theaverage goodwilland intangbles forthe reporting period. Underlying RoTE normally excludesregulatory finesand certain other adjustments but, for remuneration purposes, such adjustments are subject to review by the Committee 3The CET1 underpin will be dynamically set at the higher of 13 per cent or the minmum regulatory level as at 31 December 2022. In additon, the Committee has the discreton to take into account at the end of the performance period any changes in regulatory capital and risk-weighted asset requirements that might have been announced andimplementedafter the start ofthe performanceperiod ![]() 170 StandardChartered – Annual Report 2021 Directors’ report Directors’ remunerationreport How does our directors’ remuneration policy address the key features set out in the UK Corporate Governance Code? Risk • The Committee considers risk adjustment in respect of the Group scorecard and has a track record of applying discreton appropriately. • The rules of the LTIP give the Committee the necessary discreton to adjust vesting outcomes if it considers that they areinconsstent with underlying business performance. • We operate malus and clawback in respect of our annual incentve and LTIP. • We set the incentves of employees in Audit, Risk and Compliance functions independently ofthe businesses they oversee. Alignment with culture • Performance metrics used to determine incentve outcomes directly align with our business strategy. • In line with our Fair Pay Charter, our incentve plans support us in embedding a performance-orientated culture and our princplethat colleagues should share inthe success of the Group. Our scorecard includes financal and strategic measures and all employees’ performance is assessed by what is achieved and how it is achieved in line with our valued behaviours. • In combinaton with ourriskprocedures, ourremuneration structure ensures that our valued behaviours are appropriately recognised and rewarded. Proportionalty • In line with our commitment to pay for performance, a signficant proportion of executive director pay is delivered through incentves based on performance metrics aligned with ourstrategy. • Executive directors are further aligned with long-term shareholder interests through the deferred release of salary, annual incentve and LTIP share awards over a period of one to eight years with incentve awards also being subject to clawback for up to 10 years from grant. • Additonal shareholding requirements are in place for executive directors to build and maintan a signficant shareholding in Company shares while in employment and post-employment for two years. Both executive directors currently exceed the shareholding requirements. Predictablity • The range of possible rewards to indvidual executive directors is set out in the scenario charts on page 167 where we also demonstrate the impact of a 50 per cent share price appreciatonover the three-year performance period of the LTIP. • Maximum awards levels under all incentves are capped at two times fixed pay. Other than vesting levels which are driven by performance outcomes, the only source of variaton in final payouts is the fact that a signficant part of incentve awards is delivered in shares and linked to the share price. Simplcity andclarity • Simplcity is a key driver for the structure of our executive pay as far as possible, notwithstandng the complexity of operating as a UK regulated bank. • Additonalinformaton is included onthe alignmentof executive and wider workforce pay on page 147 in support of our commitmentto clarity. ![]() 171 Standard Chartered – Annual Report 2021 Directors’ report #### Additonal remuneration disclosures The following disclosures provide further informaton and context in relation to executive director remuneration and remuneration forthe wider workforceas required by company reporting regulations, corporate governance guidanceand insttutional investor guidelnes. These include the Directors’ Remuneration Report Regulations, the UK Corporate Governance Code, Pillar 3 disclosure requirements and the requirements of The Stock Exchange of Hong Kong Limted. Appropriateness of executive directors’ remuneration Our approach to remuneration is consistent for all employees and is designed to help ensure pay is competitve and in line with the princples of our Fair Pay Charter. Remuneration for the executive directors, in line with other employees, is reviewed annually against internal and external measures to ensure that levels are appropriate. Further details on the alignment of executive director and wider workforce remuneration is set out on page 147. Measure Approach External market data • We compete for talent in a global marketplace, with many of our key competitors based outside the UK. We review executive director fixed and variable remuneration levels against a peer group of UK and internatonal banks to ensure that it remains appropriately competitve. Market data used in benchmarking is based on the latest published report and accounts. • In additon, we consider their remuneration against FTSE30 companies, with data sourced from an external provider. Internal measures • As with all employees, executive directors’ salaries are reviewed annually in line with the Group-wide salary increase princples. In additon, we review annually the year-on-year percentage change in remuneration for the executive directors andthewideremployee population. • Our incentve plans have a clear link to Group and business performance, through published scorecards. The same Group scorecard is set to determine incentves for colleagues includng the executive directors. • Incentive decisons for colleagues, includng the executive directors, are driven by the assessment of indvidual performance includng achievementsagainst personal objectvesand conduct. • The remunerationstructurefor executive directors was considered as part ofthe broader directors’remuneration policy review during 2021, taking account of the remuneration framework applicable to all colleagues. CEO pay ratio • In line with UK regulations, we annually report pay ratios comparing CEO remuneration to all UK employees. • We review year-on-year ratio changes to understand the reasons and appropriateness for such movements. • In additon, we review the median ratio against UK FTSE and industry peer averages. The relationshp between the remuneration of the Group CEO and all UK employees Ratio of the total remuneration of the CEO to that of the UK lower quartile, median and upper quartile employees Year Method CEO £000 UK employee – £000Pay ratio P25 P50 P75 P25 P50 P75 2021 A 4,65792 139 215 51:134:122:1 2020 A 3,926 84 128 199 46:131:1 20:1 2019 A 5,360 83 128212 65:1 42:1 25:1 2018 A 6,287 78 124 208 80:151:130:1 2017 A 4,683 76 121 203 61:1 39:123:1 It is expected that the ratio will depend materially on long-term incentve outcomes each year, and accordingly may fluctuate. Therefore, the Committee also discloses the pay ratios covering salary and salary plus annual incentve, as UK employees are eligble to be considered for an annual incentve based on Group, business and indvidual performance. These show a more consistent ratio over time. Additonal ratios of pay based on salary and salary plus annual incentve Salary CEO £000 UK employee – £000Pay ratio P25 P50 P75 P25 P50 P75 2021 2,370 68 100 136 35:124:1 17:1 2020 2,370 63 93 116 38:125:1 20:1 2019 2,353 65 90 128 36:126:118:1 2018 2,300 59 86 142 39:1 27:1 16:1 2017 2,300 55 81 124 42:1 28:119:1 Salary plus annualincentve 2021 3,559 79 122 186 45:129:119:1 2020 2,756 74 104 175 37:1 26:116:1 2019 3,604 73 109 187 49:1 33:119:1 2018 3,691 72 105 183 52:1 35:1 20:1 2017 3,978 69 103 182 58:139:122:1 ![]() 172 Standard Chartered – Annual Report 2021 Directors’ report Additonalremuneration disclosures • The pay ratios are calculated using Option A published methodology, in line with investor guidance. • Employee pay data is based on full-time equivalent pay for UK employees as of 31 December for the relevant year and excludes leavers, joners, and employee transfers in or out of the UK during the year, to help ensure data is on a like-for-like basis. Total pay is calculated in line with the single figure methodology (i.e. fixed remuneration accrued during the financal year and variable remuneration relating to the performance year) and data for insured benefits are based on notional premia. No other calculation adjustments or assumptions have been made. • CEO pay is as per the single total figure of remuneration for 2021 and restated for 2020 to take account of the actual LTIP vesting in 2021. Further informaton on the single total figure is on page 155. The 2021 ratio will be restated in the 2022 directors’ remuneration report to take account of the final LTIP vesting data for eligble employees and for the CEO. • The Committee has considered the data for the three indviduals identfied at the lower quartile, median and upper quartile for 2021 and believes that it is a fair reflection of pay among the UK employee population. Each of the indviduals identfied was a full-time employee during the year and received remuneration in line with the Group remuneration policy, and none received exceptionalpay. • Our LTIP is intended to link total remuneration to the achievement of the Group’s long-term strategy and to reinforce alignment between executive remuneration andshareholder interest. Particpationis typically senior employees who have line of sight to influence directly the performance targets on the awards. The lower quartile, median and upper quartile employees identfied this year are not particpants in the LTIP. • The year-on-year increase is due to the CEO receivng a higher annual incentve for 2021 (57 per cent of maximum compared with the reduced award of 18.5 per cent in 2020 following the voluntary waiver of the cash portion). Group performance versus the CEO’s remuneration The graph below shows the Group’s TSR performance on a cumulative basis over the past 10 years alongside that of the FTSE 100 and peer banks. The graph also shows historcal levels of remuneration of the CEO over the 10 years ended 31 December 2020 for comparison. TheFTSE 100 provides abroad comparison group againstwhich shareholders may measure their relative returns. 0 2 4 6 8 10 Jan 22Jan 21Jan 20Jan19Jan 18Jan 17Jan 16Jan 16Jan 15Jan14Jan 13Jan 12 0 50 100 150 200 250 Group performance vs the CEO’sremuneration Value of £100invested on 31December 2011 CEO total remuneration (£millon) CEO total remuneration (Peter Sands)CEOtotalremuneration (Bill Winters) StandardChartered FTSE 100 Comparator median The table below shows the single figure of total remuneration for the CEO since 2012 and the variable remuneration delivered as a percentage ofmaximumopportunity. 201220132014201520162017201820192020 2021 Single figureof total remuneration £000 Peter Sands (CEO until 10 June 2015) 6,951 4,378 3,093 1,290 ––––– – Bill Winters (appointed CEO on 10 June 2015) ––– 8,3993,392 4,683 6,287 5,360 3,926 4,657 Annual incentve as a percentage ofmaximum opportunity PeterSands 63% 50%0%0% ––––– – Bill Winters ––– 0% 45% 76% 63% 55%18.5% 57% Vesting of LTIP awards as a percentage of maximum opportunity PeterSands 77% 33% 10%0%0% –––– – Bill Winters –––––– 27% 38% 26% 23% • Bill’s single figure of total remuneration in 2015 includes his buyout award of £6.5 millon to compensate for the forfeiture of share interests on joningfrom his previous employment. • The 2020 single figure for Bill has been restated based on the actual vesting and share price when the 2018–20 LTIP awards vested in March 2021. ![]() 173 Standard Chartered – Annual Report 2021 Directors’ report Annual percentage change in remuneration of directors and employees UK percentage change inremuneration In line with our Fair Pay Charter, we monitor year-on-year changes between the movement in salary, benefits and annual incentves for the CEO between performance years compared with the wider workforce. As required under the Shareholder Rights Directve (part of UK Companies regulations), we compare the directors of the PLC Board against an average full-time equivalent UK employee. The regulations require this analysis to be undertaken for all indviduals employed by Standard Chartered PLC (the parent company). As no indviduals are employed by Standard Chartered PLC (they are employed by legal entites which sit below the parent company), we voluntarily disclose the comparisons against UK employees as we feel this provides a representative comparison. Salary/fees% change Taxable benefits % change Annual incentve % change 1 2021 2020 2021 2020 2021 2020 CEO B Winters 0.0 0.7 (26.5) (2.9) 208.1 (69.2) CFO A Halford 0.7 3.7 (5.6) 30.2 208.9 (68.2) Group Chairman J Viñals 0.0 0.0 (61.5) (11.7) – – Current INEDs D P Conner (6.7) (0.6) 5.9 (57.5) – – B E Grote 0.0 0.0 0.0 0.0 – – C M Hodgson, CBE 0.0 0.0 (100.0) 28.2 – – G Huey Evans, CBE 0.0 0.0 (100.0) 233.9 – – N Kheraj (9.0) 0.0 (100.0) 7.9 – – N Okonjo-Iweala 2 – 0.0 – 63.6 – – M Ramos 2 – – – – – – P G Rivett 3 – – – – – – DTang 18.3 – (82.3) – – – CTong 0.0 – (100.0) – – – J M Whitbread 0.0 0.0 (100.0) (49.2) – – Workforce Average FTE UK employee 4, 5, 6 3.1 3.8 (2.0) 2.9 38.2 (22.1) 1The increases in annual incentves for Bill Winters and Andy Halford are reflective of the impact of the voluntary waiver of the cash element of their 2020 annual incentves, which reduced the awards by 50 per cent 2In 2021: Ngozi Okonjo-Iweala stepped down from the Board on 28 February and Maria Ramos was appointed to the Board on 1 January 3In 2020: Phil Rivett was appointed to the Board on 6 May 4Employee data is based on full-time equivalent pay for UK employees as of 31 December of the relevant year. This data excludes leavers, joners and employee transfers in or out of the UK during the year to help ensure data is on a like-for-like basis. Salary percentage change reflects increases decided at the end of 2020 and implemented in2021 5Average FTE UK employee percentage change has been calculated on a mean basis. As the employee population will change yearly and the mean average considers the full range of data, it is expected this will provide a more consistent year-on-year comparison. Any percentage changes impacted by extremes at either end of the data set will be explained in the supporting commentary 6The reduction in taxable benefits for UK employees reflects the impact of leavers during 2021, who would have typically received higher legacy benefits arrangements. On a matched sample basis, benefits increased by 1.6 per cent year-on-year For the CEO and CFO and the Group Chairman and INEDs, the data the changes relate to are set out on pages 155 and 159, respectively. The change in taxable benefits relates to the change in the values for the 2020/21 and 2019/20 tax years. Due to the low value of the taxable benefits received by INEDs, which have not exceeded £1,000 in 2021 (set out on page 159), small changes to these values are expected to cause the percentage change to fluctuate year-on-year. Scheme interests awarded, exercised and lapsed during the year Employees, includng executive directors, are not permitted to engage in any personal investment strategies with regards to their Companyshares, includnghedging againstthe shareprice of Company shares. The main features of theoutstandingshares and awards are summarised below: Award Performance measures Accrues notional divdends? 1 No. oftranchesTranche splits Performance outcome 2016–18 33% – RoE 33% – TSR 33% – Strategic Yes 5 50% tranche 1 12.5% tranches 2-5 27% 2017–19 Yes 5 5 equaltranches 38% 2018–20 No 5 26% 2019–21 33% – RoTE 33% – TSR 33% – Strategic No 5 23% 2020–22 No 5 To be assessed at end of 2022 To be assessed at end of 2023 2021–23 30% – RoTE 30% – TSR 15% – Sustainablity 25% – Strategic No 5 12016–18 and 2017–19 LTIP awards may receive divdend equivalent shares based on divdends declared between grant and vest. From 1 January 2017 remuneration regulations for European banks prohibted the award of divdend equivalent shares. Therefore, the number of shares awarded in respect of the 2018–20, 2019–21, 2020–22 and 2021–23 LTIP awards took into account the lack of divdend equivalents (calculated by reference to market consensus divdend yield) such that the overall value of the award was maintaned ![]() 174 Standard Chartered – Annual Report 2021 Directors’ report Additonalremuneration disclosures Change in interests during the period 1 January to 31 December 2021 (audited) Share award price (£) As of 1 January Awarded 1 Divdends awarded 2 Exercised 3 Lapsed As of 31 December Performance period end Vesting date B Winters 4 2016 – 18 LTIP 5.560 33,506 – 1,915 35,421 – – 11 Mar 20194 May 2021 33,506 –––– 33,506 4 May 2022 33,507 –––– 33,507 4 May 2023 2017 – 19 LTIP 7.450 45,049 – 1,355 46,404 – – 13 Mar 2020 13 Mar 2021 45,049 –––– 45,049 13 Mar 2022 45,049 –––– 45,049 13 Mar 2023 45,049 –––– 45,049 13 Mar 2024 2018 – 20 LTIP 7.782 108,378 –– 28,178 80,200 – 9 Mar 20219 Mar 2021 108,378 ––– 80,200 28,178 9 Mar 2022 108,378 ––– 80,200 28,178 9 Mar 2023 108,378 ––– 80,200 28,178 9 Mar 2024 108,379 ––– 80,200 28,179 9 Mar 2025 2019 – 21 LTIP 6.105 133,065 –––– 133,065 11 Mar 202211 Mar 2022 133,065 –––– 133,065 11 Mar 2023 133,065 –––– 133,065 11 Mar 2024 133,065 –––– 133,065 11 Mar 2025 133,067 –––– 133,067 11 Mar 2026 2020 – 22 LTIP 5.196 161,095 –––– 161,095 9 Mar 20239 Mar 2023 161,095 –––– 161,095 9 Mar 2024 161,095 –––– 161,095 9 Mar 2025 161,095 –––– 161,095 9 Mar 2026 161,095 –––– 161,095 9 Mar 2027 2021 – 23 LTIP 4.901 – 150,621 ––– 150,621 15 Mar 202415 Mar 2024 – 150,621 ––– 150,621 15 Mar 2025 – 150,621 ––– 150,621 15 Mar 2026 – 150,621 ––– 150,621 15 Mar 2027 – 150,621 ––– 150,621 15 Mar 2028 A Halford 4,5 2016 – 18 LTIP 5.560 20,008 – 1,14221,150 – – 11 Mar 20194 May 2021 20,008 –––– 20,008 4 May 2022 20,009 –––– 20,009 4 May 2023 2017 – 19 LTIP 7.450 27,888 –838 28,726 – – 13 Mar 2020 13 Mar 2021 27,888 –––– 27,888 13 Mar 2022 27,888 –––– 27,888 13 Mar 2023 27,890 –––– 27,890 13 Mar 2024 2018 – 20 LTIP 7.782 67,108 –– 17,448 49,660 – 9 Mar 20219 Mar 2021 67,108 ––– 49,660 17,448 9 Mar 2022 67,108 ––– 49,660 17,448 9 Mar 2023 67,108 ––– 49,660 17,448 9 Mar 2024 67,108 ––– 49,660 17,448 9 Mar 2025 2019 – 21 LTIP 6.105 85,094 –––– 85,094 11 Mar 202211 Mar 2022 85,094 –––– 85,094 11 Mar 2023 85,094 –––– 85,094 11 Mar 2024 85,094 –––– 85,094 11 Mar 2025 85,096 –––– 85,096 11 Mar 2026 2020 – 22 LTIP 5.196 99,976 –––– 99,976 9 Mar 20239 Mar 2023 99,976 –––– 99,976 9 Mar 2024 99,976 –––– 99,976 9 Mar 2025 99,976 –––– 99,976 9 Mar 2026 99,977 –––– 99,977 9 Mar 2027 2021 – 23 LTIP 4.901 – 96,283 ––– 96,283 15 Mar 202415 Mar 2024 – 96,283 ––– 96,283 15 Mar 2025 – 96,283 ––– 96,283 15 Mar 2026 – 96,283 ––– 96,283 15 Mar 2027 – 96,283 ––– 96,283 15 Mar 2028 Sharesave 4.980 1,807 –––– 1,807 – 1 Dec 2022 ![]() 175 Standard Chartered – Annual Report 2021 Directors’ report 1For the 2021–23 LTIP awards granted to Bill Winters and Andy Halford on 15 March 2021, the values granted were: Bill Winters: £3.1 millon; Andy Halford £2.0 millon. The number of shares awarded in respect of the LTIP took into account the lack of divdend equivalents (calculated by reference to market consensus divdend yield) such that the overall value of the award was maintaned. Performance measures apply to 2021–23 LTIP awards. The closing share price on the day before grant was £4.901 (further details are included in Note 31, Share-based payments on pages 403 to 407) 2On 31 March 2020 Standard Chartered announced that in response to the request from the PRA and as a consequence of the unprecedented challenges facing the world due to the COVID-19 pandemic, the Board decided to withdraw the recommendation to pay a final divdend for 2019. 1,200 divdend equivalent shares allocated to Bill’s 2017–19 LTIP award tranche which vested in March 2020 and 742 allocated to Andy’s 2017–19 LTIP award tranche which vested in March 2020 relating to the cancelled divdend were deducted from the calculation of divdend equivalent shares allocated to shares vesting in March 2021. Divdend equivalent shares allocated to the 2016–18 LTIP award tranche vesting in May 2021 did not include any shares relating to the cancelled divdend 3On 15 March 2021, Bill Winters exercised the 2017–19 LTIP award over a total of 46,404 shares and Andy Halford exercised the 2017–19 LTIP award over a total of 28,726 shares. The closing share price on the day before the exercise was £4.901. On 17 March 2021, Bill Winters exercised the 2018–20 LTIP award over a total of 28,178 shares and Andy Halford exercised the 2018–20 LTIP award over a total of 17,448 shares. The closing share price on the day before the exercise was £4.913. On 4 May 2021, Bill Winters exercised the 2016–18 LTIP award over a total of 35,421 shares and Andy Halford exercised the 2016–18 LTIP award over a total of 21,150 shares. The closing share price on the day before the exercise was £5.196 4The unvested share awards held by Bill Winters and Andy Halford are conditonal rights under the 2011 Plan. They do not have to pay towards these awards 5The unvested Sharesave option held by Andy Halford is an option granted on 1 October 2019 under the 2013 Plan – to exercise this option, Andy has to pay an exercise price of £4.98 per share, which has been discounted by 20 per cent As of 31 December 2021, none of the directors had registered an interest or short positon in the shares, underlying shares or debentures of the Company or any of its associated corporations that was required to be recorded pursuant to section 352 of the Securitesand Futures Ordinance, oras otherwise notifed to theCompany and TheStock Exchange of HongKong Limted pursuant to the Model Code forSecurites Transactions by Directors ofListedIssuers. Shareholder diluton All awards vesting under the Group’s share plans are satisfed by the transfer of existng shares or, where appropriate, the issuance of new shares. The Group’s share plans contain monitored limts that govern both the aggregate amount of awards that may be granted and the amount of shares that may be issued to satisfy any subsequent exercise of awards. These limts are in line with those stated in the Investment Associaton’s Princples of Remuneration and the terms of our listng on The Stock Exchange of Hong Kong Limted. The Group has two employee benefit trusts that are adminstered by independent trustees and which hold shares to meet various obligatons under the Group’s share plans. As each executive director is withn the class of beneficary of these trusts, they are deemed, for the purposes of the Companies Act 2006, to have an interest in the trusts’ shares. Details of the trusts’ shareholdings are set out in Note 28 to the financal statements on page 392 Historcal LTIP awards The current positon on vesting for unvested LTIP awards from the 2019 and 2020 performance years based on current performance and share price as of 31 December 2021 is set out in the tables below. The TSR peer group for both awards is as set out on page 158. Current positon on the 2020–22 LTIP award: projected partial vesting Measure Weightng Performance for minmum vesting (25%) Performance for maximum vesting (100%) 2020–22 LTIP assessment as of 31 December 2021 RoTE in 2022 plus CET1 underpin of the higher of 13% or the minmumregulatory requirement 33% 8.5% 11.0% RoTE belowthreshold therefore indcative 0% vesting Relative TSR performance against the peer group 33% Median Upper quartile TSR positoned below the median therefore indcative 0% vesting Strategicmeasures 33% Targets set for strategic measures linked to the business strategy Tracking above target performance therefore indcative partial vesting Current positon on the 2021–23 LTIP award: projected partial vesting Measure Weightng Performance for minmum vesting (25%) Performance for maximum vesting (100%) 2021–23 LTIP assessment as of 31 December 2021 RoTE in 2023 plus CET1 underpin of the higher of 13% or the minmumregulatory requirement 30% 6.0%10.0% RoTE at threshold therefore indcative partial vesting Relative TSR performance against the peer group 30% Median Upper quartile TSR positoned below the median therefore indcative 0% vesting Sustainablity 15% Targets set for sustainablity measures linked to the business strategy Tracking above target performance therefore indcative partial vesting Strategicmeasures 25% Targets set for strategic measures linked to the business strategy Tracking above target performance therefore indcative partial vesting The Committee assesses the value of LTIP awards on vesting and has the flexiblity to adjust if the formulaic outcome is not considered to be an appropriate reflection of the performance achieved and to avoid windfall gains. ![]() 176 Standard Chartered – Annual Report 2021 Directors’ report Additonalremuneration disclosures The approach used to determine Group-wide total discretonary incentves in 2021 is explained on page 142 of this report. The following tables show the incomestatement chargefor these incentves. Income statement charge for Group discretonary incentves 2021 $m 2020 $m Total discretonary incentves 1,367 990 Less: deferred discretonary incentves that will be charges in future years (195) (129) Plus: current year charge for deferred discretonary incentves from prior years 124 122 Total 1,296 983 Year in which income statement is expected to reflect deferred discretonary incentves Actual Expected 2020 $m 2021 $m 2022 $m 2023 and beyond $m Discretonary incentvesdeferredfrom 2019 andearlier 101 59 28 17 Discretonary incentvesdeferredfrom 2020 43 48 30 26 Discretonary incentvesdeferredfrom 2021 – 64 89 106 Total 144 171 147 149 Allocation of the Group’s earnings between stakeholders When considerngGroup variable remuneration, the Committee takes account of shareholders’concerns about relative expenditure on pay and determines the allocation of earnings to expenditure on remuneration carefully, and has approached this allocation in a discplined way over the past five years. The table below shows the distrbution of earnings between stakeholders over the past five years. The amount of corporate tax, includng the bank levy, is included in the table because it is a signficant payment and illustrates the Group’s contributon through the tax system. Actual Allocation 2021 $m 2020 $m 2019 $m 2018 $m 2017 $m 2021 % 2020 % 2019 % 2018 % 2017 % Staff costs 7,668 6,886 7,1227,074 6,758 84 85 74 75 83 Corporate taxation includng levy 1,138 1,193 1,720 1,763 1,367 12 15 18 19 17 Paidto shareholders in divdends 375 0 720 561 0 4 0860 Approach to risk adjustment Indivdual remuneration is aligned with our long-term interests and the time frame over which financal risks crystallise: • For relevant colleagues, a proportion of variable remuneration is delivered in the form of awards that are deferred for a sufficent period of time during which risk adjustments can be applied. • The abilty to apply performance adjustment through the reduction in the value of any deferred variable remuneration award through non-vesting due to performanceconsideratons and share price movement over the deferral period. The operation of in-year adjustments, malus and clawback is summarised in the following table: Critera includes Applicaton Indivduallevel • Deemed to have: (i) caused in full or in part a material loss for the Group as a result of reckless, negligent or wilful actions, or (i) exhibted inapproprate behaviours, or (ii)applied a lack of appropriate supervison and due dilgence • The indvidual failed to meet appropriate standards of fitness and propriety • In-year adjustment, malus and clawback may be applied to all or part of an award at the Committee’s discreton Business unitand/or Group level • Material restatement of the Group’s financals • Signficant failure inriskmanagement • Discovery of endemic problems in financal reporting • Financal losses, due to a material breach of regulatory guidelnes • The exercise ofregulatory or government action to recapitalse the Group following material financal losses • In-year adjustment, malus and clawback may be applied to all or part of an award at the Committee’s discreton ![]() 177 Standard Chartered – Annual Report 2021 Directors’ report Pillar 3 disclosures on material risk takers’ remuneration and disclosures on the highest paid employees Identifcationof material risk takers Indivduals have been identfied as material risk takers in accordance with the quantitatve and qualitatve critera set out in the European Banking Authority’s Regulatory Technical Standard (EU 604/2014 adopted by the PRA that came into force in June 2014) and the Remuneration Part of the PRA Rulebook in which updated identficaton critera relating to the Capital Requirements Directve V have been transposed. Material risk takers are identfied on a: (i) Standard Chartered PLC (Group); and (i) solo level consolidated entites under Standard Chartered Bank UK (Solo) basis. Quantitatvecritera The quantitatve critera identfy employees who: • have been awarded total remuneration of £658,000 or more in the previous financal year • are withn the 0.3 per cent of the number of employees on a Group or Solo basis who have been awarded the highest total remuneration in the preceding financalyear • were awarded total remuneration in the preceding financal year that was equal to or greater than the lowest total remuneration awarded that year to certain specifed groups of employees. Employees identfied by only the quantitatve critera can be excluded from being designated as material risk takers if it can be evidenced that they do not have the abilty to have a material impact on the risk profile of the Group or the Solo entity. Qualitatve critera The qualitatvecritera broadly identfiesthe following employees: • directors (both executive and non-executive) of Standard Chartered PLC • a member of senior management, which is defined as one or more of the following: – a senior manager under the PRA or FCA Senior Manager Regime – a member of the Group Management Team and the Solo Management Team • the level beneath the Management Teams • senior employees withn the Audit, Compliance, Legal and Risk functions • senior employees withn material business units • employees who are members of specifc committees • employees who are able to intiate or approve Credit Risk exposures above a certain threshold and sign off on trading book transactions at or above a specifc value at risk limt. For the purpose of the Pillar 3 tables on pages 178 and 180, unless otherwise stated, senior management is defined as directors of Standard Chartered PLC (both executive and non-executive), senior managers under the PRA or FCA Senior Manager Regime and members of the Group Management Team. Material risk takers’remuneration delivery Remuneration for material risk takers was delivered in 2021 through a combinaton of salary, pension, benefits and variable remuneration. Variable remuneration for material risk takers is structured in line with the PRA and FCA’s remuneration rules. For the 2021 performance year, the following structure applies: • At least 40 per cent of a material risk taker’s variable remuneration will be deferred over a minmum period of four years depending on the category of material risk taker. • Non-deferred variable remuneration will be delivered 50 per cent in shares, subject to a minmum 12 month retention period, and 50 per cent in cash. • At least 50 per cent of deferred variable remuneration will be delivered entirely in shares, subject to a minmum 12 month retention period (with the exception of deferred shares awarded to risk managers, which are subject to a six month minmum retention period in line with the regulations). • For some material risk takers, part of their 2021 variable remuneration may be in share awards which vest after a minmum of four years, subject tothe satisfacton of performance measures. • Variable remuneration awards are subject to remuneration adjustment provisons. This provides the Group with the abilty to reduce or revoke variable remuneration in respect of a risk, control or conduct issue, event or behaviour. • Material risk takers are subject to a 2:1 maximum ratio of variable to fixed remuneration. ![]() 178 Standard Chartered – Annual Report 2021 Directors’ report Additonalremuneration disclosures Material risk takers’deferred variable remuneration delivery Year 0 (grant) March 2022 Year1 March 2023 Year2 March 2024 Year3 March 2025 Year4 March 2026 Year5 March 2027 Year6 March 2028 Year7 March 2029 Senior managers Risk managers 1 Higher paid Non-higher paid Other material risk takers 2 1Material risk takers with 2021 total remuneration equal to or greater than £500,000 or with variable compensation equal to or greater than 33 per cent of total remuneration are classifed as ‘higher paid’. Material risk takers below this threshold are classifed as ‘non-higher paid’ 2Deferral is five years for ‘other material risk takers’ who are: i) higher paid; and i) members or chairs of relevant risk committees Material risk takers’deferred remuneration in2021 Senior management$000 All other material risk takers $000 Total Cash Shares Total Cash Shares Start of the year (1 January): Unvested 114,643 16,01198,632 351,097 126,793 224,304 Vested andunexercised – –– 7,380 – 7,380 Impact of changes to material risk taker population includng leavers during 2020 and joners in 2021 (3,995) (1,769) (2,226) (21,569) (11,303) (10,266) Start of the year (1 January) (after adjustments): Unvested 110,648 14,242 96,406 330,027 115,490 214,537 Vested andunexercised – –– 6,881 – 6,881 Awarded during the year 34,906 2,858 32,048 140,888 52,268 88,620 Total reduction during the year due to malus or clawback; or performance measures not being met (15,138) – (15,138) (36,474) (2,026) (34,448) Total deferred remuneration paid out in the financal year (10,358) (1,225) (9,133) (121,907) (44,868) (77,039) Close of the year (31 December): Unvested 120,058 15,875 104,183 314,135 120,864 193,271 Vested andunexercised – –– 5,280 – 5,280 Material risk takers’2021 fixedand variableremuneration Senior management $000 All other material risk takers $000 Fixedremuneration 1 Number of employees 28 608 Totalfixed remuneration 39,094 322,917 Cash-based 36,768 322,917 Of which deferred –– Shares orother share-linkedinstruments 2,325 – Of which deferred –– Otherforms –– Of which deferred –– Variableremuneration 2, 3 Number of employees 17 547 Totalvariable remuneration 50,584 272,218 Cash-based 17,007 138,735 Of which deferred 7,435 66,858 Shares orother share-linkedinstruments 33,577 133,483 Of which deferred 24,006 66,761 Otherforms –– Of which deferred –– Totalremuneration 89,678 595,134 1Fixed remuneration includes salary, cash allowances, benefits and pension, in the case of the Chairman and INEDs, any fees 2For some material risk takers, part of their 2021 variable remuneration may be delivered in share awards, with vesting subject to performance measures. These awards are shown on a face value basis. As the Chairman and INEDs are not eligble to receive variable remuneration they are not included in this data 3The ratio between fixed and variable remuneration for all material risk takers in 2021 was 1:0.89 Minmumof 40% of 2021 variableremuneration Minmumof 40% of 2021 variableremuneration Minmumof 40% of 2021 variableremuneration Minmumof 40% of 2021 variableremuneration ![]() 179 Standard Chartered – Annual Report 2021 Directors’ report Material risk takers’aggregate 2021 remuneration bybusiness Corporate, Commercial & Institutonal Banking $000 Consumer, Private 1 & Business Banking $000 Central management & other 2 $000 2021 351,769 50,030 283,013 1Private Banking includes Wealth Management 2Central management & other includes Group executive directors, the Chairman, INEDs, control functions, support functions and central roles Material risk takers’ sign-on and severance payments in 2021 Senior management All other material risk takers Number of employees Total amount $000 Number of employees Total amount employees $000 Sign-on payments –––– Guaranteed incentves 1 2,683 1 116 Severance payments –––– Remuneration at or aboveEUR1 millon The table below is prepared in accordance with Article 450 of the EU Capital Requirements Regulation as it forms part of UK domestic law. Remuneration band EUR Number ofemployees 1,000,000–1,500,000 96 1,500,001–2,000,000 40 2,000,001–2,500,000 13 2,500,001–3,000,000 10 3,000,001–3,500,000 3 3,500,001–4,000,000 3 4,000,001–4,500,000 4 4,500,001–5,000,000 1 5,000,001–5,500,000 2 5,500,001–6,000,000 – 6,000,001–6,500,000 – 6,500,001–7,000,000 – 7,000,001–7,500,000 – 7,500,001–8,000,000 – 8,000,001–8,500,000 1 8,500,001–9,000,000 1 9,000,001–9,500,000 – 9,500,001–10,000,000 – 10,000,001–10,500,000 1 Total 175 Remuneration of the five highest paid indviduals and the remuneration of senior management In line with the requirements of The Stock Exchange of Hong Kong Limted, the following table sets out, on an aggregate basis, the annual remuneration of: (i) the five highest paid employees; and (i) senior management for the year ended 31 December 2021. Components of remuneration Fivehighest paid 1 $000 Senior management 2 $000 Salary, cash allowances and benefits in kind 16,710 25,594 Pensioncontributons 561 1,441 Variable remuneration awards paid or receivable 26,494 41,697 Payments made on appointment – 999 Remunerationfor loss of office(contractual orother) –– Other –– Total 43,765 69,732 Total HKDequivalent 34,070 541,848 1The fivehighest paidindviduals includeBill Winters 2Senior management comprises the executive directors and the members of the Group Management Team at any point during 2021 ![]() 180 Standard Chartered – Annual Report 2021 Directors’ report Additonalremuneration disclosures The table below shows the emoluments of: (i) the five highest paid employees; and (i) senior management for the year ended 31December 2021. Remuneration band HKD Remuneration band USD equivalent Number ofemployees Fivehighest paid Senior management 1 21,000,001–21,500,000 2,702,564–2,766,910 –1 23,500,001–24,000,000 3,024,297–3,088,644 –1 25,000,001–25,500,000 3,217,338–3,281,684 –1 26,000,001–26,500,000 3,346,031–3,410,378 –1 26,500,001–27,000,000 3,410,378–3,474,725 –1 27,500,001–28,000,000 3,539,071–3,603,418 –1 30,500,001–31,000,000 3,925,152–3,989,499 –1 36,000,001–36,500,000 4,632,966–4,697,313 –1 36,500,001–37,000,000 4,697,313–4,761,660 –1 39,500,001–40,000,000 5,083,394–5,147,740 –1 46,000,001–46,500,000 5,919,901–5,984,248 –1 47,000,001–47,500,000 6,048,595–6,112,941 1– 48,000,001–48,500,000 6,177,288–6,241,635 11 75,500,001–76,000,000 9,716,360–9,780,706 11 77,000,001–77,500,000 9,909,400–9,973,747 11 91,000,001–91,500,000 11,711,109–11,775,456 1– Total 5 14 1Senior management comprises the executive directors and the members of the Group Management Team at any point during 2021 The exchange rates used in this report Unless an alternative exchange rate is detailed in the notes to the relevant table, the exchange rates used to convert the disclosures to US dollars are set out in the table below. 2021 2020 EUR 0.8421 0.8827 GBP 0.7246 0.7833 HKD 7.7704 7.7563 Christne Hodgson Chair of the Remuneration Committee 17 February 2022 ![]() 181 Standard Chartered – Annual Report 2021 Directors’ report #### Other disclosures The Directors’ report for the year ended 31 December 2021 comprises pages 90 to 191 of this report (together with the sections of the Annual Report incorporated by reference). The Company has chosen, in accordance with section 414C(11) of the Companies Act 2006, and as noted in this Directors’ report, to include certain matters in its Strategic report that would otherwise be disclosed in this Directors’ report. Both the Strategic report and the Directors’ report have been drawn up and presented in accordance with English company law, and the liablites of the directors in connection with that report shall be subject to the limtations and restrictons provided by such law. Other informaton to be disclosed in the Directors’ report is given in this section. In additon to the requirements set out in the Disclosure Guidance and Transparency Rules relating to the Annual Report, informaton required by UK Listng Rule 9.8.4 to be included in the Annual Report, where applicable, is set out in the table below and cross-referenced. Information to be included in the Annual Report (UK Listng Rules 9.8.4) Relevant Listng Rule Pages LR 9.8.4 (1) (2) (5-14) (A) (B) N/A LR 9.8.4 (4) 154, 157 and 158 Princpal activties We are a leading internatonal banking group, with over 160years of history in some of the world’s most dynamic markets. Our purpose is to drive commerce and prosperity through our unique diversty. The Group’s roots in trade finance and commercial banking have been at the core of its success throughout its history, but the Group is now more broadly based across Consumer, Private and Business Banking in its footprint markets in Asia, Africa and the Middle East. The Group operates in the UK and overseas through a number of subsidaries, branchesand offices. Further details onour business, includngkey performanceindcators, can be found withn the Strategic report on pages 1 to 30. Fair, balanced and understandable On behalf of the Board, the Audit Committee has reviewed the Annual Report and the process by which the Group believes that the Annual Report, is fair, balanced and understandable and providesthe informaton necessary for shareholders to assess the positon and performance, strategy and business model of the Group. Following its review, the Audit Committee has advised the Board that such a statement can be made in the Annual Report. Events after the balance sheet date For details on post balance sheet events, see Note 37 to the financalstatements. Code for Financal Reporting Disclosure The Group’s 2021 financal statements have been prepared in accordancewiththeprincples ofthe UK FinanceDisclosure Code for Financal Reporting Disclosure. Disclosure of informaton to auditor As far as the directors are aware, there is no relevant audit informaton ofwhichthe Group statutory auditor, EY, is unaware. The directors have taken all reasonable steps to ascertain any relevant audit informaton and ensure that the Group statutory auditors areaware of such informaton. Viablity and going concern Having made appropriate enquires, the Board is satisfed that the Company and the Group as a whole has adequate resources to continue in operation and meet its liablites as they fall due for a period of 12 months from 17February 2022 andtherefore continuesto adopt the going concern basis in preparing the financal statements. The directors’ viablity statement in respect to the Group can be found in the Strategic report on pages 86 and 87, while the directors’ going concern consideratons of the Group can be found on page 318. Sufficency of public float As at the date of this report, the Company has maintaned the prescribed public float under the rules governing the listngof securites onThe Stock Exchange of Hong Kong Limted (the “Hong Kong Listng Rules”), based on the informaton publiclyavailable to the Company and withn the knowledge of the directors. Research and development During the year, the Group invested $1.89 billon (2020: $1.59billon) in research and development, of which $0.94 billon (2020: $0.78 billon) was recognised as an expense. The research and development investment primarly related to the planning, analysis, design, development, testing, integraton, deployment and intial support of technologysystems. Politcal donations The Group has a policy in place which prohibts donations being made that would: (i)improperlyinfluence legislaton or regulation, (i) promote politcal views or ideologes, and (ii) fund politcal causes. In alignment to this, no politcal donations were made in the year ended 31 December 2021. Directors andtheir interests The membership of the Board, together with their biographcal details, are given on pages 91 to 94. Details of the directors’ benefical and non-benefical interests in the ordinary shares of the Company are shown in the Directors’ remuneration report on pages 141 to 180. The Group operates a number of share-based arrangements for its directors and employees. Details of these arrangements are included in the Directors’ remuneration report and in Note 31 to the financal statements ![]() 182 Standard Chartered – Annual Report 2021 Directors’ report Other disclosures The Company has received from each of the INEDs an annual confirmatonof independence pursuant to Rule3.13 of the Hong Kong Listng Rules and still considers all of the non- executivedirectors to be independent. At no time during the year did any director hold a material interest in any contracts of signficance with the Company or any of its subsidary undertakings. In accordance with the Companies Act 2006, we have established a processrequirng directors to disclose proposed outside business interests before any are entered into. This enables prior assessment of any conflict or potential conflict of interest and any impact on time commitment. On behalf of the Board, the Governance and Nominaton Committee reviews existng conflicts of interest annually to consider if they continue to be conflicts of interest, and also to revist the terms upon which they were determined to be. The Board is satised that our processes in this respect continue to operate effectively. Subject to company law, the Articles of Associaton and the authority granted to directors in general meeting, the directors may exercise all the powers of the Company and may delegate authorites to committees. The Articles of Associaton contain provisons relatingto the appointment, re-election and removal of directors. Newly appointed directors retire at the AGM following appointment and are eligblefor election. All directors are nominated forannual re-election byshareholderssubject tocontinued satisfactory performancebased upon their annualassessment. Non-executivedirectors are appointed for an intial period of one year and subject to (re)election by shareholders at AGMs, in line with the UK Corporate Governance Code 2018. The Company has granted indemnties to all of its directors on terms consistent withthe 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 indemnties 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 UK’s pension fund corporate trustee (Standard Chartered Trustees (UK) Limted), and remain in force at the date of this report. Signficant agreements The Company is not party to any signficant agreements that would take effect, alter or terminate following a change of control of the Company. The Company does not have agreements with any director or employee that would provide compensation for loss of office oremployment resulting from a takeover, except that provisons of the Company’s share schemes and plans may cause options and awards granted to employees under such schemes and plans to vest on a takeover. 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. Results and divdends 2021: paid interm divdend of 3 cents per ordinary share (2020: no interm divdend paid) 2021: proposed final divdend of 9 cents per ordinary share (2020: paid final divdend of 9 cents per ordinary share) 2021: total divdend of 12 cents per ordinary share (2020: total divdend, 9 cents per ordinary share) Share capital The issued ordinary share capital of the Company was reduced by a total of 77,063,162 over the course of 2021. This was due to the cancellation of ordinary shares as part of the Company’s two share buy-back programmes. No ordinary shares were issued during the year. The Company has one class of ordinary shares, which carries no rights to fixed income. On a show of hands, each member present has the right to one vote at our general meetings. On a poll, each member is entitled to one vote for every $2 nominal value of share capital held. The issued nominal valueof the ordinary shares represents 85.3 per cent of the total issued nominal value of all share capital. Theremainng 14.7 percent comprises preference shares, which have preferential rights to income and capital but which, in general, do not confer a right to attend and vote at ourgeneral meetings. Further details of the Group’s share capital can be found in Note 28 to the financal statements There are no specifc restrictons on the size of a holding nor on the transfer of shares, which are both governed by the general provisons of the Articles of Associaton and prevailng legislaton. There are no specifc restrictons on voting rights and the directors are not aware of any agreements between holders of the Company’s shares that may result in restrictons on the transfer of securites or on voting rights. No person has any special rights of control over the Company’s share capital and all issued shares are fully paid. Articles of Associaton The Articles of Associaton may be amended by special resolution of the shareholders. A copy of the Company’s Articles of Associaton can be found on our website here sc.com/investors Authority to purchase own shares At the AGM held on 12 May 2021, our shareholders renewed the Company’s authority to make market purchases of up to 312,143,771 ordinary shares, equivalent to approximately 10 per cent of issued ordinary shares as at 25 March 2021, and up to all of the issued preference share capital. ![]() 183 Standard Chartered – Annual Report 2021 Directors’ report The authority to make market purchases up to 10 per cent of issued ordinary share capital was used during the year through two buy-back programmes announced in February and August 2021. These were utilsed to reduce the number of ordinary shares in issue and as part of the Group’s approach to divdend growth and capital returns. The first share buy-back programme was launched on 1 March 2021 and ended on 29 March 2021. The second share buy-back programme was launched on 4 August 2021 and ended on 16 September 2021. A total of 77,063,162 ordinary shares with a nominal value of $0.50 were re-purchased for an approximate aggregate consideraton paidof $504 millon. A monthly breakdown of the shares purchased during the period includng the lowest and highest price paid per share is set out in Note 28 to the financal statements. All ordinary shares which were bought back were cancelled. In accordance with the terms of a waiver granted by The Stock Exchange of Hong Kong Limted (HKSE) as subsequently modifed,the Company willcomply with the applicablelaw and regulation in theUK in relation to holding of any shares in treasury and with the conditons of granting the waiver by the HKSE. No treasury shares were held during theyear. Further details can be found in Note 28 to the financal statements Authority to issue shares The Company is granted authority to issue shares by the shareholders at its AGM. The size of the authorites granted depends on the purposes for which shares are to be issued and is withn applicable legaland regulatory requirements. Shareholder rights Under theCompanies Act2006, shareholders holding 5 per cent or more of the paid-up share capital of the Company carrying the right of voting at general meetings of the Company are able to require the directors to hold a general meeting. A request may be in hard copy or electronic form and must be authenticated by the shareholders making it. Where such a request has been duly lodged with the Company, the directors are obliged to call a general meeting withn 21 days of becoming subject to the request and must set a date for the meeting not more than 28 days from the date of the issue of the notice convening the meeting. Under the Companies Act 2006, shareholders holding 5 per cent or more of the total voting rights at an AGM of the Company, or 100 shareholders entitled to vote at the AGM with an average of at least £100 paid-up share capital per shareholder, are entitled torequire the Company tocirculate a resolution intended to be moved at the Company’s next AGM. Such a request must be made not later than six weeks before the AGM to which the request relates or, if later, the time notice is given of the AGM. The request may be in hard copy or electronic form, must identfy the resolution of which notice is to be given and must be authenticated by the shareholders making it. Shareholders are alsoable to put forward proposalsto shareholder meetings and enquires to the Board and/or the Senior Independent Director by using the ‘contact us’ informaton on the Company’s website sc.com or by emailng the Group Corporate Secretariat at group-corporate.secretariat@sc.com Major interests in shares and voting rights As at 31 December 2021, Temasek Holdings (Private) Limted (Temasek) is the only shareholder that has an interest of more than 10 per cent in the Company’s issued ordinary share capital carrying a right to vote at any general meeting. Information provided to the Company pursuant to the Financal Conduct Authority’s (FCA)Disclosureand Transparency Rules (DTRs) is published on a Regulatory Information Service and on the Company’s website. As at 11 February 2021, the Company has been notifed of the following informaton, in accordance with DTR 5, from holders of notifable interests in the Company’s issued share capital. The informaton provided in the table below was correct at the date of notifcation; however, the date received may not have been withn 2021. It should be noted that these holdings are likely to have changed since the Company was notifed. However, notifcation of any change is not required until the next notifable threshold is crossed. Notifable interests Interest in ordinaryshares (based on voting rights disclosed) Percentage of capital disclosed Natureof holding as perdisclosure Temasek Holdings (Private) Limted 510,451,383 16.01 Indirect Schroders plc 176,127,832 5.64687 Indirect (5.63174%) ContractsforDifference(0.01513%) BlackRock Inc. 183,640,172 5.55 Indirect (5.01%) Securites Lending (0.39%) ContractsforDifference(0.14%) ![]() 184 Standard Chartered – Annual Report 2021 Directors’ report Other disclosures Related party transactions Details of transactions with directors and officers and other related parties are set out in Note 36 to the financalstatements. Connected/continung connected transactions By virtue of its shareholding of over 10 per cent in the Company, Temasek and its associates are related parties and connected persons of the Company for the purposes of the UK ListngRules and the Hong Kong Listng Rules, respectively (together the “Rules”). The Rules are intended to ensure that there is no favourable treatmentto Temasek orits associatesto thedetriment of other shareholders in the Company. Unless transactions between the Group and Temasek or its associates are specifcally exempt under the Rules or are subject to a specifc waiver, they may require a combinaton of announcements, reporting and independent shareholders’ approval. On 12 November 2021, the HKSE extended a waiver (the “Waiver”) it previously granted to the Company for the revenue banking transactions with Temasek which do not fall under the passive investor exemption (the “Passive Investor Exemption”) under Rules 14A.99 and 14A.100 of the Hong Kong Listng Rules. Under the Waiver, the HKSE agreed to waive the announcement requirement, the requirement to enter into a written agreement and set an annual cap, and the reporting (includng annual review) requirements under Chapter 14A for the three-year period ending 31 December 2024 on the conditons that: a) The Company will disclose details of the Waiver (includng nature of the revenue banking transactions with Temasek and reasons for the Waiver) in subsequent annual reports; and b) The Company will continue to monitor the revenue banking transactions with Temasek during the threeyears ending 31 December 2024 to ensure that the 5 per cent threshold for the revenue ratio will not be exceeded. The main reasons for seeking the Waiver were: • The nature and terms of revenue banking transactions may vary and evolve over time; having fixed-term written agreements would not be suitable to accommodate the various banking needs of the Company’s customers (includng Temasek) and would be impractcal and unduly burdensome. • It would be impractcable to estimate and determine an annual cap on the revenue banking transactions with Temasek as the volume and aggregate value of each transaction are uncertain and unknown to the Company as a banking groupdue to multiple factors includng market driven factors. • The revenues generated from revenue banking transactions were insgnifcant. Without a waiver from the HKSE or an applicableexemption, these transactions wouldbe subject to various percentage ratio tests which cater fordifferent types of connected transactions and as such may produce anomalous results. For the year ended 31 December 2021, the Group provided Temasek with money market and capital markets products and services that were revenue transactions in nature. As a result of the Passive Investor Exemption and the Waiver, the vast majorty of the Company’stransactions with Temasek and its associates fall outside of the connected transactions regime. However, non-revenue transactions with Temasek or any of its associates continue to be subject to monitorng for connected transaction issues. The Company confirms that: • The revenue banking transactions entered into with Temasek in 2021 were below the 5 per cent threshold for the revenue ratio test under the Hong Kong Listng Rules; and • It willcontinue to monitor revenue bankingtransactions with Temasek during the three years ending 31 December 2024 to ensure that the 5 per cent threshold for the revenue ratiowill notbe exceeded. The Company therefore satisfed the conditons of the Waiver. Fixed assets Details of additons to fixed assets are presented in Note 18 to the financalstatements. Loan capital Details of the loan capital of the Company and its subsidaries are set out in Notes 22 and 27 to the financal statements. Debenture issues and equity-linked agreements During the financal year ended 31 December 2021, the Company madenoissuanceof debentures or equity-linked agreements. Risk management 1 The Board is responsible for maintaning and reviewng the effectivenessof the risk management system. An ongoing process for identfying, evaluating and managing the signficant risks that we face is in place. The Board is satisfed that this process constitutes a robust assessment of all of the princpal risks, emerging risks and material cross-cutting risks facing the Group, includng those that would threaten its business model, future performance, solvency or liqudity. 1The Group’s Risk Management Framework and System of Internal Control applies only to wholly controlled subsidaries of the Group, and not to Associates, Joint Ventures or Structured Entites of the Group. Key areas of risk on financal instruments for the directors included the imparment of loans and advances and valuationof financal instruments held at fair value. Thisrisk assessment and management is explained further in the Audit Committee Key areas and Action taken on page 120. The Risk review and Capital review on pages 194 to 293 sets out the princpalrisks, emerging risks andintegrated risks,our approach torisk management, includng ourriskmanagementprincples,an overview of our Enterprise RiskManagement Frameworkand the risk management and governance practices for each princpal risk type. The Board- approved Risk Appetite Statement can be found on pages 264 to 279 In accordance with Article 435(1)(e) of the UK onshored Capital Requirements Regulation, the Board Risk Committee, on behalf of the Board, has considered the adequacy of the risk management arrangements of the Group and has sought and received assurance that the risk management systems in placeare adequate with regard tothe Group’s profile and strategy. ![]() 185 Standard Chartered – Annual Report 2021 Directors’ report Internal control 1 The Board is responsible for maintaning and reviewng the effectivenessof the internal control system. Its effectiveness is reviewed regularly by the Board, its committees, the Management Team and Group Internal Audit. For the year ended 31 December 2021, the Board Risk Committee has reviewed the effectiveness of the Group’s system of internal control. As part of this review, affirmaton was received that the Group Chief Risk Officer is satisfed that the Group’s risk management and internal control framework is materially effective and adequately highlghts risks and improvement areas formanagement attention. Group Internal Audit represents the third line of defence and provides independent assurance ofthe effectiveness of management’s control of business activties (the first line) and of the control processes maintaned by the Risk Framework Ownersand Policy Owners (the secondline). The audit programmeincludes obtainng an understanding of the processes and systems under audit review, evaluating the designof controls,and testing the operating effectiveness and outcomes of key controls. The work of Group Internal Audit is focused on the areas of greatest risk as determined by a risk-based assessment methodology. The Board considers the internal control systems of the Company to be effective and adequate. Group Internal Audit reports regularly to the Audit Committee, the Group Chairman and the Group Chief Executive; and the Group Head, Internal Audit reports directly to the Chair of the Audit Committee and adminstratively to the Group Chief Executive. The findngs of all adverse audits are reported to the Audit Committee, the Group Chairman and the Group Chief Executive where immedate corrective actionis required. The Board Risk Committee has responsiblity for overseeing the management of the Company’s princpal risks as well as reviewng the effectiveness of the Group’s Enterprise Risk Management Framework. The Audit Committee monitors the integrty of the Company’s financal reporting, compliance and internal control environment. The risk management approach starting on page 258 describes the Group’s riskmanagementoversight committee structure. Our business is conducted withn a developed control framework, underpinned by policy statements and standards. There are written polices and standards designed to ensure the identficaton and management ofrisk, includng Credit Risk, TradedRisk, Treasury Risk, Operational andTechnology Risk, Information and Cyber Security Risk, Compliance Risk, Financal Crime Risk, Model Risk and Reputational and Sustainablity Risk. The Board has established a management structure thatclearly defines roles, responsiblites and reporting lines. 1The Group’s Risk Management Framework and System of Internal Control applies only to wholly controlled subsidaries of the Group, and not to Associates, Joint Ventures or Structured Entites of the Group. Delegated authorites are documented andcommunicated. Executive risk committees regularly review the Group’srisk profile. The performance of the Group’s businesses is reported regularly to senior management and the Board.Performance trends and forecasts, as well as actual performance against budgets and prior periods, are monitored closely. Financal informaton is prepared usingappropriate accounting polices, which areapplied consistently. Operationalprocedures and controls have beenestablished to faciltate complete, accurate and timely processing of transactions and the safeguarding ofassets. Thesecontrols include appropriatesegregationof duties, the regular reconcilation of accounts and the valuation of assets and positons. In respect of handling insde informaton, we have applied relevant controls on employees who are subject to handlinginsde informaton, includng controls overthe dissemnation of such informaton and their dealings in the Company’s shares. Such systems are designed to manage rather than elimnate the risk of failure to achieve business objectves and can only provide reasonable and not absolute assurance against material misstatement or loss. Employee polices and engagement 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 and dialogue. We continueto listen and acton feedbackfromcolleagues to ensure internal communicatons remain impactful and meaningful, in support of the Group’s strategy and transformation. In additon to the Bridge (ourinternalbusiness collaboration platform) which allows colleaguesto receive key updates, exchange ideas and provide feedback, we also leveragea range of channelsincludng email broadcasts, newsletters with customised content for each employee segment, audio and video calls, town halls and other staff engagement and recognitonevents. To continue to improve the way we communicate and ensure our employee communicatons remain 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 toour performanceand strategy. Our People Leaders alsoprovide guidance andhelp colleaguesunderstandtheir role in executingand 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 thathasenabledourcolleagues 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 and variousmanagementmeetings provide an importantplatform for colleagues to discuss and clarify key issues. Regular performance conversations provide the opportunity to discuss how indviduals, the team and the business area have contributed to our overall performance and, in year-end conversations, how any compensation awards relateto this. 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. ![]() 186 Standard Chartered – Annual Report 2021 Directors’ report Other disclosures The Board engages with and listens to the views of the workforce through several sources, includng through virtual, interactve engagement sessions. More informaton can be found on pages 113 and 114 in the Directors’ report. 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 inplace, 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 that 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 thirty days’ leave (through annual leave and public holidays), a minmum of twenty calendar weeks’ fully paid maternity leave, a minmum of two calendar weeks of leave for spouses or partners, and two calendar weeks foradoption leave.Combined,thisis above the International LabourOrganisat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) conventionsinclud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). 14.3 per cent of employees across 21 markets are covered by collective bargainng agreements and for employees not covered by collectivebargainng agreements, their working conditons and terms of employment are based on the Bank’s Group & Country polices andas per indvidual employment contracts issued by the Bank. The 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, coachingor mediaton. This caninclude issues of bullying, harassment, discrminaton and victmisaton, as well as concerns around conditons of employment (for example, health and safety, new working practices or the working environment). Employees can raise grievances to their People Leader or a Human Resources (HR) Representative. The global process toaddress grievances involves an HR representative and a member of the business reviewng the grievance, conducting fact findng into the grievance and providng a written outcome to the aggrieved employee. If a grievance is upheld, the next steps might include remedying a policy or process, or intiatng a discplinary review of the conduct of the subject of the grievance. The Group Grievance Standard and accompanying process is reviewed on a periodc basis in consultation with stakeholders across HR, Legal, Compliance and Shared Investigatve Services. Grievance trends are reviewed on a quarterly basis and action plansare developed to address any concerning trends. There is a distnct Group Speaking Up Policy which covers instances where an employee wishes to ‘blow the whistle’ on actual, plannedor potential wrongdoingby another employee or the Group. 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 underpin ourGroup Discplinary Standard. Dismssals due tomisconduct issues and/or performance (where required by law to follow a discplinary process) are governed by the 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 variances in place. Our Group Diversty and Inclusion Standard has been developed toensure a respectful workplace, with fairand 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 anappropriateworking environment. The Group aims to provide equality of opportunity for all, protect the dignty of employees and promote respect at work. All indviduals are entitled to be treated with dignty and respect, and to be free from harassment, bullying, discrminatonand victmisaton. Thishelps to support productive working conditons, decreased staff attriton, positve employee morale and engagement, maintans employee wellbeing, and reducespeople-related risk. All employees and contractors arerequired to takepersonal responsiblity tocomply with the Standard,includng conductingthemselves in amanner that demonstrates appropriate, non-discrminatory behaviours. The Group is committed toprovide equal opportunites and fair treatment in employment. We donotaccept unlawful discrminaton inour recruitment oremployment practices on any grounds includng but not limted to: sex, race, colour, nationalty, ethnicty, 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onor belief. We strive for recruitment, appraisals, pay and conditons, trainng, development, succession planning, promotion, grievance/discplinary procedures and employment terminaton practices that are inclusveand accessible; and that do not directly or indrectly discrminate. Recruitment, employment, trainng, development and promotion decisonsare based on the skills, knowledge and behaviour required to perform the role to the Group’s standards. Implied in all employment terms isthe commitment to equal pay for equal work. We will also make reasonable workplace adjustments (includng duringthe hirng process) to ensure all indviduals feel supported and are able to particpate fully and reach their potential. If employees become disabled, wewill proactively seek to support them with appropriate trainng and workplace adjustments where possible and exploreevery opportunityto ensure their employment continues. Health and safety Our Health, Safety and Wellbeing (HSW) programme covers both mentaland physical health andwellbeing. TheGroup complies withboth externalregulatory 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 exceedtheregulatory minmum. Compliance rates are reported at least biannually to each country’s Management Team. ![]() 187 Standard Chartered – Annual Report 2021 Directors’ report We follow the ILO code of practice on recording and notifcation of occupational accidents and diseases, as well as alignng to UK Health and Safety Executive, and ensuring we meet all local H&S regulatory reporting requirements. We record and report all work-related illness and inuries, includngsub-contractors, vistors andclients. HSW performance and risks are reported annually to the Group Risk Committee and Board 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-mandatedhealthcare, whichrepresent less than 0.5 per cent of the Group’s employees. All staff also have access to professionalcounselling 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 anexistng mental illness or a mental health criss. The mental health support is given until appropriate professional help is received, or the cris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. To date we have trained over 400 mental health first aiders in 42 markets, covering 95 per cent of colleagues. In 2021, we recorded no work-related fatalites or serious long-term work-related health issues in our staff, although 68 colleagues passed away from COVID-19 in non-work- related situatons. Whilstnot mandatory, we ‘strongly encourage’ vaccinaton againstCOVID-19 foremployees and have held vaccinaton drives where possible to assist colleagues and their familes to access vaccinatons. Major inuries (per the UK Health & Safety Executive defintion) increased slightly from 23 in 2020 to 24, with fractures the most common type of major inury (52 per cent). Overall, reported inuries reduced by six per cent, with ‘slips/trips/falls’ and ‘transport/commuting’ remainng the mostcommon causes of inury. Our inury rates remain aligned to, or better than industry benchmarks. Hazards and near miss reports decreased 42 per cent between 2020 and 2021, and all premises are inspected at least annually to identfy any hazards, risks and incdences of non-compliance. Throughout2021, the COVID-19pandemic continuedto impact health, safety and wellbeing. With lockdowns and restrictons continung across our markets throughout the year, weaccelerated our Future Workplace Now plans and approximately80per cent ofcolleagues adopted working from home arrangements. Workplace closures andrestricted 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 checklistis available forstaff 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. Major customers Our five largest customers together accountedfor 1.7 per cent of our total operating income in the year ended 31 December 2021. Major suppliers In 2021, $4.1 billon was spent with approximately 12,100 first tier suppliers. Of this, 73 per cent of the total spend was spent in the Asia region, with 19 per cent in Europe and the Americas, and eight per cent in Africa and the Middle East. Our five largest suppliers together accounted for 16 percent of total spend, with the largest ten amounting to 24 per cent of total spend. 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 Group engages with suppliers on environmentaland socialmatters, please see our Supplier Charter and Supplier Diversty and Inclusion Standard. As set out under the UK Modern Slavery Act 2015, the Group is required topublish a Modern Slavery Statement annually. The 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 Group has prevented modern slavery and human traffickng in its operations, financng and supply chainduring 2021. Our Supplier Charterand Supplier Diversty and Inclusion standard can be viewed at sc.com/en/group/suppliers/ Details of how we create value for our suppliers and other stakeholder groups can be found on pages 51 to 59 Productresponsiblity We aim to design and offer products based on client needs to ensure fair treatment and outcomes for clients. The 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. The Group does notmanufacture products andthereforedoesnot have a defined quality assurance process or recall procedures; nor does it sell or ship products that would be liable for return on heath and safety grounds. We have processes and guidelnes specifc to each of our client businesses, to promptly resolve clientcomplaints, understand andrespond to client issues. Conduct consideratons aregiven signficant weightng in front-line incentve structures to drive the right behaviours. For more informatonon our approach toproduct design, product pricng, treating customers fairly and protecting vulnerable customers, and incentvisng our frontline employees, see pages 51 and 52. For more informaton on fraud identficaton see pages 72 and 73. ![]() 188 Standard Chartered – Annual Report 2021 Directors’ report Other disclosures Safeguarding intellectual property rights The Group has processes in place to manage the Group’s intellectual property rights and respect third party intellectual property rights. The Group has complied with applicable intellectual property laws and regulations. Group Code of Conduct The Board has adopted a Group Code of Conduct (the Code) relating to the lawful and ethical conduct of business and this is supported by the Group’s valued behaviours. This has been communicated to all directors and employees, all of whom are expected to observe high standards of integrty and fair dealing inrelation to customers, employees and regulators in the communites in which the Group operates. Directors and employees are asked to recommit to the Code annually, and 99.6 per cent have completed the 2021 recommitment. AllBoardmembers haverecommittedto the Code. Managing environmental and social risk The Board is responsible for ensuring that high standards of responsible business are maintaned and that an effective control framework is in place. This encompasses risk associated with clients’ operations and their potential impact on the environment, includng climate change, and local communites. The Board recognises its responsiblity to manage these risks and that failureto manage them adequately could have adverse impact on stakeholders as well as the Group. The Board, via the Culture and Sustainablity Committee, reviews sustainablity priorties, and oversees the development of, and delivery against, public commitments regardingthe activtiesand/or businesses that theGroupwill or will not accept in alignment with our Here for good brand promise. At a management level, the CEO, CCIB is responsible for sustainablefinance, which incorporates E&S risk management. Led in 2021 by the Group Head, Conduct, Financal Crime and Compliance, across-business SustainablityForum is responsible fordeveloping and deliverng the Group’s broader sustainablity strategy. Standard Chartered has publicly committed to the recommendations of the Financal Stabilty Board’s Task Force on Climate-related FinancalDisclosures (TCFD) recommendations since 2017. Our comprehensive TCFDdisclosure ispublished in a standalone report which providesinformaton in a readily identfiableand accessible format for all interested stakeholders. A summary of the TCFD report can be found on pages 67 to 69, with the full report available at sc.com/tcfd Community engagement We collaborate with local partners to support social and economic development in communitesacross our markets. We are committed to sustainable social and economic development throughour business, operations and communites. We aim to create more inclusve economies by sharing our skillsand expertise anddeveloping 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. For more informaton on Futuremakers, as well as our employeevolunteering and community investment expenditure, please see pages 76 and 77 in the Sustainable and Responsible Business section. ESG reporting guide We comply with the requirements for environmental,social and governance reportingunder Appendix 27 ofthe Hong Kong Listng Rules with the exception of A1.3 on hazardous waste and A1.6 on production and handling of hazardous waste and A2.5 on packaging. As an office-based financal services provider, we generate minmal hazardous waste or packaging material. As such, these issues are not material and we do not report them. Environmental impact of our operations We aim to minmise the environmental impact of our operations as part of ourcommitment 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. Disclosures related totheGroup’s environmental polices as well as GHG, energy efficency, water and waste performance metrics are included in the sustainable and responsible business section of the Strategic report on pages 74 and 75, and in the supplementary environment data table on page 451. Our reporting methodology is based upon the World ResourcesInstitute/World BusinessCouncilfor Sustainable Development Greenhouse Gas Protocol Corporate Accounting and Reporting Standard (Revised Editon). We report on all emisson sources required under the Companies Act 2006 (Strategic Report and Directors’ Reports) Regulations. Using conversion factors from the International Energy Agency 2021 Emissons Factors and the UK Government’s Department for Business, Energy& Industrial Strategy, emissons arereported inmetric tonnesof carbon dioxde equivalent (CO 2 e), encompassing the six Kyoto gases. Scope 1 emissons are defined as arisng from the consumption of energy from direct sources, during the use of property occupied by the Group. On-site combustion of fuels includng diesel, liquefed petroleum gas (LPG) and natural gas, is recorded using meters, or where metering is not available, collated from fuel vendor’s invoces. Emissons from the combustion of fuel inGroup-operated transportation devices, as well as fugitve emissons, are excluded as being immateral. Scope 2 emissons are defined as arisng from the consumption of indrect sources of energy, during the use of property occupied by the Group. Energy generated off-site in the form of purchased electricty, heat, steam or cooling, is collected as kilowatt hours consumed using meters or where metering is not available,collated from vendor’s invoces. Applicable to both Scope 1 and 2 emissons, we include all indrect and direct sources of energy consumed by buildng services(amongstother activties) withnthe space occupied by the Group, leased or owned. This can include base buildng services under landlord control, but over which we typically hold a reasonable degreeof influence. All data centre facilties with conditoning systems and hardware remainng under the operational control of the Group areincluded in thereporting. Thisdoes not include energy used at outsourced data centre facilties which are captured under Scope 3. Scope 3 emissons occur as a consequence of the Group’s activties but arisng from sources not controlled by us. Business air travel data is collected as person kilometres travelled by seating class, by employees of the Group. ![]() 189 Standard Chartered – Annual Report 2021 Directors’ report Data is drawn from country operations that have processes in place to gather accurateemployee airtravel datafrom travel management companies. Flights are categorised between short, medium and long-haul trips. Emissons from other potential Scope 3 sources such as electricty transmisson and distrbution line losses are not currently accounted for on the basis that they cannot be calculatedwith an acceptable level of reliablity or consistency. We do however capture Scope 3 emissons from outsourced data centres and business air travel exclusively in terms of carbon emissons, both managed by third parties. Further informatonon the princples and methodologies used to calculate the GHG emissons of the Group can be found in our reporting critera document 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onof results. Accordingly, the operatingincome used in this inventory corresponds to the same time period rather than the calendar year used in financal reporting. Assurance Our Scope 1 and 2 emissons are assured by an independent body, Global Documentation, against the requirements of ISO14064. Indicator 2021 20202019 Units Headcount (at year end) 81,957 83,657 84,398 Headcount Net internal area of occupied property covered by reporting 998,571 1,050,414 1,154,999 m 2 Annual operating income from 1 October to 30 September 14,541 15,233 15,200 $millon Greenhouse gas emissons (location based) Scope 1 emissons(combustion of fuels) 2,902 3,988 4,542 tonnes CO 2 eq/year Scope 2 emissons (purchased electricty) 82,761 113,870 141,771 tonnes CO 2 eq/year Scope 1 & 2 emissons 85,662 117,858 146,313 tonnes CO 2 eq/year Scope 1 & 2 emissons (UK and offshore area only) – –– tonnes CO 2 eq/year Scope 3 emissons with distance uplift (air travel) 3,654 33,930 94,043 tonnes CO 2 eq/year Scope 3 emissons (Global Data Centre) 43,132 29,562 46,362 tonnes CO 2 eq/year Total Scope 1, 2 & 3 emissons 132,448 181,350 286,718 tonnes CO 2 eq/year Total Scope 1, 2 & 3 emissons/headcount 1.62 2.17 3.40 tonnes CO 2 eq/ headcount/year Total Scope 1, 2 & 3 emissons/operating income 9.11 11.91 18.86 tonnes CO 2 eq/ $m/year Environmentalresource efficency Indirect non-renewableenergyconsumption 142.4 184.2 222.6 GWh/year Indirect renewable energy consumption 27.5 14.1 17.0 GWh/year Direct non-renewable energy consumption 12.4 16.5 18.8 GWh/year Direct renewable energy consumption 0.7 0.800.80 GWh/year Energy consumption (Group) 183 215.6 258.3 GWh/year Energy consumption(UK and offshore area only) 5 GWh/year Further detail on our environment performance, as well as associated assumptions and methodologies can be found on pages 451 and 452 . Electroniccommunicaton The Board recognises the importance of good communicatons with allshareholders. Directors are in regular contactwith our insttutional shareholders and general presentations are made when we announce our financal results. The AGM presents an opportunity to communicatewithall shareholders. Our shareholders are encouragedto receiveour corporate documents electronically. The annual and intermfinancal statements, Notice of AGM and any divdend circulars are all available electronically. If you do not already receive your corporate documents electronically and would like to do so in future, please contact ourregistrars attheaddress on page 457. Shareholders are also able to vote electronically on the resolutions being put to the AGM through our registrars’ website at investorcentre.co.uk. Annual General Meeting Our 2022 AGM will be held at 11:00am (UK time) (6:00pm Hong Kong time) on 4 May 2022. Further details regarding the format, location and business to be transacted will be disclosed withn the 2022 Notice of AGM. Our 2021 AGM was held on 12 May 2021 at 11:00am (UK time) (6:00pm Hong Kong time). Special business at the meeting included the approval of the power to allot ECAT1 Securites for cash without certain formalites. All resolutions were passed at the meeting, the details of which can be viewed on our website. ![]() 190 Standard Chartered – Annual Report 2021 Directors’ report Other disclosures Non-audit services The Group’s non-audit services policy (“the policy”) was reviewed and approved by the Audit Committee on 28 October 2021. The policy is based on an overridng princple that, to avoid any actual or perceived conflicts of interest, the Group’s auditor should only be used when either there is evidence that there is no alternative in terms of quality and there is no conflict with their duties as auditor. EY can be used where the work is required by a regulator or competent authority. The policy clearly sets out the critera for when the Audit Committee’s prior written approval is required. The policy requires a conservative approach to be taken to the assessment of requests for EY to provide non-audit services. Subject to the overridng princple, the Audit Committee’s view is that EY can be of value in a range of non-audit service activties and should be allowed to tender subject to the terms of the policy. The Group is required to take a conservative approach to interpretngthe potential threats to auditor independence and requires commensurately robust safeguards against them. UK legislaton and guidance from the FRC sets out threats to auditindependence includng self-interest, self-review, familarity, taking of a management role or conducting advocacy. In particular, maintaning EY’s independence from the Group requires EY to avoid taking decisons on the Group’s behalf. It is also recognised as essential that management retains the decison-making capabilty as to whether to act on advice given by EY as part of a non-audit service. This means not just the abilty to action the advice given, but to have sufficent knowledge of the subject matter to be able to make a reasoned and independent judgement as to its validty. All of this is contained withn the policy. By wayof (non-exhaustive) illustratonof the applicatonof the princples set out in the policy, the following types of non-audit services are likely to be permissble under the policy: • Reviews of interm financal informaton and verifcation of interm profits – the Group would also extend this to work on investor circulars in most foreseeable circumstances • Extended audit or assurance work on financal informaton and/or financal or operational controls, where this work is closely linkedto the audit engagement • Agreed upon procedures on materials withn or referenced in the annual report of the Group or an entity withn the Group • Internal control review services Strictly prohibted under the policy: • Bookkeeping, informaton technology and internal audit services • Corporate finance services, valuation services or litgationsupport • Tax or regulatory structuring proposals • Services where fees are paid on a contingent basis (in whole or in part) • Consulting services that actively assist in running the business in place of management as opposed to providng or validatng informaton, whichmanagement then utilses in the operation of the business The policy is not a prescribed list of non-audit services that EY is permitted to provide. Rather, each request for EY to provide non-audit services will be assessed on its own merits. The Audit Committee believes that such a case-by-case approach best accommodates (i) the need for the appropriate rigour andchallenge to be applied toeach request for EY to provide non-audit services while (i) preserving sufficent flexiblity for the Group to engage EY to provide non-auditservices where they areable to deliver particular value to the Group and where the proposed services can be provided without compromisng EY’s objectvity and independence. To ensure that the Group will comply with a cap that limts fees on non-audit services provided by EY to under 70 per cent of the average Group audit fee from the previous three consecutive financal years, (which will apply from EY’s fourth year of being the Group’s external auditor), the policy requires that annual non-audit service fees are lower than 70 per cent of the average annual Group audit fee up to this time. The caps exclude audit related non-audit services and services carried out pursuant to law or regulation. For 2021, without deducting non-audit service fees which were required by law or regulation and performed by EY, the ratio was 0.4:1. Details relating to EY‘s remuneration as the Group statutory auditorand a descripton ofthe broad categories of the types of non-audit services provided by EY are given in Note 38 to the financal statements. Auditor The Audit Committee reviews the appointment of the Group’s statutory auditor, its effectiveness and its relationshp with the Group, whichincludes monitorng our use ofthe auditors for non-auditservices andthe balance ofaudit and non-audit fees paid. Following an annual performance and effectiveness review of EY, it was felt that EY is considered to be effective, objectve and independent inits role as Group statutoryauditor. Each director believes that there is no relevant informaton of which our Group statutory auditor is unaware. Each has taken all steps necessary as a director to be aware of any relevant audit informatonand to establish thatthe Group statutory auditor is madeaware of any pertinentinformaton. EY will be in attendance at the 2022 AGM. A resolution to re-appoint EY as auditor was proposed at the Company’s 2021 AGM and was successfully passed. EY is a Public Interest Entity Auditor recognised in accordance with the HongKong Financal ReportingCouncil Ordinance. By order of the Board Scott Corrigan Interim Group Company Secretary 17 February 2022 Standard Chartered PLC Registered No. 966425 ![]() 191 Standard Chartered – Annual Report 2021 Directors’ report #### Statement of directors’ responsiblites The directors areresponsiblefor preparing the Annual Report and the Group and Company financal statements in accordance with applicablelawand regulations. 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 accordancewith UK-adopted internatonal accounting standardsin conformity with the requirements of the Companies Act 2006. • The Group financal statements have been prepared in accordancewithUK adopted internatonal accounting standardsand InternationalFinancal Reporting Standards as adopted bythe European Union; • The Company financal statements have beenproperly 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 accounting polices and then 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 areresponsiblefor keeping adequate accounting records that are sufficent to show and explain the Company’stransactions and disclose withreasonable 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 1 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. 1The Group’s Risk Management Framework and System of Internal Control applies only to wholly controlled subsidaries of the Group, and not to Associates, Joint Ventures or Structured Entites of the Group. Under applicable law and regulations, the directors are also responsible for preparinga Strategic Report, Directors’Report, Directors’ Remuneration Report and Corporate Governance Statement that complies with that law and those regulations. The directors are responsible for the maintenance and integrty of the corporate and financal informaton included on the Company’s website. Legislaton in the UK governing the preparation and dissemnation offinancal statements may differ from legislatonin other jursdictons. Responsiblity statement of the directors in respect of the annual financal report 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onof the Companyand the undertakings included in the consolidaton taken as a whole, together with a descriptonof the emergingrisks and uncertaintesthat they face We consider the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the informaton necessaryfor shareholders to assess the Group’s positon and performance, business model and strategy. By order of the Board Andy Halford Group Chief Financal Officer 17 February 2022 ![]() 192 Standard Chartered – Annual Report 2021 Risk review ![]() 193 Standard Chartered – Annual Report 2021 #### Risk review and Capital review 194Risk index 196Risk update 199Risk profile 258Enterprise RiskManagement Framework 288Capital review ª Creatingthe ## workplace ## of the future º In 2021, we implemented Future Workplace, Now – hybrid-working which combines virtual and office- based working, with greater flexiblity in working patterns and locations. The programme has been rolled out in 28 markets – includng Hong Kong, Singapore, the United Kingdom, the United States, the United Arab Emirates as well as our Global Business Service locations in India and Malaysia – where 73 per cent of employees have agreed flexible-workingarrangements. Read more online at www.sc.com/hybridworkng Risk review and Capital review ![]() 194 Standard Chartered – Annual Report 2021 Risk review Index #### Risk review and Capital review Risk Index Annual Report and Accounts Pillar 3 Report Risk update 196 Risk profileOur risk profile in 2021 199 Credit Risk 200 32 - 80 Basis of preparation 200 Credit Risk overview 200 IFRS 9 expected credit loss princples and approaches 200 Maximum exposure to Credit Risk 202 Analysis offinancalinstrumentby stage 203 Credit quality analysis 205 58 - 71 • Credit quality by client segment 205 • Credit quality by geographic region 210 Movement in gross exposures and credit imparment for loans and advances, debt securites, undrawn commitments and financal guarantees 211 Movement of debt securites, alternative Tier 1 and other eligble bills 213 Analysis ofstage 2 balances 218 53 - 56 Credit imparmentcharge 218 COVID-19 relief measures 219 Problem credit management and provisoning 220 • Forborne and other modifed loans by client segment 220 • Forborne and other modifed loans by region 221 • Credit-impared (stage 3) loans and advances by client segment 222 • Credit-impared (stage 3) loans and advances by geographic region 222 Credit Risk mitgation 222 71 - 73 • Collateral 222 • Collateral held on loans and advances 223 • Collateral– Corporate, Commercial and Institutonal Banking 223 • Collateral– Consumer, Private and Business Banking 224 • Mortgage loan-to-value ratios by geography 225 • Collateraland other creditenhancements possessed or called upon 225 • Other Credit Risk mitgation 226 Other portfolio analysis 226 • Maturity analysis of loans and advances by client segment 226 • Credit quality by industry 227 • Industry and Retail Products analysis of loans and advances by geographicregion 228 • Vulnerable sectors 229 • Debt securites and other eligble bills 232 IFRS 9 expected credit loss methodology 233 2 Compositon of credit imparment provisons 234 TradedRisk 245 81 - 96 Market risk changes 245 Counterparty Credit Risk 248 Derivatve financal instruments Credit Risk mitgation 248 Liqudity and Funding Risk 248 Liqudity and funding risk metrics 249 Encumbrance 251 Liqudity analysis of the Group’s balance sheet 253 Interest Rate Risk in the Banking Book 256 Operational and Technology Risk 257 5 Operational Risk profile 257 Otherprincpalrisks 257 ![]() 195 Standard Chartered – Annual Report 2021 Risk review and Capital review Risk Index Annual Report and Accounts Pillar 3 Report Risk management approach Enterprise Risk Management Framework 258 4 -5 Princpal Risks 264 4 Emerging Risks 280 Capital Capital summary 288 CRD Capital base 289 12 - 15 Movement in total capital 290 Risk-weighted assets 291 26 - 29 UK Leverage ratio 293 30 The following parts of the Risk review and Capital review form part of these financal statements and are audited by the external auditors: • a) Risk review: Disclosures marked as ‘audited’ from the start of Credit risk section (page 200) to the end of Other princpal risks in the same section (page 257); and • b) Capital review: Tables marked as ‘audited’ from the start of ‘CRD capital base’ to the end of ‘Movement in total capital’, excluding ‘Total risk-weighted assets’ (pages 289 to 290). ![]() 196 Standard Chartered – Annual Report 2021 Risk review Risk update #### Risk update All risk types, both financal and non-financal, are managed and reported in accordance with the Group’s Enterprise Risk Management Framework. Our key highlghts from the past year are shown here. Our portfolio quality Wide-ranging disrupton to supply chainsand risng inflaton levels, in additon to the human cost of the pandemic, continued to place intense pressure onthe majorty ofour markets. Despite these extreme challenges, we have built a solid foundation that has helped us to deliver a good performance with a resilent risk profile. This year demonstrated our commitment to strong andsustainable growth, with continued improvements seen in a number of our metrics since the end of 2020. Credit Risk remains elevated as the Group continues tomonitor the impact of thepandemic and ongoing volatilty in the real estate sector in China. Through our stress testing capabilties and extensive portfolio reviews, we identfied and proactively managed a number of portfolios that were at risk, especially areas with higher vulnerabilty to COVID-19 and volatile commodity prices, such as Aviaton, Hospitalty and Oil & Gas. To support our clients, we continued to enact comprehensivesupport schemes for retail and corporate customers, includng loan and interest repayment holidays, covenant relief, fee waivers or cancellations, loan extensions and new facilties. In the second half of the year, we began to see signs of recovery in some markets as actions taken by governments and vaccine roll-outs helped to alleviate the economic effects of the pandemic. However, the resurgence of COVID-19 infectons and new variants saw increased cases as 2021 came to a close, and lockdowns were reintroduced in a number of territores. We remain viglant as the recovery remains uneven globally, with some countries increasng reliance on vaccines as a means of managing the pandemic and other countries using a wider range of measures. The threat of prolonged weak economic outlooks may lead to a sustained period of increased risk aversion, uncertainty and emerging risks. The Group’s total gross loans and advances in 2021 were $304.1 billon, an increase of $15.8 billon from 2020. Stage 2 and 3 loans have improved since 2020 by $7 billon to $24.9 billon, as we continue to focus on high-quality orignation. Stage 3 loans decreased to $8.1 billon (2020: $9.2 billon), with the overall contributon to the total remainng unchanged at 3 per cent. In Corporate, Commercial and Institutonal Banking, stage 1 gross loans increased by $11.4 billon to $122.4 billon, representing 85 per cent oftheportfolio (2020:80per cent), on the back of transfers from stage 2 and continued focus on orignation ofinvestment gradelending. Compared to 2020, exposure in early alerts decreased by 49 per cent to $5.5 billon (2020: $10.7 billon), mainly due to reductions in counterparty exposure and clients being removed from early alert. While early alerts have decreased, the Group remains viglant in view of persistent challenging conditons in some markets and sectors. Credit Grade 12 balances decreased to $1.7 billon (2020: $2.2 billon) mainly due to repayments and outflows to non-performing loans, that were partly offset by sovereign rating downgrades. The percentage ofinvestment grade corporate exposure has also increased to 69 per cent compared to 62 per cent a year ago, reflecting an increase in repurchase agreement balances and high-quality orignations. Exposure to our top 20 corporate clients as a percentage of Tier 1 capital has increased by 1 per cent to 61 per cent (2020: 60 per cent), driven by increased exposure to investment gradeclients. The Corporate, Commercial and Institutonal Banking portfolios remain predominantly short-tenor and continue tobe diversfied across industry sectors, products, andgeographies. Our Consumer, Private and Business Banking portfolio remains stable and resilentdespite ongoingchallenges posed by the pandemic, with stage 1 gross loans increasng by $8.0 billon in 2021 driven by growth in Mortgage and Secured wealth products.Stage 1 loans represent 97percent of the Consumer, Private and Business Banking portfolio (2020: 97 per cent) with 96 per cent rated as ‘Strong’. Stage 2 loans reduced by $0.7 billon, mainly driven by mortgage loans movement from stage 2 tostage 1 due to forward-looking macroeconomic outlook improvement. Stage 3 loansremain stable at1 per cent of the portfolio. The majorty of Consumer, Private and Business Banking products continue to be fully secured loans at 86 per cent of total loans (2020: 86 per cent). The overall average loan-to-value ofthemortgage portfolio remains low at 41 per cent. The unsecured portfolio has remained flat compared to the previous year and continues to make up a small proportion of total Consumer, Private and Business Banking exposure. Average Group Value at Risk (VaR) in 2021 was $54.8 millon, a signficant decrease compared to the previous year (2020: $97.6 millon) due to extreme market movements from 2020 dropping out of the one-year VaR time horizon. However, volatilty started to increase in the second half of 2021, driven by the impact of new COVID-19 variants. Trading activties haveremained relatively unchanged and primarly client driven. Key highlghts 2021 • Asset quality has continued to improve in a challenging macroeconomic environment • Credit imparment signficantly reduced across allstages • The Group has maintaned a strong liqudity and capital positon ![]() 197 Standard Chartered – Annual Report 2021 Risk review and Capital review The Group maintaned strong liqudity ratios despite the continued impact of the COVID-19 stress. The liqudity coverage ratio (LCR) has remained unchanged at 143 per cent, despite revisng our approach to calculating the LCR. We have re-assessed the methodology to better reflect the portabilty of liqudity across the Group, while still considerng currency convertiblity and regulatory intra group limts. TheGroup’s advances-to-deposits ratio has decreased by 2 per cent to 59.1 per cent, driven by an 8 per cent growth in customer deposits, most of which came from corporate customers. Customer loan growth was mainly from mortgages in Singapore and Hong Kong, and corporate loans across the Group. The Group’s CET1 capital decreased by 28 basis points to 14.1 per cent (2020: 14.4 per cent). Further details, includng explanation of pro forma changes as at 1 January 2022, can be found in the Capital Review section on Page 288. Key indcators 2021 20202019 Group totalbusiness 1 304.1 288.3 274.3 Stage 1 loans ($ billon) 279.2 256.4 246.1 Stage 2 loans ($ billon) 16.8 22.7 20.8 Stage 3 loans, credit-impared ($ billon) 8.1 9.2 7.4 Stage 3 cover ratio 58% 58%68% Stage 3 cover ratio (includng collateral) 75% 76% 85% Corporate, Commercial &InstitutonalBanking Investmentgrade corporate net exposures as apercentage of total corporate netexposures 69% 62% 61% Loans and advances maturing in one year or less as a percentage of total loans and advancesto customers 66% 61% 62% Early alert portfolio net exposures ($ billon) 5.5 10.7 5.3 Credit grade 12 balances ($ billon) 1.7 2.2 1.6 Aggregate top 20 corporate net exposures as a percentage of Tier 1 capital 61% 60% 56% Collateralisaton of sub-investment grade net exposures maturing in more than one year 49% 46% 45% Consumer, Private& Business Banking Loan-to-value ratio of Consumer, Private & Business Banking mortgages 41% 45% 45% 1These numbers represent total gross loans and advances to customers. COVID-19 A number of management actions were taken throughout the year to mitgate the effect of COVID-19 on our portfolios and risk profile, informed by stress testing of various COVID-19 related scenarios anddeep-dives on specifcportfolios. Various short-term reliefmeasures were implemented and we have increased engagement with our customers to find appropriate financng optionswhereavailable. This includes enhancing our monitorng of facilty drawdowns, loan and interest repayment holidays, covenantrelief, fee waivers or cancellations, loan extensions and new facilties. In Corporate, Commercial and Institutonal Banking, 0.2 per cent of the portfolio are subject to relief measures. Around 68 per cent of the amounts approved are for tenor extensions of 90 days or less and approximately 17 per cent of the reliefs granted are to clients in vulnerable sectors. In Consumer, Private and Business Banking, less than 1 per cent of total Consumer, Private and Business Banking exposure has had relief measures approved as at 31 December 2021, of which 51 per cent is fully secured. Through the use of customer surveys and analysis ofthe COVID-19 impact anddelinquency trends, we have identfied a higher-risk cohort of Business Banking customers which are being actively managed. 56 per cent of the Business Banking portfolio is fully secured by property or government guarantees. While the macroeconomic environment has stabilsed for the majorty of the markets in our footprint, we continue to be cognisant of the potential longer-term impact, especially as relief measures have now been eased in most of our major markets. We are managing exposures to a set of identfied vulnerable sectors includng Aviaton, Oil & Gas, Commodity Traders, Metals & Minng, Commercial Real Estate and Hotels & Tourism particularly closely. These sectors represent 28 per cent (31 December 2021: 27 per cent) of the total net exposure in Corporate, Commercial and Institutonal Banking, with the increase of 10 per cent to $72.5 billon (2020: $65.6 billon) largely due tohigher levels ofundrawn commitments and financal guarantees, particularly in the Commodity Traders and Commercial Real Estate sectors. Stage 3 loans Overall, stage 3 gross loans and advances to customers decreased by 12 per cent in 2021, from $9.2 billon to $8.1 billon. Stage 3 provisons decreased by $0.7 billon to $4.7 billon. In Corporate, Commercial and Institutonal Banking, gross stage 3 loans decreased by $1.1 billon compared with 31 December 2020 due to debt sales and repayments in Asia, and Africa and Middle East regions. Provisons decreased by $0.7 billon to $3.9 billon driven by repayments and write-offs. Inflows into stage 3 were lower by 53 per cent at $1.7 billon, compared with $3.6 billon in 2020. The new inflows in 2021 were mainly in Asia, and Africa and the Middle East. Gross stage 3 loans in Consumer, Private and Business Banking remained broadly stable at $1.6 billon. ![]() 198 Standard Chartered – Annual Report 2021 Risk review Risk update The stage 3 cover ratio (excluding collateral) in the total customer loan book remained at 58 per cent. Corporate, Commercial and Institutonal Banking cover ratio decreased by 1 per cent to 59 per cent as a result of write-offs and new accounts with a lower coverage than existng stage 3 loans. The Consumer, Private and Business Banking cover ratio is 51 per cent (2020: 47 per cent) primarly due to a new provison taken on a Business Banking client. The cover ratio includng collateral decreased to 75 per cent (2020: 76 per cent). Credit imparment At Group level, total credit imparment charge includng the restructuring portfolio signficantly reduced to $0.3 billon (2020: $2.3 billon) representing a loan loss rate of 7 basis points (bps) of average customer loans and advances (2020: 66 bps). Decreases were seen across all stages, with stage 3 imparment down by $1.3 billon, majorty of which was from Corporate, Commercial andInstitutonal Banking. Stage 1 and 2 imparment decreased by $749 millon, partly due to reduction in stage 2 exposures from lower levels of early alerts, additonal collateral and improvement in probabilty of default, and partly due toimprovng macroeconomic forecasts and reduction in COVID-19 management overlays. Corporate, Commercial and Institutonal Banking saw a release of $44 millon, a signficant improvement compared with the credit imparment charge of $1.5 billon last year. Stage 1 and 2 imparment is a net charge of $23 millon mainly driven by charges from a post model adjustment for multiple economic scenarios and the sovereign downgrade of Sri Lanka. The COVID-19 management overlays also reduced by $95 millon although this was offset by a new, separately assessed management overlay of $95 millon over the end of 2021 for the Commercial Real Estate exposures in China. Stage 3 credit release of $67 millon was due to signficant recoveries during the year. Consumer, Private and Business Banking credit imparment has decreased (2021: $285 millon, 2020: $741 millon). Stage 1 and 2 imparment were signficantly lower compared with 2020 at $32 millon, mainly due to ECL reversals as the forward-looking macroeconomic outlook improved in relative terms. Stage 3 credit imparment of $253 millon decreased by 23 per cent driven by better recoveries. Central and other items saw a total imparment of $22 millon primarly due to multiple economic scenario post model adjustments. There was a net $9 millon imparment release from the Group’s discontnued businesses. 2021 2020 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 businessportfolio Corporate, Commercial & InstitutonalBanking 1 23 (67) (44) 390 1,139 1,529 Consumer, Private & Business Banking 1 32 253 285 413 328 741 Central & other items 23 (1) 22 24 – 24 Credit imparmentcharge/(release) 78 185 263 827 1,467 2,294 Restructuring businessportfolio Others (2) (7) (9) – 3131 Credit imparmentcharge/(release) (2) (7) (9) – 3131 Total credit imparment charge/ (release) 76 178 254 827 1,498 2,325 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 Further details of the risk performance for 2021 is set out in the Risk profile section (pages 199 to 257) ![]() 199 Standard Chartered – Annual Report 2021 Risk review and Capital review #### Risk profile Our risk profile in 2021 Our Enterprise Risk Management Framework (ERMF) enables us to closely manage enterprise-wide risks with the objectve of maximsingrisk-adjusted returns while remainngwith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 usto 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 thechallenges ofthe ongoing pandemic,our solid foundation has helped usto deliver a good 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 duringthepandemic. We remain viglant to the continued impact of COVID-19 and an uneven global recovery. We are particularly closely managing exposures in identfied vulnerable sectors includngAviaton, Commercial Real Estate and Oil & Gas. The table below highlghts the Group’s overall risk profile associatedwith ourbusiness strategy. We have a robust risk management approach supported through our well-establishedERMF • 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 throughthe relevant PRTs • Given their integrated nature, Digtal Asset Risk and Third-Party Risk, in additon toClimate Risk, have been categorised as IRTs in the ERMF • 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-assessments performed in our footprint markets reflect the maturing ERMF adoptionwith emphasis on first-line ownership of risks • The more mature financal risks continued to bemore effectively managed on a relative basis compared to non-financalrisks in 2021, and other aspects of the ERMF are established and operating to a more consistent standard • 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nits businesses, functions and across the footprint, as well as management of risks which are integrated in nature Further details on the ERMF can be found in the Risk managementapproach sectionon page 258 Our portfolios exhibt a resilent risk profile despite achallenging macroeconomic environment • The proportion of the Group’s gross loans and advances to customers in stage 1 and 2 has improved to 92 per cent and 6 per cent respectively (from 89 per cent and 8 per cent respectivelyin 2020) • Exposure to investment grade clients has increased to 69 per cent (2020: 62 per cent) reflecting an increase in repurchase agreement balances and high-quality orignations • There has been a 49 per cent decrease to $5.5 billon (2020: $10.7 billon) in early alerts exposure, mainly due to reductions in counterparty exposure and clients being removed from early alert • The totalcredit imparmentcharge signficantly reduced to $0.3 billon (2020: $2.3 billon), with decreases seen across all three stages • Stage 3 gross loans decreased to $8.1 billon (2020: $9.2 billon), with the overall contributon to the total remainng unchanged at 3 per cent. The overall stage 3 cover ratio remained stable at 58 per cent (2020: 58 per cent) • The majorty of our Consumer, Private & Business Banking products continue to be fully secured loans (stable at 86 per cent of the portfolio). The overall average loan-to-value of the mortgage portfolio is low at 41 per cent Our capital and liqudity positons continue to be at healthy levels • We remain well capitalsed and our balance sheet remains highly liqud • The Group liqudity coverage ratio has remained stable at 143 per cent • We continue to have a strong advances-to-deposits ratio • Our customer deposit base is diversfied by type and maturity • Our Common Equity Tier 1 ratio is 14.1 per cent (2020: 14.4 per cent). Further details, includngexplanation of pro forma changes as at 1 January 2022, can be found in the Capital Review section on page 288 ![]() 200 Standard Chartered – Annual Report 2021 Risk review Risk profile CreditRisk (audited) Basis of preparation Unless otherwise stated the balance sheet and income statement informaton presented withn thissection isbased 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 repurchaseagreement balancesheld at amortisedcost, 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 contractualobligat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al guarantees. Staging offinancal instruments Financal instruments that arenot already credit-impared are orignated into stage 1 and a 12-month expected credit loss provisonis recognised. Instruments will remain in stage 1 until they are repaid, unless they experience signficant credit deterioraton (stage 2) or theybecome credit-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 atorignation. The framework used to determine a signficant increase in credit risk is set out below. 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. Title Descripton Supplementary informaton Page 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 breachesmodel 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 thoseissueshave been remedied. IFRS 9 methodology Determinng lifetme expected credit loss for revolving products Post model adjustments 233 233 235 Incorporation of forward-looking informaton The determinaton of expected credit loss includes various assumptions and judgements inrespectof forward-looking macroeconomic informaton. Refer to pages 235 to 239for incorporationof 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 offorward-looking informaton andimpact of non-linearty Forecast ofkey macroeconomic variablesunderlying the expected credit loss calculation Management overlay and sensitvityto macroeconomic variables 235 236 239 Signficant increasein 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 withtheriskof 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 usingquantitatve andqualitatvecriter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vecritera per segment: Corporate, Commercial & Institutonal Banking clients Consumer Banking clients Private Banking clients Debt securites 242 242 243 243 243 243 243 Stage 1 • 12-month ECL • Performing Stage 2 • Lifetmeexpectedcredit loss • Performing but has exhibted signficant increase in credit risk (SICR) Stage 3 • Credit-impared • Non-performing ![]() 201 Standard Chartered – Annual Report 2021 Risk review and Capital review Title Descripton Supplementary informaton Page 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 consistentwith internal Credit Risk management and theregulatory defintion of default. Unlikely to pay factors include objectve conditons such asbankruptcy, 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 Banking clients Corporate, Commercial & Institutonal Banking and Private Banking clients 243 243 Transfers betweenstages 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 211 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nalcashflows 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 theinstrument. 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 Forbearanceand other modifed loans 219 220 Governanceand applicaton of expert credit judgement in respectof expected credit losses The models used in determinng ECL are reviewed and approved by the 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 themonitorng thresholdsthenan 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 judgementwhich hadan impact on governance processes, with the output of the expected credit models assessed by the IFRS9 ImpairmentCommittee. Group Credit Model Assessment Committee IFRS 9 Impairment Committee 244 244 ![]() 202 Standard Chartered – Annual Report 2021 Risk review Risk profile 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 $36 billon to $796 billon (2020: $760 billon). Cash and balances at Central banks increased by $6 billon and loans and advances to customers grew by $17 billon. Of the $17 billon increase, $6 billon was in Corporate, Commercial and Institutonal Banking. Consumer, Private and Business Banking increased by $7.4 billon largely in Mortgage and Secured wealth products, and Central and other items increased by $3 billon. There was an increase of $21 billon in fair value through profit and loss instruments and an increase of $10 billon in investment securites debt, offset by a $17 billon decrease in derivatve exposures. 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-balancesheet Cash and balances at central banks 72,66372,663 66,71266,712 Loans and advances to banks 1 44,383 1,079 43,304 44,347 1,247 43,100 of which – reverse repurchase agreements and other simlar secured lending 7 1,0791,079 – 1,2471,247 – Loans and advances to customers 1 298,468 131,397 167,071 281,699 123,516 158,183 of which – reverse repurchase agreements and other simlar secured lending 7 7,3317,331 – 2,9192,919 – Investment securites – debt securites and other eligble bills 2 162,700162,700 152,861152,861 Fair value through profit or loss 3, 7 123,234 80,009 –43,225 102,259 63,405– 38,854 Loans and advances to banks 3,8473,847 3,8773,877 Loans and advances to customers 9,9539,953 9,3779,377 Reverse repurchaseagreements and other simlarlending 7 80,00980,009 – 63,40563,405– Investment securites – debt securites and other eligble bills 2 29,42529,425 25,60025,600 Derivatve financal instrument s4, 7 52,445 8,092 39,502 4,851 69,467 10,136 47,097 12,234 Accrued income 1,6741,674 1,7751,775 Assets held for sale 5252 8383 Other assets 5 40,06840,068 40,97840,978 Total balance sheet 795,687 220,577 39,502 535,608 760,181 198,304 47,097 514,780 Off-balancesheet 6 Undrawn commitments 158,5233,848 154,675 153,4034,432 148,971 Financal guaranteesand other equivalents 58,535 2,240 56,295 53,832 2,252 51,580 Total off-balance sheet 217,058 6,088 – 210,970 207,235 6,684 – 200,551 Total 1,012,745 226,665 39,502 746,578 967,416 204,988 47,097 715,331 1Net of credit imparment. An analysis of credit quality is set out in the credit quality analysis section (page 205). Further details of collateral held by client segment and stage are set out in the collateral analysis section (page 222) 2Excludes equity and other investments of $737 millon (31 December 2020: $454 millon). Further details are set out in Note 13 Financal instruments 3Excludes equity and other investments of $5,861 millon (31 December 2020: $4,528 millon). Further details are set out in Note 13 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 valuesof applicablederivatve transactions 5Other assets include Hong Kong certifcates of indebtedness, 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 includesguarantees ![]() 203 Standard Chartered – Annual Report 2021 Risk review and Capital review 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 againsteach class of financalinstrument. The proportion of financal instruments held withn stage 1 improved by 1 per cent to 94.8 per cent (2020: 93.8 per cent). Total stage 1 balances increased by $47 billon, of which around $23 billon was in loans and advances to customers. Of the $23 billon increase in loans to customers, $11 billon was in Corporate, Commercial and Institutonal Banking and $8 billon was in Consumer, Private and Business Banking across Mortgage and Secured wealth products. Off-balance sheet exposures increased by $11.3 billon due to an increase of $5.8 billon in undrawn commitments and a $5.4 billon increase in financal guarantees, trade credits and irrevocable letter of credit. Stage 2 financal instruments reduced to $34.6 billon (2020: $39.9 billon) due to exposure changes and partly due to transfers to stage 1 in Corporate, Commercial and Institutonal Banking as early alert balances reduced. As a result, the proportion of loans and advances to customers classifed in stage 2 also reduced to $16.8 billon or 6 per cent (2020: $22.6 billon or 8 per cent). Stage 3 financal instruments were stable at 1 per cent of the Group total. 2021 Stage 1Stage 2Stage 3 Total Gross balance 1 $millon Totalcredit imparment $millon Net carrying value $millon Gross balance 1 $millon Totalcredit imparment $millon Net carrying value $millon Gross balance 1 $millon Totalcredit imparment $millon Net carrying value $millon Gross balance 1 $millon Totalcredit imparment $millon Net carrying value $millon Cash and balances at central banks 72,601 – 72,601 66 (4) 62 ––– 72,667 (4) 72,663 Loans and advances to banks (amortised cost) 43,776 (12) 43,764 580 (4) 576 54 (11) 43 44,410 (27) 44,383 Loans and advances to customers (amortised cost) 279,178 (473) 278,705 16,849 (524) 16,325 8,095 (4,657) 3,438 304,122 (5,654) 298,468 Debt securites and other eligble bills 5 157,352 (67) 5,315 (42) 113 (66) 162,780 (175) Amortised cost 41,092 (13)41,079 200 (1) 199 113 (66) 47 41,405 (80) 41,325 FVOCI 2 116,260 (54) 5,115 (41) –– 121,375 (95) – Accrued income (amortised cost) 4 1,674 – 1,674 –––––– 1,674 – 1,674 Assets held for sale 4 52 – 52 –––––– 52 – 52 Other assets 40,067 – 40,067 –––4 (3) 1 40,071(3) 40,068 Undrawn commitments 3 149,530 (42) 8,993 (60) ––158,523 (102) Financal guarantees, trade credits and irrevocable letters of credit 3 54,923 (15) 2,813 (22) 799 (207) 58,535 (244) Total 799,153 (609) 34,616 (656) 9,065 (4,944) 842,834 (6,209) 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 gross includes $33 millon orignated credit-impared debt securites ![]() 204 Standard Chartered – Annual Report 2021 Risk review Risk profile 2020 Stage 1Stage 2Stage3 Total 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 66,649 – 66,649 67 (4) 63––– 66,716 (4) 66,712 Loans and advances to banks (amortised cost) 44,015 (14) 44,001 349 (3) 346 ––– 44,364 (17) 44,347 Loans and advances to customers (amortised cost) 256,437 (534) 255,903 22,661 (738) 21,923 9,214 (5,341) 3,873 288,312 (6,613) 281,699 Debt securites and other eligble bills 5 149,316 (56) 3,506 (26) 114 (58) 152,936 (140) Amortised cost 19,246 (15) 19,231 195 (2) 193 114 (58) 56 19,555 (75) 19,480 FVOCI 2 130,070 (41) 3,311 (24) –– 133,381 (65) Accrued income (amortised cost) 4 1,775 – 1,775 –––––– 1,775 – 1,775 Assets held for sale 4 83–83––––––83–83 Other assets 40,978 (1) 40,977 –––4 (3) 1 40,982 (4) 40,978 Undrawn commitments 3 143,703 (39) 9,698 (78) 2– 153,403 (117) Financal guarantees, trade credits and irrevocable letters of credit 3 49,489 (20) 3,573 (36) 770 (194) 53,832 (250) Total 752,445 (664) 39,854 (885) 10,104 (5,596)802,403 (7,145) 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 gross includes $38 millon orignated credit-impared debt securites ![]() 205 Standard Chartered – Annual Report 2021 Risk review and Capital review Credit quality analysis (audited) Credit quality by client segment For the Corporate, Commercial and Institutonal Banking portfolio, 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 Banking Private Banking 1 Consumer & Business Banking Internal grade mapping S&P external ratings equivalent Regulatory PD range (%) Internal ratings Number of days past due Strong 1A to 5BAAA to BB+0 to 0.425Class I and Class IVCurrent loans (no past dues norimpared) Satisfactory 6A to 11C BB to B-/CCC 2 0.426 to 15.75Class II and Class IIILoans past due till 29 days Higher risk Grade 12 CCC/C 15.751to 99.999 GSAM managed Past 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 theexpected 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 $23 billon compared with 31 December 2020 and represent an increase of 3 per cent. Stage 1 gross balances represent 92 per cent of loans and advances to customers (2020: 89 per cent). The stage 1 coverage ratio remained at 0.2 per cent compared with 31 December 2020. In Corporate, Commercial and Institutonal Banking, the proportion of stage 1 loans has increased to 85 per cent (2020: 80 per cent), and the percentage of stage 1 loans rated as strong is higher at 64 per cent (2020: 58 per cent) as the Group continues to focus on the orignation ofinvestment grade lending. Stage 1 loans increased by $11 billon, primarly in the Government, Manufacturing and Consumer durables sectors. Consumer, Private and Business Banking stage 1 loans increased by $8 billon primarly driven by new lending in Mortgage and Secured wealthproducts. The proportion rated as strong remained stable at 96 per cent. Stage 2: Stage 2 gross loans and advances to customers decreased by $6 billon compared with 31 December 2020, and the proportion of stage 2 loans also reduced to 5.5 per cent from 7.9 per cent per cent due to changes in exposures and also due to transfers to stage 1 in Corporate, Commercial and Institutonal Banking. Consumer, Private and Business Banking stage 2 loans saw a decrease of $0.7 billon, mainly driven by mortgage loans movement from stage 2 to stage 1 due to forward-looking macroeconomic outlook improvement. Stage 2 loans to customers classifed as ‘Higher risk’ decreased by $0.9 billon, primarly driven by lower inflows from early alert non-purely precautionary, offset by outflows to stage 3. The overall stage 2 cover ratio reduced from 3.3 per cent to 3.1 per cent. Stage 3: Stage 3 gross loans and advances to customers decreased by 12 per cent to $8.1 billon compared with 31 December 2020 of $9.2 billon. Stage 3 provisons decreased by $0.7 billon to $4.7 billon. The stage 3 cover ratio (excluding collateral) remained stable at 58 per cent. In Corporate, Commercial and Institutonal Banking, gross stage 3 loans decreased by $1.1 billon compared with 31 December 2020 due to debt sales and repayments in Asia and Africa and the Middle East regions. Provisons decreased by $0.7 billon to $3.9 billon also driven by repayments and write-offs. Corporate, Commercialand Institutonal Banking cover ratio decreased by 1 per cent as a result of write-offs and new accounts with a lower coverage than existng stage 3 loans. In Consumer, Private and Business Banking, stage 3 loans remained stable at 1 per cent of the portfolio while the cover ratio improved by 4 per cent to 51 per cent (2020: 47 per cent) due to a new provison taken on a Business Banking client. ![]() 206 Standard Chartered – Annual Report 2021 Risk review Risk profile Loans and advances by client segment (audited) 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 1 43,776 122,368 134,37122,439 279,178149,530 54,923 – Strong 30,813 77,826 129,568 22,333 229,727 132,274 37,418 – Satisfactory 12,963 44,542 4,803 106 49,451 17,25617,505 Stage 2 580 14,818 1,921 110 16,849 8,993 2,813 – Strong 126 2,366 1,253 – 3,619 2,786 714 – Satisfactory 105 11,180 308 – 11,488 5,235 1,546 – Higher risk 349 1,272 360 110 1,742 972 553 Of which (stage 2): – Less than 30 days past due – 77 308 – 385 –– – More than 30 days past due – 49 360 – 409 –– Stage 3, credit-impared financal assets 54 6,520 1,575 – 8,095 – 799 Gross balance¹ 44,410 143,706 137,867 22,549 304,122 158,52358,535 Stage 1 (12) (103) (370) – (473)(42) (15) – Strong (4) (58)(283) – (341) (23) (5) – Satisfactory (8) (45) (87) – (132) (19) (10) Stage 2 (4) (341) (183) – (524) (60) (22) – Strong (2) (62) (104) – (166) (6) (1) – Satisfactory (2) (179) (32) – (211) (46) (9) – Higher risk – (100) (47) – (147) (8) (12) Of which (stage 2): – Less than 30 days past due – (2)(32) – (34) –– – More than 30 days past due – (3) (47) – (50) –– Stage 3, credit-impared financal assets (11) (3,861) (796) – (4,657) – (207) Total credit imparment (27) (4,305) (1,349) – (5,654) (102) (244) Net carrying value 44,383 139,401 136,518 22,549 298,468 Stage 1 0.0% 0.1% 0.3%0.0%0.2%0.0%0.0% – Strong 0.0% 0.1% 0.2%0.0% 0.1% 0.0%0.0% – Satisfactory 0.1%0.1% 1.8% 0.0%0.3% 0.1%0.1% Stage 2 0.7% 2.3% 9.5% 0.0% 3.1% 0.7%0.8% – Strong 1.6%2.6% 8.3% 0.0% 4.6% 0.2% 0.1% – Satisfactory 1.9% 1.6% 10.4% 0.0% 1.8% 0.9% 0.6% – Higher risk 0.0% 7.9% 13.1% 0.0% 8.4% 0.8% 2.2% Of which (stage 2): – Less than 30 days past due 0.0% 2.6% 10.4% 0.0% 8.8% 0.0%0.0% – More than 30 days past due 0.0% 6.1%13.1% 0.0% 12.2% 0.0%0.0% Stage 3, credit-impared financal assets (S3) 20.4% 59.2% 50.5%0.0% 57.5% 0.0% 25.9% Cover ratio 0.1% 3.0%1.0% 0.0% 1.9% 0.1% 0.4% Fair value through profit or loss Performing 22,574 69,356 67 1,774 71,197 –– – Strong 20,132 53,756 67 1,772 55,595 –– – Satisfactory 2,442 15,600 –2 15,602 –– – Higher risk ––––––– Defaulted (CG13–14) – 38 –– 38 –– Gross balance (FVTPL) 2 22,574 69,394 67 1,774 71,235 –– Net carrying value (incl FVTPL) 66,957 208,795 136,585 24,323 369,703 –– 1Loans and advances includes reverse repurchase agreements and other simlar secured lending of $7,331 millon under Customers and of $1,079 millon under Banks, held at amortised cost 2Loans and advances includes reverse repurchase agreements and other simlar secured lending of $61,282 millon under Customers and of $18,727 millon under Banks, held at fair value through profit or loss ![]() 207 Standard Chartered – Annual Report 2021 Risk review and Capital review 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 1 44,015 110,993 126,294 19,150 256,437 143,703 49,489 – Strong 4 34,961 64,277 120,892 18,889 204,058 122,792 30,879 – Satisfactory 4 9,054 46,716 5,402 261 52,37920,911 18,610 Stage 2 349 20,004 2,657 – 22,661 9,698 3,573 – Strong 95 2,756 1,522 – 4,278 3,537 386 – Satisfactory 233 15,105 665 – 15,770 5,522 2,399 – Higher risk 21 2,143 470 – 2,613 639 788 Of which (stage 2): – Less than 30 days past due – 202 663– 865 –– – More than 30 days past due 29 148 480 – 628 –– Stage 3, credit-impared financal assets – 7,652 1,562 – 9,214 2 770 Gross balance¹ 44,364 138,649 130,513 19,150 288,312 153,40353,832 Stage 1 (14) (95) (438) (1) (534) (39) (20) – Strong (7) (34) (328) – (362) (19) (13) – Satisfactory (7) (61) (110) (1) (172) (20) (7) Stage 2 (3) (487) (251) – (738)(78) (36) – Strong – (42) (100) – (142) (3)(3) – Satisfactory (3) (291) (85) – (376) (44) (19) – Higher risk – (154) (66) – (220) (31) (14) Of which (stage 2): – Less than 30 days past due – (6) (85) – (91) –– – More than 30 days past due – (6)(66) – (72) –– Stage 3, credit-impared financal assets – (4,610) (731) – (5,341) – (194) Total credit imparment (17) (5,192) (1,420) (1) (6,613) (117) (250) Net carrying value 44,347 133,457 129,09319,149 281,699 Stage 1 0.0% 0.1% 0.3% 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% 2.0% 0.4% 0.3% 0.1% 0.0% Stage 2 0.9% 2.4% 9.4% 0.0% 3.3% 0.8% 1.0% – Strong 0.0% 1.5% 6.6% 0.0% 3.3% 0.1% 0.8% – Satisfactory 1.3% 1.9% 12.8% 0.0% 2.4% 0.8%0.8% – Higher risk 0.0% 7.2% 14.0% 0.0% 8.4% 4.9% 1.8% Of which (stage 2): – Less than 30 days past due 0.0%3.0% 12.8% 0.0% 10.5% 0.0%0.0% – More than 30 days past due 0.0% 4.1% 13.8% 0.0% 11.5% 0.0%0.0% Stage 3, credit-impared financal assets (S3) 0.0% 60.2% 46.8% 0.0%58.0%0.0% 25.2% Cover ratio 0.0% 3.7% 1.1% 0.0% 2.3% 0.1% 0.5% Fair value through profit or loss Performing 22,082 54,384 135 12 54,531 –– – Strong 18,100 29,527 133 8 29,668 –– – Satisfactory 3,982 24,775 24 24,781 –– – Higher risk – 82 –– 82 –– Defaulted (CG13-14) – 46 –– 46 –– Gross balance (FVTPL) 2 22,082 54,430 135 12 54,577 –– Net carrying value (incl FVTPL) 66,429 187,887 129,22819,161 336,276 –– 1Loans and advances includes reverse repurchase agreements and other simlar secured lending of $2,919 millon under Customers and of $1,247 millon under Banks, held at amortised cost 2Loans and advances includes reverse repurchase agreements and other simlar secured lending of $45,200 millon under Customers and of $18,205 millon under Banks, held at fair value through profit or 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 $119,766 millon to $120,892 millon and Satisfactory restated from $6,528 millon to $5,402 millon. Stage 1 ECL: Strong restated from $307 millon to $328 millon and Satisfactory restated from $131 millon to $110 millon ![]() 208 Standard Chartered – Annual Report 2021 Risk review Risk profile Loans and advances by client segment credit quality analysis Creditgrade Regulatory 1 year PD range (%) S&P external ratings equivalent Corporate, Commercial &Institutonal Banking 2021 Gross Creditimparment Stage 1Stage 2Stage 3 Total Stage 1Stage 2Stage 3 Total Strong 77,826 2,366 – 80,192 (58) (62) – (120) 1A–2B 0–0.045 AA- and above 14,013 216 – 14,229 (1) –– (1) 3A–4A 0.046–0.110 A+ to A- 23,173 515 – 23,688 (3) –– (3) 4B–5B 0.111–0.425 BBB+ toBBB-/BB+ 40,640 1,635 – 42,275 (54) (62) – (116) Satisfactory 44,542 11,180 – 55,722 (45) (179) – (224) 6A–7B 0.426–1.350 BB+/BB to BB- 27,009 2,894 – 29,903 (21) (40) – (61) 8A–9B 1.351–4.000 BB-/B+ to B+/B 11,910 5,592 – 17,502 (13) (90) – (103) 10A–11C 4.001–15.75 B to B-/CCC 5,623 2,694 – 8,317 (11) (49) – (60) Higher risk – 1,272 – 1,272 – (100) – (100) 12 15.751–99.999 CCC/C – 1,272 – 1,272 – (100) – (100) Defaulted –– 6,5206,520 –– (3,861)(3,861) 13–14 100 Defaulted –– 6,5206,520 –– (3,861)(3,861) Total 122,368 14,818 6,520 143,706 (103) (341) (3,861) (4,305) Credit grade Regulatory 1 year PD range (%) S&P external ratings equivalent 2020 (Restated¹) Gross Credit imparment Stage 1Stage 2Stage3 Total Stage 1Stage 2Stage 3 Total Strong 64,277 2,756 – 67,033 (34) (42) – (76) 1A–2B 0–0.045 AA- and above 11,071 295 – 11,366 – (4) – (4) 3A–4A 0.046–0.110 A+ to A- 16,753 815 – 17,568 (2) (11) – (13) 4B–5B 0.111–0.425 BBB+ toBBB-/BB+ 36,453 1,646 – 38,099 (32) (27) – (59) Satisfactory 46,716 15,105 – 61,821 (61) (291) – (352) 6A–7B 0.426–1.350 BB+/BB to BB- 28,917 5,396 – 34,313 (31) (74) – (105) 8A–9B 1.351 –4.000 BB-/B+to B+/B 12,276 5,235 – 17,511 (20) (108) – (128) 10A–11C 4.001–15.75 B to B-/CCC 5,523 4,474 – 9,997 (10) (109) – (119) Higher risk – 2,143 – 2,143 – (154) – (154) 12 15.751–99.999 CCC/C – 2,143 – 2,143 – (154) – (154) Defaulted –– 7,6527,652 –– (4,610)(4,610) 13–14 100 Defaulted –– 7,6527,652 –– (4,610)(4,610) Total 110,993 20,004 7,652 138,649 (95) (487) (4,610) (5,192) 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. Prior period has been restated ![]() 209 Standard Chartered – Annual Report 2021 Risk review and Capital review Creditgrade Consumer,Private &Business Banking 2021 Gross Credit imparment Stage 1Stage 2Stage 3 Total Stage 1Stage 2Stage 3 Total Strong 129,568 1,253 – 130,821 (283) (104) – (387) Secured 112,167 884 – 113,051 (48) (19) – (67) Unsecured 17,401 369 – 17,770 (235) (85) – (320) Satisfactory 4,803 308 – 5,111 (87) (32) – (119) Secured 4,524 164 – 4,688 (44) (1) – (45) Unsecured 279 144 – 423 (43) (31) – (74) Higher risk – 360 – 360 – (47) – (47) Secured – 250 – 250 – (11) – (11) Unsecured – 110 – 110 – (36) – (36) Defaulted –– 1,5751,575 –– (796)(796) Secured 1,1071,107 (516)(516) Unsecured –– 468468 –– (280)(280) Total 134,371 1,921 1,575 137,867 (370) (183) (796) (1,349) Credit grade 2020 (Restated¹) Gross Credit imparment Stage 1Stage 2Stage 3 Total Stage 1Stage 2Stage 3 Total Strong 120,892 1,522 – 122,414 (328) (100) – (428) Secured 104,446 1,345 – 105,791 (59) (30) – (89) Unsecured 2 16,446 177 – 16,623 (269) (70) – (339) Satisfactory 5,402 665 – 6,067 (110) (85) – (195) Secured 5,023 220 – 5,243 (11) (3) – (14) Unsecured 2 379 445 – 824 (99) (82) – (181) Higher risk – 470 – 470 – (66) – (66) Secured – 316 – 316 – (12) – (12) Unsecured – 154 – 154 – (54) – (54) Defaulted –– 1,5621,562 –– (731)(731) Secured 1,0611,061 (418)(418) Unsecured –– 501501 –– (313)(313) Total 126,294 2,657 1,562 130,513 (438) (251)(731) (1,420) 1Following the Group’s change in organisatonal structure, there has been an integraton of Private Banking and Retail Banking to Consumer, Private & Business Banking. Prior period has been restated 2FY 2020 Consumer, Private & Business Banking Stage 1 Gross: Strong Unsecured restated from $15,319 millon to $16,446 millon and Satisfactory Unsecured restated from $1,505 millon to $379 millon. Stage 1 ECL: Strong Unsecured restated from $249 millon to $269 millon and Satisfactory Unsecured restated from $118 millon to $99 millon ![]() 210 Standard Chartered – Annual Report 2021 Risk review Risk profile Credit quality by geographic region The following table sets out the credit quality for gross loans and advances to customers and banks, held at amortised cost, by geographic region and stage. Loans and advances to customers Amortised cost 2021 2020(Restated) Asia $millon Africa & Middle East $millon Europe & Americas $millon Total $millon Asia 3 $millon Africa & Middle East $millon Europe & Americas $millon Total $millon Gross (stage 1) 235,123 19,990 24,065 279,178 211,668 21,144 23,625 256,437 Provison (stage1) (371) (86)(16) (473) (423) (96) (15) (534) Gross (stage 2) 8,779 4,077 3,993 16,849 13,771 6,251 2,639 22,661 Provison (stage2) (318) (137) (69) (524) (418) (255) (65) (738) Gross (stage 3)² 4,448 2,918 729 8,095 4,790 3,473 951 9,214 Provison (stage3) (2,400) (1,970) (287) (4,657) (2,483)(2,313) (545) (5,341) Net loans 1 245,261 24,792 28,415298,468 226,905 28,204 26,590 281,699 1Includes reverse repurchase agreements and other simlar secured lending 2Amounts do not include those purchased or orignated credit-impared financal assets 3Following 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. Priorperiod hasbeen restated. Loans and advances to banks Amortised cost 2021 2020(Restated) Asia $millon Africa & Middle East $millon Europe & Americas $millon Total $millon Asia 2 $millon Africa & Middle East $millon Europe & Americas $millon Total $millon Gross (stage 1) 29,916 5,828 8,032 43,776 31,448 5,539 7,028 44,015 Provison (stage1) (3) (5) (4) (12) (9) (3) (2) (14) Gross (stage 2) 346 144 90 580 107207 35 349 Provison (stage2) (1)(1) (2) (4) (1) (2) – (3) Gross (stage 3) 54 –– 54 –––– Provison (stage3) (11) –– (11) –––– Net loans 1 30,301 5,966 8,116 44,383 31,545 5,741 7,061 44,347 1Includes reverse repurchase agreements and other simlar secured lending 2Following 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 beenrestated ![]() 211 Standard Chartered – Annual Report 2021 Risk review and Capital review 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, 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 ofmultiple trades during the year. Thecredit imparment chargein the income statement comprises theamounts 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 and 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 credit grade 12, or when non-investment grade debtsecuritesare acquired. • 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 linerepresents additonal specifc provisonsrecognised on exposures heldwith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 to ECL models, which incorporates changes to model approaches and methodologies, 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 $42 billon to $685 billon when compared with 31 December 2020. Half of this increase in exposures was in Corporate, Commercial and Institutonal Banking, from new orignations and transfers from stage 2 in part due to upgrades of accounts from non-purely precautionary early alert. There was a $9 billon increase in Consumer, Private and Business Banking which was mainly driven by new orignations in mortgage and secured wealth products. Additonally, there was a $8 billon increase in debt securites in stage 1. Total stage 1 provisons decreased by $54 millon to $609 millon, primarly in Consumer, Private and Business Banking unsecured lending, due toan improvementin macroeconomic forecasts for Singaporeand Hong Kong. Corporate, Commercial and Institutonal Banking provisons increased by $9 millon primarly due to an overlay taken for China Commercial real estate exposures of $31 millon offset by improvement in probabilty of default. Stage 2 gross exposures decreased by $5 billon to $35 billon, primarly driven by $6 billon of net outflows from exposure changes and transfers to stage 1 in Corporate, Commercial and Institutonal Banking, particularly in the Manufacturing and Commercial Real Estate sectors. Consumer, Private and Business Banking exposures decreased by $0.9 billon, of which $0.7 billon was from the secured portfolio (mainly mortgages in Asia), and $0.2 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 $229 millon compared to 31 December 2020, $174 millon of which was in Corporate, Commercial and Institutonal Banking as a result of exposure changes and transfers to stage 1, repayment of exposures, increased collateral and a net reduction of $31 millon in judgemental management overlays (which are reported in ‘Changes in risk parameters’ in the table). The COVID-19 management overlay reduced by $95 millon as early alert balances fell, this was partly offset by an overlay taken for China Commercial Real Estate exposures of $64 millon. Consumer, Private and Business Banking provisons decreased by $72 millon, mainly in unsecured lending from improvement in macroeconomic forecasts, and lower delinquences as conditons normalised in a number of our markets. The impact of changes in macroeconomic forecasts decreased provisons by $5 millon (2020: increase of $81 millon), which includes a $51 millonmultiple economic scenario post model adjustment. New ECL models implemented during the year decreased provisons by $3 millon. In Corporate, Commercial and Institutonal Banking, gross stage 3 loans decreased by $1.1 billon compared with 31 December 2020 due to debt sales and repayments in Asia and Africa and the Middle East regions. Provisons decreased by $0.7 billon to $3.9 billon also driven by repayments and write-offs. Corporate, Commercial and Institutonal Banking cover ratio decreased by 1 per cent as a result of write-offs and new accounts with a lower coverage than existng stage 3 loans. Consumer, Private and Business Banking total stage 3 loans remained broadly stable at $1.6 billon. ![]() 212 Standard Chartered – Annual Report 2021 Risk review Risk profile All segments (audited) Amortised cost and FVOCI Stage 1Stage 2Stage 3 Total Gross balance 7 $millon Total credit impar- ment $millon Net $millon Gross balance 7 $millon Total credit impar- ment $millon Net $millon Gross balance 7 $millon Total credit impar- ment $millon Net $millon Gross balance 7 $millon Total credit impar- ment $millon Net $millon As at 1 January 2020 612,404 (514) 611,890 38,787 (458) 38,3298,082 (5,255) 2,827 659,273 (6,227) 653,046 Transfers tostage 1 46,437 (712) 45,725 (46,393) 712 (45,681)(44) – (44) ––– Transfers tostage 2 (91,067) 430 (90,637) 91,176 (431) 90,745 (109) 1 (108) ––– Transfers tostage 3 (451) 1 (450)(4,684) 266 (4,418) 5,135 (267) 4,868 ––– Net changein exposures 5 63,223 (119) 63,104 (39,610) 142 (39,468) (1,544) 233 (1,311) 22,069 25622,325 Net remeasurement from stage changes – 8888 – (409)(409) – (789)(789) – (1,110)(1,110) Changes in risk parameters – 1717 – (546)(546) – (1,186)(1,186) – (1,715)(1,715) Write-offs –––––– (1,913)1,913 – (1,913)1,913 – Interestdue but unpaid –––––– 231 (231) – 231 (231) – Discount unwind ––––––– 8585 – 8585 Exchange translation differences and other movements¹ 12,414 146 12,560 511 (157) 354 262 (97) 165 13,187 (108) 13,079 As at 31December 2020² 642,960 (663) 642,297 39,787 (881) 38,906 10,100 (5,593) 4,507 692,847 (7,137) 685,710 Income statement ECL (charge)/release 3 (14) (813) (1,742) (2,569) Recoveries of amounts previously written off –– 242242 Total credit imparment (charge)/release (14) (813) (1,500) (2,327) As at 1 January 2021 642,960 (663) 642,297 39,787 (881) 38,906 10,100 (5,593)4,507 692,847 (7,137) 685,710 Transfers tostage 1 25,975 (620) 25,355 (25,924) 620 (25,304) (51) – (51) ––– Transfers tostage 2 (53,994) 211 (53,783) 54,335 (220) 54,115 (341) 9 (332) ––– Transfers tostage 3 (212) 3 (209) (2,822) 335 (2,487) 3,034(338) 2,696 ––– Net changein exposures 5 84,288 (132) 84,156 (30,551) 169 (30,382) (2,429) 661 (1,768) 51,308 698 52,006 Net remeasurement from stage changes – 5454 – (157)(157) – (212)(212) – (315)(315) Changes in risk parameters – 7979 – (89)(89) – (915)(915) – (925)(925) Write-offs –––––– (1,215) 1,215 – (1,215) 1,215 – Interestdue but unpaid –––––– (189)189 – (189)189 – Discount unwind 6 ––––––– 227227 – 227227 Exchange translation differences and other movements¹ (14,258) 459 (13,799) (275)(429) (704) 152 (184) (32) (14,381) (154) (14,535) As at 31December 2021² 684,759 (609) 684,150 34,550 (652) 33,898 9,061 (4,941) 4,120 728,370 (6,202) 722,168 Income statement ECL (charge)/release 3 1 (77) (466) (542) Recoveries of amounts previously written off –– 288288 Total credit imparment (charge)/release 4 1 (77) (178) (254) 1Includes fairvalue adjustments and amortisatonon debt securites 2Excludes Cash and balances at central banks, Accrued income, Assets held for sale and Other assets gross balances of $114,464 millon (2020: $109,556 millon) and Total credit imparment of $7 millon (2020: $8 millon) 3Does not include Nil (2020: $2 millon release) relating to Other assets 4Statutory basis 5Stage 3 gross includes $33 millon (2020: $38 millon) orignated credit-impared debt securites 6Includes $171 millon adjustment in relation to interest earned on impared assets 7The gross balance includes thenotional amountof off balancesheet instruments ![]() 213 Standard Chartered – Annual Report 2021 Risk review and Capital review Of which – movement of debt securites, alternative Tier 1 and other eligble bills (audited) Amortised cost and FVOCI Stage 1Stage 2Stage 3 Total Gross balance $millon Total credit impar- ment $millon Net $millon Gross balance $millon Total credit impar- ment $millon Net $millon Gross balance $millon Total credit impar- ment $millon Net $millon Gross balance $millon Total credit impar- ment $millon Net 3 $millon As at 1 January 2020 138,782 (50) 138,732 4,644 (23) 4,621 75 (45) 30 143,501 (118) 143,383 Transfers tostage 1 1,732 (28) 1,704 (1,732) 28 (1,704) –––––– Transfers tostage 2 (1,151) 18 (1,133)1,151 (18) 1,133 –––––– Transfers tostage 3 –––––––––––– Net changein exposures 2 5,298 (35) 5,263 (470) 11 (459) 39 – 39 4,867 (24) 4,843 Net remeasurement from stage changes – 1616 – (26)(26) –––– (10)(10) Changes in risk parameters – 1515 – (5)(5) – (6)(6) –44 Write-offs –––––––––––– Interestdue but unpaid –––––––––––– Exchange translation differences and other movements 1 4,655 8 4,663 (87) 7 (80) – (7)(7) 4,568 8 4,576 As at 31December 2020 149,316 (56) 149,260 3,506 (26) 3,480 114 (58) 56 152,936 (140) 152,796 Income statement ECL (charge)/release (4) (20) (6) (30) Recoveries of amounts previously written off –––– Total credit imparment (charge)/release (4) (20) (6) (30) As at 1 January 2021 149,316 (56) 149,260 3,506 (26) 3,480 114 (58) 56152,936 (140) 152,796 Transfers tostage 1 403 (11) 392 (403) 11 (392) –––––– Transfers tostage 2 (2,358) 16 (2,342)2,358 (16) 2,342 –––––– Transfers tostage 3 –––––––––––– Net changein exposures 2 14,670 (39) 14,631 (155) (11) (166) –11 14,515 (49) 14,466 Net remeasurement from stage changes – 1313 – (17)(17) –––– (4)(4) Changes in risk parameters – 2121 –88– (3)(3) – 2626 Write-offs –––––––––––– Interestdue but unpaid –––––––––––– Exchange translation differences and other movements 1 (4,679) (11) (4,690) 9918 (1) (6) (7) (4,671) (8) (4,679) As at 31December 2021 157,352 (67) 157,285 5,315 (42) 5,273 113 (66) 47162,780 (175) 162,605 Income statement ECL (charge)/release (5) (20) (2) (27) Recoveries of amounts previously written off –––– Total credit imparment (charge)/release (5) (20) (2) (27) 1Includes fairvalue adjustments and amortisatonon debt securites 2Stage 3 gross includes $33 millon (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 $162,700 millon (31 December 2020: $152,861 millon). Refer to the Analysis of financal instrument by stage table on page 203 ![]() 214 Standard Chartered – Annual Report 2021 Risk review Risk profile Corporate, Commercial andInstitutonal Banking (restated 2 )(audited) Amortised cost and FVOCI Stage 1Stage 2Stage 3 Total Gross balance 4 $millon Total credit impar- ment $millon Net $millon Gross balance 4 $millon Total credit impar- ment $millon Net $millon Gross balance 4 $millon Total credit impar- ment $millon Net $millon Gross balance 4 $millon Total credit impar- ment $millon Net $millon As at 1 January 2020 295,383 (158) 295,225 28,525 (253) 28,272 6,795 (4,688) 2,107 330,703 (5,099) 325,604 Transfers tostage 1 37,180 (310) 36,870 (37,180) 310 (36,870) –––––– Transfers tostage 2 (79,882) 204 (79,678)79,917 (205) 79,712 (35) 1 (34) ––– Transfers tostage 3 (337) – (337) (3,665) 82 (3,583) 4,002 (82) 3,920 ––– Net changein exposures 36,605 (51) 36,554 (36,363) 59 (36,304) (1,201) 231 (970) (959) 239 (720) Net remeasurement from stage changes – 1515 – (188)(188) – (700)(700) – (873)(873) Changes in risk parameters – 6969 – (297)(297) – (763)(763) – (991)(991) Write-offs –––––– (1,216) 1,216 – (1,216) 1,216 – Interestdue but unpaid –––––– 115 (115) – 115 (115) – Discount unwind ––––––– 5454 – 5454 Exchange translation differences and other movements 3,504 77 3,581 508 (107) 401 (38) 43 5 3,974 13 3,987 As at 31December 2020 292,453 (154) 292,299 31,742 (599) 31,143 8,422 (4,803) 3,619 332,617 (5,556) 327,061 Income statement ECL (charge)/release 1 33 (426) (1,232) (1,625) Recoveries of amounts previously written off –– 2222 Total credit imparment (charge)/release 33 (426) (1,210) (1,603) As at 1 January 2021 292,453 (154) 292,299 31,742 (599) 31,143 8,422 (4,803) 3,619332,617 (5,556) 327,061 Transfers tostage 1 21,123 (243) 20,880 (21,123) 243 (20,880) –––––– Transfers tostage 2 (45,354) 103 (45,251) 45,556 (112) 45,444 (202) 9 (193) ––– Transfers tostage 3 (69) – (69) (1,989) 164 (1,825) 2,058 (164) 1,894 ––– Net changein exposures 50,762 (62) 50,700 (28,447)133 (28,314) (2,082) 636 (1,446) 20,233 707 20,940 Net remeasurement from stage changes –11– (27)(27) – (145)(145) – (171)(171) Changes in risk parameters – 4141 – (105)(105) – (434)(434) – (498)(498) Write-offs –––––– (510) 510 – (510) 510 – Interestdue but unpaid –––––– (224) 224 – (224) 224 – Discount unwind 3 ––––––– 191191 – 191191 Exchange translation differences and other movements (5,783) 151 (5,632) (302) (122) (424) (90) (103)(193) (6,175) (74) (6,249) As at 31December 2021 313,132 (163) 312,969 25,437 (425) 25,012 7,372 (4,079) 3,293 345,941 (4,667) 341,274 Income statement ECL (charge)/release 1 (20) 1 57 38 Recoveries of amounts previously written off –– 1919 Total credit imparment (charge)/release (20) 1 76 57 1Does not include Nil (2020: $2 millon release) relating to Other assets 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 3Includes a $166 millon adjustment in relation to interest earned on impared assets 4Thegross balance includes the notionalamount of offbalance sheet instruments ![]() 215 Standard Chartered – Annual Report 2021 Risk review and Capital review Consumer, Private andBusiness Banking(restated 1 )(audited) Amortised cost and FVOCI Stage 1Stage 2Stage 3 Total Gross balance 3 $millon Total credit impar- ment $millon Net $millon Gross balance 3 $millon Total credit impar- ment $millon Net $millon Gross balance 3 $millon Total credit impar- ment $millon Net $millon Gross balance 3 $millon Total credit impar- ment $millon Net $millon As at 1 January 2020 168,095 (310) 167,785 5,609 (180) 5,429 1,212 (521) 691 174,916 (1,011) 173,905 Transfers tostage 1 7,519 (373) 7,146(7,475) 373 (7,102) (44) – (44) ––– Transfers tostage 2 (10,033) 207 (9,826) 10,107 (207) 9,900 (74) – (74) ––– Transfers tostage 3 (113) 1 (112) (1,023) 184 (839) 1,136 (185) 951 ––– Net changein exposures 12,701 (34) 12,667 (2,777) 71 (2,706) (390) 2 (388) 9,534 39 9,573 Net remeasurement from stage changes – 5757 – (194)(194) – (90)(90) – (227)(227) Changes in risk parameters – (65)(65) – (245)(245) – (416)(416) – (726)(726) Write-offs –––––– (698) 698 – (698) 698 – Interestdue but unpaid –––––– 116 (116) – 116 (116) – Discount unwind ––––––– 3232 – 3232 Exchange translation differences and other movements 3,875 72 3,947 93 (61) 32303 (134) 169 4,271 (123) 4,148 As at 31December 2020 182,044 (445) 181,599 4,534 (259) 4,275 1,561 (730) 831 188,139 (1,434) 186,705 Income statement ECL (charge)/release (42) (368) (504)(914) Recoveries of amounts previously written off –– 220220 Total credit imparment (charge)/release (42) (368) (284) (694) As at 1 January 2021 182,044 (445) 181,599 4,534 (259) 4,275 1,561 (730) 831 188,139 (1,434) 186,705 Transfers tostage 1 4,450 (365) 4,085 (4,399) 365 (4,034) (51) – (51) ––– Transfers tostage 2 (6,279) 91 (6,188) 6,418 (91) 6,327 (139) – (139) ––– Transfers tostage 3 (144) 2 (142)(833) 172 (661) 977 (174) 803 ––– Net changein exposures 14,748 (31) 14,717 (2,060)47 (2,013) (347) 24 (323) 12,341 40 12,381 Net remeasurement from stage changes – 4040 – (113)(113) – (66)(66) – (139)(139) Changes in risk parameters – 1717 –88– (480)(480) – (455)(455) Write-offs –––––– (705)705 – (705)705 – Interestdue but unpaid –––––– 35 (35) – 35 (35) – Discount unwind 2 –––––––3636–3636 Exchange translation differences and other movements (3,277) 313 (2,964) 24 (316) (292) 247 (77) 170 (3,006) (80) (3,086) As at 31December 2021 191,542 (378) 191,164 3,684 (187) 3,497 1,578 (797) 781 196,804 (1,362) 195,442 Income statement ECL (charge)/release 26 (58) (522) (554) Recoveries of amounts previously written off –– 269269 Total credit imparment (charge)/release26 (58)(253) (285) 1Following the Group’s change in organisatonal structure, there has been an integraton of Private Banking and Retail Banking to Consumer, Private & Business Banking. Prior period has been restated 2Includes a $5 millon adjustment in relation to interest earned on impared assets 3The gross balanceincludes thenotional amount ofoff balance sheetinstruments ![]() 216 Standard Chartered – Annual Report 2021 Risk review Risk profile Consumer, Private and Business Banking – secured (restated 1 )(audited) Amortised cost and FVOCI Stage 1Stage 2Stage 3 Total Gross balance 3 $millon Total credit impar- ment $millon Net $millon Gross balance 3 $millon Total credit impar- ment $millon Net $millon Gross balance 3 $millon Total credit impar- ment $millon Net $millon Gross balance 3 $millon Total credit impar- ment $millon Net $millon As at 1 January 2020 118,160 (26) 118,134 4,526 (19) 4,507 779 (290) 489 123,465 (335) 123,130 Transfers tostage 1 5,560 (25) 5,535 (5,527) 25 (5,502) (33) – (33) ––– Transfers tostage 2 (6,799) 11 (6,788) 6,862 (11) 6,851 (63) – (63) ––– Transfers tostage 3 (55) – (55) (511) 6 (505) 566 (6) 560 ––– Net changein exposures 8,285 (5) 8,280 (2,044) 1 (2,043) (200) 2 (198) 6,041 (2) 6,039 Net remeasurement from stage changes –11– (7)(7) – (12)(12) – (18)(18) Changes in risk parameters –11– (55)(55) – (102)(102) – (156)(156) Write-offs –––––– (106) 106 – (106) 106 – Interestdue but unpaid –––––– 100 (100) – 100 (100) – Discount unwind ––––––– 1111 – 1111 Exchange translation differences and other movements 2,297 (29) 2,268 57 8 65 15 (27) (12) 2,369 (48) 2,321 As at 31December 2020 127,448 (72) 127,376 3,363 (52) 3,311 1,058 (418) 640 131,869 (542) 131,327 Income statement ECL (charge)/release (3) (61) (112) (176) Recoveries of amounts previously written off –– 5050 Total credit imparment (charge)/release (3) (61)(62) (126) As at 1 January 2021 127,448 (72) 127,376 3,363 (52) 3,311 1,058 (418) 640 131,869 (542) 131,327 Transfers tostage 1 2,884 (37) 2,847 (2,843) 37 (2,806) (41) – (41) ––– Transfers tostage 2 (3,888) 9 (3,879) 4,007 (9) 3,998 (119) – (119) ––– Transfers tostage 3 (107) 1 (106) (400) 8 (392) 507 (9) 498 ––– Net changein exposures 13,611 (9) 13,602 (1,452) 3 (1,449) (224) 24 (200) 11,935 18 11,953 Net remeasurement from stage changes – (1)(1) – (2)(2) – (1)(1) – (4)(4) Changes in risk parameters –44– 1414 – (144)(144) – (126)(126) Write-offs –––––– (125) 125 – (125) 125 – Interestdue but unpaid –––––– (3) 3– (3) 3– Discount unwind 2 ––––––– 3434 – 3434 Exchange translation differences and other movements (2,748) 9 (2,739) 10 (31) (21) 50 (131) (81) (2,688) (153) (2,841) As at 31December 2021 137,200 (96) 137,104 2,685 (32) 2,653 1,103 (517) 586 140,988 (645) 140,343 Income statement ECL (charge)/release (6) 15 (121) (112) Recoveries of amounts previously written off –– 6868 Total credit imparment (charge)/release (6) 15 (53) (44) 1Following the Group’s change in organisatonal structure, there has been an integraton of Private Banking and Retail Banking to Consumer, Private & Business Banking. Prior period has been restated 2Includes a $5 millon adjustment in relation to interest earned on impared assets 3The gross balanceincludes thenotional amount ofoff balance sheetinstruments ![]() 217 Standard Chartered – Annual Report 2021 Risk review and Capital review Consumer, Private and Business Banking – unsecured (restated 1 )(audited) Amortised cost and FVOCI Stage 1Stage 2Stage 3 Total Gross balance 2 $millon Total credit impar- ment $millon Net $millon Gross balance 2 $millon Total credit impar- ment $millon Net $millon Gross balance 2 $millon Total credit impar- ment $millon Net $millon Gross balance 2 $millon Total credit impar- ment $millon Net $millon As at 1 January 2020 49,935 (284) 49,651 1,083 (161) 922 433 (231) 202 51,451 (676) 50,775 Transfers tostage 1 1,959 (348) 1,611 (1,948) 348 (1,600) (11) – (11) ––– Transfers tostage 2 (3,234) 196 (3,038) 3,245 (196) 3,049 (11) – (11) ––– Transfers tostage 3 (58) 1 (57) (512) 178 (334) 570 (179) 391 ––– Net changein exposures 4,416 (29) 4,387 (733) 70 (663) (190) – (190) 3,493 41 3,534 Net remeasurement from stage changes – 5656 – (187)(187) – (78)(78) – (209)(209) Changes in risk parameters – (66)(66) – (190)(190) – (314)(314) – (570)(570) Write-offs –––––– (592) 592 – (592) 592 – Interestdue but unpaid –––––– 16 (16) – 16 (16) – Discount unwind ––––––– 2121 – 2121 Exchange translation differences and other movements 1,578 101 1,679 36 (69) (33) 288 (107) 181 1,902 (75) 1,827 As at 31December 2020 54,596 (373) 54,223 1,171 (207) 964 503 (312) 191 56,270 (892) 55,378 Income statement ECL (charge)/release (39) (307) (392) (738) Recoveries of amounts previously written off –– 170170 Total credit imparment (charge)/release (39) (307) (222) (568) As at 1 January 2021 54,596 (373) 54,223 1,171 (207) 964 503 (312) 191 56,270 (892) 55,378 Transfers tostage 1 1,566 (328) 1,238 (1,556) 328 (1,228) (10) – (10) ––– Transfers tostage 2 (2,391) 82 (2,309) 2,411 (82) 2,329 (20) – (20) ––– Transfers tostage 3 (37) 1 (36) (433) 164 (269) 470 (165) 305 ––– Net changein exposures 1,137 (22) 1,115 (608) 44 (564) (123) – (123) 406 22 428 Net remeasurement from stage changes – 4141 – (111)(111) – (65)(65) – (135)(135) Changes in risk parameters – 1313 – (6)(6) –(336)(336)– (329)(329) Write-offs –––––– (580)580 – (580)580 – Interestdue but unpaid –––––– 38 (38) – 38 (38) – Discount unwind –––––––22–22 Exchange translation differences and other movements (529) 304 (225)14 (285) (271) 197 54 251 (318) 73 (245) As at 31December 2021 54,342 (282) 54,060 999 (155) 844 475(280) 195 55,816 (717) 55,099 Income statement ECL (charge)/release 32 (73) (401)(442) Recoveries of amounts previously written off –– 201201 Total credit imparment (charge)/release 32 (73) (200) (241) 1Following the Group’s change in organisatonal structure, there has been an integraton of Private Banking and Retail Banking to Consumer, Private & Business Banking. Prior period has been restated 2The gross balance includes thenotional amountof off balancesheet instruments ![]() 218 Standard Chartered – Annual Report 2021 Risk review Risk profile Analysis of stage 2 balances The table below analyses total stage 2 gross exposures and associated expected credit provisons by the key signficant increase in credit risk (SICR) driver that caused the exposures to be classifed as stage 2 as at 31 December 2021 and 31 December 2020 for each segment. This may not be the same driver that caused the intial transfer into stage 2. Where multiple drivers apply, the exposure is allocated based on the table order. For example, a loan may have breached the PD thresholds and could also be on non-purely precautionary early alert; in this instance, the exposure is reported under ‘Increase in PD’. 2021 Corporate, Commercial & Institutonal banking Consumer,Private & Business Banking Central& other items Total Gross $millon ECL $millon Coverage % Gross $millon ECL $millon Coverage % Gross $millon ECL $millon Coverage % Gross $millon ECL $millon Coverage % Increase in PD 14,737187 1.3% 2,704 122 4.5% 4,691 22 0.5% 22,132 331 1.5% Non-purely precautionary early alert 5,000 26 0.5% 83 – 0.0% –– 0.0% 5,083 26 0.5% Higher risk (CG12) 1,075 37 3.4% 27 1 3.2% 631 20 3.1% 1,733 57 3.3% Sub-investment grade 235 1 0.3% –– 0.0% –– 0.0% 235 1 0.3% Topup/Sell down (Private Banking) –– 0.0% 493 1 0.2% –– 0.0% 493 1 0.2% Others 4,390 8 0.2% 178 2 1.2% 173 2 1.3% 4,741 13 0.3% 30 days past due –– 0.0% 199 18 9.3% –– 0.0% 199 18 9.3% Management overlay 166 42 – 208 Total stage 2 25,437 425 1.7% 3,684 187 5.1% 5,495 44 0.8% 34,616 656 1.9% 2020 Corporate, Commercial & Institutonal banking Consumer,Private & Business Banking Central& other items Total Gross $millon ECL $millon Coverage % Gross $millon ECL $millon Coverage % Gross $millon ECL $millon Coverage % Gross $millon ECL $millon Coverage % Increase in PD 19,680 326 1.7% 3,219 152 4.7% 1,966 9 0.5% 24,865 487 2.0% Non-purely precautionary early alert 6,983 28 0.4% –– 0.0% –– 0.0% 6,983 28 0.4% Higher risk (CG12) 635 36 5.7% –– 0.0% 383 12 3.1% 1,018 48 4.7% Sub-investment grade 317 4 1.3% –– 0.0% 1,018 2 0.2% 1,336 6 0.4% Topup/Sell down (Private Banking) –– 0.0% 632 1 0.1% –– 0.0% 632 1 0.1% Others 4,126 8 0.2% 411 1 0.3% 211 4 2.1% 4,748 14 0.3% 30 days past due –– 0.0% 27227 10.0% –– 0.0% 27227 10.0% Management overlay 197 78 – 275 Total stage 2 31,742 599 1.9% 4,534 259 5.7% 3,578 27 0.8% 39,854 885 2.2% The majorty of exposures and the associated expected credit loss provisons continue to be in stage 2 due to decreases in the probabilty of default. The amount of exposures in Corporate, Commercial and Institutonal Banking placed on non-purelyprecautionary early alert decreased during the year and as a result the proportion of stage 2driven bythis category decreased. Although ‘Higher risk’ lending balances decreased compared to 2020, the portion of exposures in stage 2 with a ‘High risk’ driver increased, as a higher proportion of CG12 accounts were included withn ‘Increase in PD’ in 2020. 10 per centof the provisons heldagainst stage 2 Consumer, Private and Business Banking exposures arise from the applicaton of the 30 days past due backstop, although this represents only 5 per cent of exposures. The proportion of PD driven exposures in stage 2 has reduced compared to 2020 as the impact of COVID-19 measures reduced in the Group’s major Consumer Banking markets. The Central and other items segment has seen a signficant increase in the ’Higher risk’ category at 31 December 2021 primarly due to newly downgraded sovereign counterparties in Sri Lanka. ‘Others’primarly incorporates exposures where orignation data is incomplete and the exposures are allocated into stage2. Creditimparmentcharge (restated 1 )(audited) The ongoing credit imparment is a net charge of $263 millon (2020: $2,294 millon). The net charge of $263 millon is divded across Consumer, Private and Business Banking $285 millon and $22 millon in Central and other items, partly offset by release of $44 millon in Corporate, Commercial and Institutonal Banking. Stage 1 and 2 imparment is a net charge of $78 millon. ![]() 219 Standard Chartered – Annual Report 2021 Risk review and Capital review Corporate, Commercial and Institutonal Banking stage 1 and 2 is a net charge of $23 millon, due to a $30 millon charge from a post model adjustment for multipleeconomic scenarios, $24 millon charge on sovereign downgrade of Sri Lanka, offset by decline in stage 2 exposures reflecting lower levels of non-purely precautionary early alert exposures, additonal collateral and improvement in probabilty of default. The COVID-19 managementoverlay reduced by $95 millon although this was offset by a new, separately assessed management overlay in Q4 2021 of $95 millon for China Commercial Real Estate exposures. Consumer, Private and Business Banking credit imparment has also decreased (2021: $285 millon, 2020: $741 millon). Stage 1 and 2 imparment reduced to $32 millon at the end of 2021 (2020: $413 millon) mainly due to ECL reversals as the forward-looking macroeconomic outlook improved in relative terms. The Central and other items segment stage 1 and 2 is a net charge of $23 millon primarly due to multiple economic scenario post model adjustments. Stage 3 imparment is a net charge of $185 millon. There was a release of $67 millon from Corporate, Commercial and Institutonal Banking stage 3 credit imparment due to signficant recoveries during the year. Consumer, Private and Business Banking stage 3 credit imparment of $253 millon decreased from $328 millon, driven by better recoveries. Restructuring (audited) There was a net $9 millon imparment release from the Group’s discontnued businesses. 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 businessportfolio Corporate, Commercial & Institutonal Banking 1 23 (67) (44) 390 1,139 1,529 Consumer, Private & Business Banking 1 32 253 285 413 328 741 Central & other items 23 (1) 22 24 – 24 Credit imparmentcharge/(release) 78 185 263 827 1,467 2,294 Restructuring businessportfolio Others (2) (7) (9) – 3131 Credit imparmentcharge/(release) (2) (7) (9) – 3131 Total credit imparment charge/(release) 76 178 254 827 1,498 2,325 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 and 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 COVID-19relief measures COVID-19 payment-related relief measures were in place across most of our markets during 2020 and 2021, particularly focused on Consumer, Private and Business Banking customers. Measures in most markets have now expired, althoughmoratoria schemes incertain Africa andthe Middle East countries have been extended to 30 June 2022. These schemes are generally intiated by country regulators and governments. Measures include princpal and/or interest moratoria and term extensions, andare generally available to eligble borrowers (those that are current or less than 30 days past due, unless localregulators 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 and the Middle East, compulsory (regulatory approved) moratoria reliefs are applied toall eligble loans unless a customerhas specifcally asked to opt out. In most major Consumer, Private and 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, Commercial and 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 beforborne. 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 onthe new termsas set out inthe 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. ![]() 220 Standard Chartered – Annual Report 2021 Risk review Risk profile Impact from temporary changes to loancontractual terms 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 amount outstanding at 31 December 2021. The Consumer, Private and Business Banking portfolio under moratoria reduced to $1,182 millon compared to $2,372 millon at the end of 2020 and a peak of $8.9 billon in the first half of 2020,with the remainng balance primarly concentrated in Asia. This represents less than 1 per cent of the Group’s gross loans and advances to banks and customers. 51 per cent of relief measures are fully secured. 31 per cent of the total amounts approved are to Business Banking customers, concentrated in industres that have been materially disrupted. 79 per cent of the total amounts approved are in stage 1 and 2 per cent in stage 2, the latter mainly in Malaysia where compulsory (regulatory mandated) reliefmeasures are in place. 79per cent of stage 2 accounts under relief measures are collateralised byimmovable property. In Corporate, Commercial and Institutonal Banking, 0.2 per cent of the portfolio are subject to relief measures. Around 68 per cent of the amounts approved are for tenor extensions of 90 days or less and approximately 17 per cent of the reliefs granted are to clients in vulnerable sectors. COVID-19relief measures Segment/Product Total Asia Africa & 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 % of portfolio 2 Credit cards & Personal loans 217 1.2% 74 0.5% 143 7.7% Mortgages & Auto 6000.7% 590 0.7%10 0.6% Business banking 365 4.3% 365 4.4% – 0.0% TotalConsumer, Private and Business Banking 1,182 0.9% 1,029 0.9% 153 3.1% Corporate, Commercial & Institutonal Banking 511 0.2% 388 113 10 Total at 31 December 2021 1,693 0.5% 1,417 266 10 Total Consumer, Private and BusinessBanking 2,372 1.8% 2,206 166 Corporate, Commercial & Institutonal Banking 1,195 0.6% 746 429 20 Total at 31 December 2020 3,567 1.0% 2,952 595 20 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 Problem credit management and provisoning (audited) Forborne and other modifed loans by client segment 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 $499 millon to $1,529 millon, compared with 31 December 2020, $718 millon of which was in performing forborne loans offset by an increase of $219 millon in non-performing forborne loans. Just under half of the total decrease in forborne loans was in Corporate, Commercial and Institutonal Banking, primarly driven by cures out of performing forborne loans in Africa and the Middle East, with the remainder of the decrease due to lower performing forborne loans in Consumer, Private and Business Banking mainly driven by full repayment of a signficant outstanding loan account in Private Banking. ![]() 221 Standard Chartered – Annual Report 2021 Risk review and Capital review The table below presents loans with forbearance measures by segment. 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 Banking $millon Consumer, Private & Business Banking $millon Total $millon All loans with forbearance measures 2,526 406 2,932 2,890 703 3,593 Credit imparment (stage 1 and 2) (4) – (4) (3) (1) (4) Credit imparment (stage 3) (1,237) (162) (1,399) (1,380) (181) (1,561) Net carrying value 1,285 244 1,529 1,507 521 2,028 Included withn the above table Gross performingforborne loans 272 59 331 698 351 1,049 Modifcation of terms and conditons¹ 257 59 316 696 351 1,047 Refinancng² 15–15 2–2 Impairment provisons (4) – (4) (3) (1) (4) Modifcation of terms and conditons 1 (4) – (4) (3) (1) (4) Refinancng 2 ––– ––– Net performing forborne loans 268 59327 695 350 1,045 Collateral 65 56 121 329 23 352 Gross non-performing forborne loans 2,253 348 2,601 2,192 352 2,544 Modifcation of terms and conditons¹ 2,095 348 2,443 2,022 352 2,374 Refinancng² 158 – 158 170 – 170 Impairment provisons (1,237) (162) (1,399) (1,380) (181) (1,561) Modifcation of terms and conditons¹ (1,106) (162) (1,268) (1,248) (181) (1,429) Refinancng² (131) – (131) (132) – (132) Net non-performing forborne loans 1,016 186 1,202 812 171 983 Collateral 236 62 298 289 47 336 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 and Private Banking and Retail Banking to Consumer, Private & Business Banking. Prior period has been restated Forborne and other modifed loans by region Amortised cost 2021 2020(Restated) Asia $millon Africa & Middle East $millon Europe & Americas $millon Total $millon Asia 1 $millon Africa & Middle East $millon Europe & Americas $millon Total $millon Performing forborne loans 205 76 46 327 135 585 3251,045 Stage 3 forborne loans 572 137 493 1,202 639 164 180 983 Net forborne loans 777 213 539 1,529 774749 505 2,028 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 beenrestated ![]() 222 Standard Chartered – Annual Report 2021 Risk review Risk profile Credit-impared (stage 3) loans and advances by client segment (audited) Gross stage 3 loans for the Group is $8.1 billon (2020: $9.2 billon). The reduction in loans was primarly driven by Corporate, Commercial and Institutonal Banking debt sales and repayments in Asia and Africa and the Middle East regions. Inflows into stage 3 for Corporate, Commercial and Institutonal Banking were lower by 53 per cent at $1.7 billon, compared with $3.6 billon in 2020 and remain low compared to historcal norms. The new inflows in 2021 were mainly in Asia and Africa and the Middle East. Gross stage 3 loans in Consumer, Private and Business Banking remained broadly stable at $1.6 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 representsthe 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 and Institutonal Banking cover ratio decreased by 1 per cent as a result of write-offs and new accounts with a lower coverage than existng stage 3 loans. The Consumer, Private and Business Banking cover ratio is 51 per cent (2020: 47 per cent) due to a new provison taken on a Business Banking client. Amortised cost 2021 2020 (Restated 1 ) Corporate, Commercial & Institutonal Banking $millon Consumer, Private & Business Banking $millon Total $millon Corporate, Commercial & Institutonal Banking $millon Consumer, Private & Business Banking $millon Total $millon Gross credit-impared 6,520 1,575 8,095 7,652 1,562 9,214 Credit imparment provisons (3,861) (796) (4,657) (4,610) (731) (5,341) Net credit-impared 2,659 779 3,438 3,042 831 3,873 Cover ratio 59%51% 58% 60% 47% 58% Collateral ($ millon) 805 641 1,446 1,063 643 1,706 Cover ratio (after collateral) 72% 91% 75% 74% 88% 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 and Private Banking and Retail Banking to Consumer, Private & Business Banking. Prior period has been restated Credit-impared (stage 3) loans and advances by geographic region Stage 3 gross loans decreased by $1.1 billon or 12 per cent compared with 31 December 2020. The decrease was primarly driven by Corporate, Commercial and Institutonal Banking debt sales and repayments in Asia and Africa and the Middle East regions. Amortised cost 2021 2020(Restated) Asia $millon Africa & Middle East $millon Europe & Americas $millon Total $millon Asia 1 $millon Africa & Middle East $millon Europe & Americas $millon Total $millon Gross credit-impared 4,448 2,918 729 8,095 4,790 3,473 951 9,214 Credit imparment provisons (2,401) (1,970) (286) (4,657) (2,483)(2,313) (545) (5,341) Net credit-impared 2,047 948 443 3,438 2,307 1,160 406 3,873 Cover ratio 54% 68% 39% 58% 52% 67% 57% 58% 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 beenrestated 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 and counterparty risk of theguarantor. 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 unadjusted market value of collateral across all asset types, in respect of Corporate, Commercial and Institutonal Banking, without adjustng for over-collateralisaton, was $346 billon (2020: $313 billon). ![]() 223 Standard Chartered – Annual Report 2021 Risk review and Capital review 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 inaccordance with our riskmitgation policy and for the effect of over-collateralisaton. The extent of overcollateralizat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. The value of collateral reflects management’s best estimate and is 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 and Business Banking segment, 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. Total collateral for Consumer, Private and Business Banking has increased to $103 billon (2020: $100 billon) due to an increase in Mortgages and Secured wealthproducts. Stage 2 collateral reduced by $2.9 billon to $6.1 billon, due to a decrease in Corporate, Commercial and Institutonal Banking and Consumer, Private and Business Banking loan balances. Total collateral for Central and other items increased by $4.3 billon to $6.4 billon compared with 2020 due to an increase in lending under reverse repurchase agreements. Collateral held on loans and advances The table below details collateral held against exposures, separately disclosng stage 2 and stage 3 exposure and corresponding collateral. Amortised cost 2021 Net amountoutstanding Collateral Net 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 1 183,784 15,053 2,702 29,414 5,077 805 154,370 9,976 1,897 Consumer, Private & Business Banking 136,518 1,738 779 102,769 1,045 641 33,749 693 138 Central & other items 22,549 110 – 6,381 –– 16,168 110 – Total 342,851 16,901 3,481138,564 6,122 1,446 204,287 10,779 2,035 Amortised cost 2020 (Restated) Net amountoutstanding Collateral Net 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, 3 177,804 19,863 3,042 29,002 7,373 1,063 148,802 12,490 1,979 Consumer, Private & Business Banking 3 129,093 2,406 831 100,392 1,677 643 28,701 729 188 Central & other items 19,149 –– 2,053 –– 17,096 –– Total 326,04622,269 3,873 131,447 9,050 1,706 194,599 13,219 2,167 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 and Private Banking and Retail Banking to Consumer, Private & Business Banking. Prior period has been restated Collateral – Corporate, Commercial and Institutonal Banking (audited) Collateral heldagainst Corporate, Commercial and Institutonal Banking exposures amounted to $29 billon. Collateral taken for longer-term and sub-investment grade corporate loans improved to 49 per cent (2020: 46 per cent). Our underwritng standards encourage takingspecifc charges on assets and we consistently seek high-quality, investment-grade collateral. 75 per cent of tangible collateral (2020: 82 per cent) held comprises physical assets or is property based, with the remainder largely in cash and investment securites. The reduction intangible collateral is due to decrease in property collateral from repayments in Asia. Overall collateral remained largely flat at $29 billon as the decrease in tangible collateral held that comprises physical assets or is property based, was offset by increases in cash and investment securites by $1.4 billon, and in financal guarantee and insurance by $1.1 billon. Non-tangible collateral, such as guarantees and standby letters of credit, is alsoheld 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 the probabilty of default and other credit-related factors. Collateral is alsoheld against off- balancesheet exposures, includng undrawn commitments and trade-related instruments. ![]() 224 Standard Chartered – Annual Report 2021 Risk review Risk profile Corporate, Commercial and Institutonal Banking (restated 2 ) Amortised cost 2021 $millon 2020 $millon Maximum exposure 183,784 177,804 Property 10,589 12,872 Plant, machinery and other stock 1,411 1,585 Cash 3,549 2,066 Reverse repos 2,042 2,172 A- to AA+ 122 438 BBB- toBBB+ 483 742 Unrated 1,437 992 Financal guaranteesand insurance 6,616 5,470 Commodites 198 222 Ships and aircraft 5,009 4,615 Total value of collateral 1 29,414 29,002 Net exposure 154,370 148,802 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 Collateral – Consumer, Private and Business Banking (audited) In Consumer, Private and Business Banking, 86 per cent of the portfolio is fully secured (2020: 86 per cent). 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 $millon Maximum exposure 117,129 1,329 18,060136,518 111,112 760 17,221 129,093 Loans toindviduals Mortgages 89,222 –– 89,222 85,597 –– 85,597 CCPL 150 – 17,03117,181 171 – 16,921 17,092 Auto 542 –– 542 536 –– 536 Securedwealthproducts 21,495 –– 21,495 19,886 –– 19,886 Other 5,720 1,329 1,029 8,078 4,922 760 300 5,982 Total collateral 1 102,769 100,392 Net exposure 2 33,749 28,701 Percentage oftotalloans 86% 1% 13% 86% 1% 13% 1Collateral values are adjusted where appropriate in accordance with our risk mitgation policy and for the effect of over-collateralisaton 2Amounts net of ECL ![]() 225 Standard Chartered – Annual Report 2021 Risk review and Capital review Mortgage loan-to-value ratios by geography (audited) Loan-to-value (LTV) ratios measure the ratio of the current mortgage outstanding to the current fair value of the properties on which they are secured. In mortgages, the value of property held as security signficantly exceeds princpal outstanding of the mortgage loans. The average LTV of the overall mortgage portfolio reduced from 45 per cent in 2020 to 41 per cent in 2021. Hong Kong, which represents 33 per cent of the mortgage portfolio, has an average LTV of 43.8 per cent. All of our other key markets continue to have low portfolio LTVs, (Korea, Singapore and Taiwan at 35.2 per cent, 43.2 per cent and 48.8 per cent respectively). An analysis of LTV ratios by geography for the mortgage portfolio is presented in the table below. Amortised cost 2021 Asia % Gross Africa & Middle East % Gross Europe & Americas % Gross Total % Gross Less than 50 per cent 68.2 27.6 16.8 66.4 50 per cent to 59 per cent 11.6 18.6 19.9 11.9 60 per cent to 69 per cent 8.1 19.6 37.5 8.9 70 per cent to 79 per cent 9.1 16.5 17.1 9.4 80 per cent to 89 per cent 2.4 9.1 8.7 2.7 90 per cent to 99 per cent 0.5 4.8 – 0.5 100 per cent and greater 0.1 3.8 – 0.2 Average portfolio loan-to-value 40.5 61.9 60.8 41.1 Loans to indviduals – mortgages ($millon) 85,765 1,651 1,806 89,222 Amortised cost 2020 (Restated) Asia 1 % Gross Africa & Middle East % Gross Europe & Americas % Gross Total % Gross Less than 50 per cent 62.4 22.1 16.4 59.7 50 per cent to 59 per cent 15.015.028.0 15.4 60 per cent to 69 per cent 10.5 19.629.0 11.5 70 per cent to 79 per cent 8.6 20.7 21.7 9.4 80 per cent to 89 per cent 2.6 7.4 3.72.7 90 per cent to 99 per cent 0.9 6.0 0.6 1.0 100 per cent and greater – 9.2 0.60.3 Average portfolio loan-to-value 44.1 64.7 60.4 44.7 Loans to indviduals – mortgages ($millon) 81,570 1,871 2,156 85,597 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 beenrestated Collateral and other creditenhancements possessed or called upon(audited) 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 is $11.8 millon (2020: $23.2 millon). 2021 $millon 2020 $millon Property, plantand equipment 5.8 18.2 Guarantees 6.0 4.8 Other 0.0 0.2 Total 11.8 23.2 ![]() 226 Standard Chartered – Annual Report 2021 Risk review Risk profile 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, referencingloan assetswith 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 Risk and Foreign Exchange Rate Risk on these assets. Creditlinkednotes The Group has issued credit linked notes for portfolio management purposes, referencingloan assetswith 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 linkednotes provide mitgation. Derivatve financal instruments The Group enters into master netting agreements, whichin 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 CreditRisk mitgation(page 248). Off-balance sheet exposures For certain types of exposure, 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 adefault take place. Other portfolio analysis This section provides maturity analysis by credit quality by industry and industry and retail products analysis by region. Maturity analysis of loans and advances by client segment Loans and advances to the Corporate, Commercial and Institutonal Banking segment remain predominantly short-term, with $95.5 billon or 66 per cent (2020: $84.6 billon or 61 per cent) maturing in less than one year. 98 per cent (2020: 94 per cent) of loans to banks mature in less than one year, an increase compared with 2020 as net exposures increased by $1.8 billon. 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 and Business Banking short-term book of one year or less and long-term book of over five years are stable at 26 per cent (2020: 25 per cent) and 62 per cent (2020: 62 per cent) of the total portfolio respectively. 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 95,454 36,953 11,299 143,706 Consumer, Private & Business Banking 35,991 16,783 85,093 137,867 Central & other items 22,318 224 7 22,549 Gross loans and advances to customers 153,76353,960 96,399 304,122 Impairment provisons (5,057) (462) (135) (5,654) Net loansand advances to customers 148,706 53,498 96,264 298,468 Net loans and advances to banks 43,274 955 154 44,383 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 84,554 41,133 12,962 138,649 Consumer, Private & Business Banking 1 33,037 16,002 81,474 130,513 Central & other items 18,704 443 3 19,150 Gross loans and advances to customers 136,295 57,578 94,439 288,312 Impairment provisons (5,722) (743) (148) (6,613) Net loansand advances to customers 130,573 56,835 94,291 281,699 Net loans and advances to banks 41,524 2,821 2 44,347 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 and Private Banking and Retail Banking to Consumer, Private & Business Banking. Prior period has been restated ![]() 227 Standard Chartered – Annual Report 2021 Risk review and Capital review 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, gross loans and advances increased by $15.8 billon to $304.1 billon compared with 31 December 2020, of which $8.5 billon was from Corporate, Commercial and Institutonal Banking and the Central and other items segments, and $7.4 billon in Consumer, Private and Business Banking. Stage 1 loans increased by $23 billon to $279.2 billon. Of the $23 billon, $15 billon were corporate loans, mainly due to new lending in Manufacturing and primarly stage transfers in the Transport, telecom and utilties, Commercial real estate and Manufacturing sectors. Consumer, Private and Business Banking increased by $8 billon, mainly from the mortgage book and secured wealth products from new orignations largely from Asia. Stage 2 loans decreased by $6 billon largely due to Corporate, Commercial and Institutonal Banking, in part due to transfers to stage 1. Stage 3 loans reduced by $1.1 billon to $8.1 billon due to Corporate, Commercial and Institutonal Banking debt sales and repayments in Asia and Africa and the Middle East regions. 2021 Stage 1Stage 2Stage 3 Total Gross balance $millon Total credit impar- ment $millon Net carrying amount $millon Gross balance $millon Total credit impar- ment $millon Net carrying amount $millon Gross balance $millon Total credit impar- ment $millon Net carrying amount $millon Gross balance $millon Total credit impar- ment $millon Net carrying amount $millon Industry: Energy 10,454 (19) 10,435 2,067 (76) 1,991 998 (719) 279 13,519 (814) 12,705 Manufacturing 23,792 (9) 23,783 1,181 (30) 1,151 852 (562) 290 25,825 (601) 25,224 Financng, insurance and non-banking 24,380 (9) 24,371 1,257 (12) 1,245268 (207) 61 25,905 (228) 25,677 Transport, telecom and utilties 12,778 (5) 12,773 4,926 (51) 4,875 966 (289) 677 18,670 (345) 18,325 Food andhousehold products 8,093 (2) 8,091 721 (26) 695 380 (276) 104 9,194 (304) 8,890 Commercial real estate 17,680 (43) 17,637 1,787 (75) 1,712 833 (335) 498 20,300 (453) 19,847 Minngand quarrying 4,793 (3) 4,790 480 (20) 460 272 (167) 105 5,545 (190) 5,355 Consumer durables 7,069 (3) 7,066 407 (9) 398 425 (346) 79 7,901 (358) 7,543 Construction 2,279 (3) 2,276 506 (19) 487 914 (624) 290 3,699 (646) 3,053 Trading companies and distrbutors 1,144 (1) 1,143 117 (8) 109 143(135) 8 1,404 (144) 1,260 Government 26,588 (2) 26,586 678 (1) 677 154 (8) 146 27,420 (11) 27,409 Other 5,757 (4) 5,753 801 (14) 787 316 (194) 122 6,874 (212) 6,662 RetailProducts: Mortgage 87,987 (22) 87,965 862(20) 842 599 (184) 415 89,448 (226) 89,222 CCPL and other unsecured lending 16,880 (278) 16,602 570 (132) 438 395 (254) 141 17,845 (664) 17,181 Auto 541 (1) 540 2–2––– 543 (1) 542 Securedwealth products 21,067 (61) 21,006307 (10) 297 483 (291) 19221,857 (362) 21,495 Other 7,896 (8) 7,888 180 (21) 159 97 (66) 31 8,173 (95) 8,078 Total value (customers)¹ 279,178 (473) 278,705 16,849 (524) 16,325 8,095 (4,657) 3,438 304,122 (5,654) 298,468 1Includes reverse repurchase agreements and other simlar secured lending held at amortised cost of $7,331 millon ![]() 228 Standard Chartered – Annual Report 2021 Risk review Risk profile 2020 Stage 1Stage 2Stage 3 Total Gross balance $millon Total credit impar- ment $millon Net carrying amount $millon Gross balance $millon Total credit impar- ment $millon Net carrying amount $millon Gross balance $millon Total credit impar- ment $millon Net carrying amount $millon Gross balance $millon Total credit impar- ment $millon Net carrying amount $millon Industry: Energy 10,047 (25) 10,022 1,889 (87) 1,802 1,036 (777) 259 12,972 (889) 12,083 Manufacturing 20,164 (13) 20,151 2,763 (65) 2,698 1,554 (1,042) 512 24,481 (1,120) 23,361 Financng, insurance and non-banking 23,416 (8) 23,408 834 (7) 827 310 (209) 101 24,560 (224) 24,336 Transport, telecom and utilties 11,771 (12) 11,759 5,071 (124) 4,947 1,041 (473) 568 17,883 (609) 17,274 Food andhousehold products 8,625 (7) 8,618 752 (24) 728 529 (346) 183 9,906 (377) 9,529 Commercial real estate 15,847 (13) 15,834 3,068 (34) 3,034 408 (186) 222 19,323 (233) 19,090 Minngand quarrying 4,723 (6) 4,717 887 (19) 868 286 (182) 104 5,896 (207) 5,689 Consumer durables 4,689 (3) 4,686 967 (36) 931601 (413) 188 6,257 (452) 5,805 Construction 2,571 (3) 2,568 849 (28) 821 1,067 (527) 540 4,487 (558) 3,929 Trading companies and distrbutors 877 (1) 876 314 (7) 307 284 (237) 471,475 (245) 1,230 Government 23,099 (1) 23,0981,064 (3) 1,061 220 (11) 209 24,383 (15) 24,368 Other 4,314 (4) 4,310 1,546 (53) 1,493 316 (207) 109 6,176 (264) 5,912 RetailProducts: Mortgage 83,760 (18) 83,742 1,507 (36) 1,471 593 (209) 384 85,860 (263) 85,597 CCPL and other unsecured lending 16,708 (363) 16,345 785 (205) 580 450 (283) 167 17,943 (851) 17,092 Auto 531 (1) 530 5–51–1 537 (1) 536 Securedwealth products 19,375 (52) 19,323 319 (9) 310 466 (213) 253 20,160 (274) 19,886 Other 5,920 (4) 5,916 41 (1) 40 52 (26) 26 6,013 (31) 5,982 Total value (customers)¹ 256,437 (534) 255,903 22,661 (738) 21,923 9,214 (5,341) 3,873 288,312 (6,613) 281,699 1Includes reverse repurchase agreements and other simlar secured lending held at amortised cost of $2,919 millon Industry and Retail Products analysis of loans and advances bygeographicregion This section provides an analysis of the Group’s amortised cost loan portfolio, net of provisons, by industry and region. In the Corporate, Commercial and Institutonal Banking segment, our largest industry exposures are to Financng, insurance and non-banking, Government and Manufacturing sectors, with each constitutng at least 15 per cent of Corporate, Commercial and Institutonal Banking loans and advances tocustomers. Financng, insurance and non-banking industry clients are mostly investment-grade insttutions and this lending forms part of the liqudity management of the Group. The Manufacturing sector groupis spread across a diverse range of industres, includng automobiles and components, capital goods, pharmaceuticals, biotech and life sciences, technology hardware and equipment, chemicals, paper products and packaging, with lending spread over 3,500 clients. Loans and advances to the Energy sector remained largely stable at $13.5 billon or 8 per cent (2020: $13.0 billon or 8 per cent) of total loans and advances to Corporate, Commercial and Institutonal Banking. The Energy sector lending is spread across five sub-sectors and over 190 clients. The Group provides loans to commercial real estate counterparties of $20 billon, which represents 7 per cent of total customer loans and advances. In total, $8.4 billon of this lending is to counterparties where the source of repayment is substantially derived from rental or sale of real estate and is secured by real estate collateral. The remainng commercial real estate loans comprise working capital loans to real estate corporates, loans with non-property collateral, unsecured loans and loans to real estate entites of diversfied conglomerates. The average LTV ratio of the commercial real estate portfolio has decreased to 50 per cent, compared with 51 per cent in 2020. The proportion of loans with an LTV greater than 80 per cent has decreased to 2 per cent, compared with 4 per cent in 2020. The China Commercial Real Estate portfolio is being closely monitored and a management overlay of $95 millon has been taken to account for risks not reflected in the ECL models. The Mortgage portfolio continues tobe the largestportion of the Retail Products portfolio, at $89.4 billon. CCPL and other unsecured lending remainedlargely stable at $17.8billon. ![]() 229 Standard Chartered – Annual Report 2021 Risk review and Capital review Amortised cost 2021 2020(Restated) Asia $millon Africa & Middle East $millon Europe & Americas $millon Total $millon Asia 1 $millon Africa & Middle East $millon Europe & Americas $millon Total $millon Industry: Energy 6,265 2,721 3,719 12,705 4,879 2,717 4,487 12,083 Manufacturing 20,771 1,751 2,702 25,224 17,899 2,202 3,260 23,361 Financng, insurance and non-banking 14,184 905 10,588 25,677 15,278 1,0188,040 24,336 Transport, telecomand utilties 11,661 4,218 2,44618,325 10,377 5,218 1,679 17,274 Food andhousehold products 5,497 2,360 1,033 8,890 5,922 2,418 1,189 9,529 Commercialreal estate 17,150 1,048 1,649 19,847 15,945 1,755 1,390 19,090 Minngand quarrying 3,833 572 950 5,355 4,080 7178925,689 Consumer durables 6,742 398 403 7,543 5,249 335 221 5,805 Construction 1,839 814 400 3,053 2,608 940 381 3,929 Trading companies anddistrbutors 1,047 176 37 1,260 908 192 130 1,230 Government 22,987 4,117 305 27,409 19,416 4,880 72 24,368 Other 4,681 670 1,311 6,662 3,770 928 1,214 5,912 RetailProducts: Mortgages 85,765 1,651 1,806 89,222 81,570 1,871 2,156 85,597 CCPL and otherunsecured lending 15,090 1,991 100 17,181 14,977 2,019 96 17,092 Auto 500 42 – 542 481 55 – 536 Securedwealthproducts 19,984 545 966 21,495 18,120 383 1,383 19,886 Other 7,265 813 – 8,078 5,426 556 – 5,982 Net loansand advances to customers 245,261 24,792 28,415298,468 226,905 28,204 26,590 281,699 Net loans and advances to banks 30,301 5,966 8,116 44,383 31,545 5,741 7,061 44,347 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 beenrestated Vulnerable sectors Vulnerable sectors are those thattheGroup considers to be most at risk from COVID-19 and volatile energy prices, and wecontinue to monitor exposures tothesesectors particularly carefully. Total net on balance sheetexposure to vulnerablesectors increased by $0.5 billon to $33 billon compared to 31 December 2020 and the total net on and off-balance sheet exposure increased to 28 per cent (2020: 27 per cent) of the total net exposure in Corporate, Commercial and Institutonal Banking. The increase is largely due to higher levels of undrawn commitments and financal guarantees, particularly in the Commercial real estate and Commodity traders sectors respectively. Stage 2 loans decreased by $1.9 billon of loans to vulnerable sectors, as compared to 31 December 2020. This was primarly driven by a decrease in Commercial real estate portfolio due to transfers to stage 1. Stage 3 loans to vulnerable sectors increased by $0.6 billon compared to 31 December 2020, mainly due to Commercial real estate and Oil and gas sectors from new downgrades from ‘High risk’ accounts. The Group has net exposure of $4.0 billon (2020: $3.5 billon) to China Commercial Real Estate counterparties which are primarly booked in Hong Kong and China. $3.1 billon of this exposure is to property developers whose cashflows have been particularly impacted bypolicy changes to deleverage the property sector and $2.1 billon of these are on purely precautionary and non-purelyprecautionary early alert. As a result of ongoing uncertaintes affecting this sector, the Group has taken a $95 millon (2020: $nil) management overlay on credit imparment for the exposures on early alert at 31 December 2021 (see page 240). The Group is further indrectly exposed to China Commercial Real Estate through its associate investment in China Bohai Bank. Refer to Note 32 Investments in subsidary undertakings, jont ventures and associates. ![]() 230 Standard Chartered – Annual Report 2021 Risk review Risk profile Maximum exposure Amortised cost 2021 Maximum on-balance sheet exposure (net of credit imparment) $millon Collateral $millon Net on-balance sheet exposure $millon Undrawn commitments (net of credit imparment) $millon Financal guarantees (net of credit imparment) $millon Net off-balance sheet exposure $millon Total on & off-balance sheet net exposure $millon Industry: Aviaton¹ 3,458 2,033 1,425 1,914 431 2,345 3,770 Commoditytraders 8,732 262 8,4702,434 6,832 9,266 17,736 Metals & minng 3,616 450 3,166 3,387637 4,024 7,190 Commercialreal estate 19,847 7,290 12,557 7,192 291 7,483 20,040 Hotels & tourism 2,390 789 1,601 1,363 121 1,484 3,085 Oil & gas 6,826 1,029 5,797 8,8426,013 14,855 20,652 Total 44,869 11,853 33,016 25,132 14,325 39,457 72,473 TotalCorporate, Commercial & Institutonal Banking 139,401 26,294 113,107 96,406 49,666 146,072 259,179 TotalGroup 342,851 138,564 204,287 158,421 58,291 216,712 420,999 Amortised cost 2020 (Restated) Maximum on-balance sheet exposure (net of credit imparment) $millon Collateral $millon Net on-balance sheet exposure $millon Undrawn commitments (net of credit imparment) $millon Financal guarantees (net of credit imparment) $millon Net off-balance sheet exposure $millon Total on & off-balance sheet net exposure $millon Industry: Aviaton¹ ² 4,255 2,1062,149 1,321 531 1,852 4,001 Commoditytraders 8,664 318 8,346 2,189 4,459 6,648 14,994 Metals & minng 3,882 513 3,369 2,850 886 3,736 7,105 Commercialreal estate 19,090 8,00411,086 5,283 313 5,596 16,682 Hotels & tourism 2,557 1,110 1,447 1,185 110 1,295 2,742 Oil & gas 7,199 1,032 6,167 8,332 5,587 13,919 20,086 Total 45,647 13,083 32,564 21,160 11,886 33,046 65,610 TotalCorporate, Commercial & Institutonal Banking 133,457 27,561 105,896 92,001 46,725 138,726 244,622 TotalGroup 326,046 131,447 194,599 153,286 53,582 206,868 401,467 1As a result of industry classifcation changes in 2021, FY 2020 on-balance sheet exposure has been restated by $416 millon to make the numbers comparable 2In additon to the aviaton sector loan exposures, the Group owns $3.1 billon (31 December 2020: $3.9 billon) of aircraft under operating leases. Refer to page 383 – Operating lease assets ![]() 231 Standard Chartered – Annual Report 2021 Risk review and Capital review Loans and advances by stage 2021 Stage 1Stage 2Stage 3 Total Gross balance $millon Total credit impar- ment $millon Net carrying amount $millon Gross balance $millon Total credit impar- ment $millon Net carrying amount $millon Gross balance $millon Total credit impar- ment $millon Net carrying amount $millon Gross balance $millon Total credit impar- ment $millon Net carrying amount $millon Industry: Aviaton 1,120 – 1,120 2,174 (11) 2,163 239 (64) 175 3,533 (75) 3,458 Commoditytraders 8,482 (4) 8,478 195 (5) 190 713 (649) 64 9,390 (658) 8,732 Metals & minng 3,083 (1) 3,082 450 (17) 433 219 (118) 101 3,752 (136) 3,616 Commercial real estate 17,680 (43) 17,637 1,787 (75) 1,712 833 (335) 498 20,300 (453) 19,847 Hotels & tourism 1,562 (1) 1,561 722 (9) 713 182 (66) 116 2,466 (76) 2,390 Oil & gas 4,999 (5) 4,994 1,595 (34) 1,561 486 (215) 271 7,080 (254) 6,826 Total 36,926 (54) 36,872 6,923 (151) 6,772 2,672 (1,447) 1,225 46,521(1,652) 44,869 TotalCorporate, Commercial & Institutonal Banking 122,368 (103) 122,265 14,818 (341) 14,477 6,520 (3,861) 2,659 143,706 (4,305) 139,401 TotalGroup 322,954 (485) 322,469 17,429 (528) 16,901 8,149 (4,668) 3,481348,532 (5,681) 342,851 2020 (Restated) Stage 1Stage 2Stage 3 Total Gross balance $millon Total credit impar- ment $millon Net carrying amount $millon Gross balance $millon Total credit impar- ment $millon Net carrying amount $millon Gross balance $millon Total credit impar- ment $millon Net carrying amount $millon Gross balance $millon Total credit impar- ment $millon Net carrying amount $millon Industry: Aviaton¹ 2,193 (1) 2,192 1,909 (26) 1,883 258 (78) 180 4,360 (105) 4,255 Commoditytraders 8,067 (3) 8,064 473(12) 461 799 (660) 139 9,339 (675) 8,664 Metals & minng 3,128 (3) 3,125 677 (18) 659 210 (112) 98 4,015 (133) 3,882 Commercial real estate 15,847 (13) 15,834 3,068 (34) 3,034 408 (186) 222 19,323 (233) 19,090 Hotels & tourism 1,318 (2) 1,316 1,168 (18) 1,150 138 (47) 91 2,624 (67) 2,557 Oil & gas 5,650 (7) 5,643 1,548 (69) 1,479 276 (199) 77 7,474 (275) 7,199 Total 36,203 (29) 36,174 8,843 (177) 8,666 2,089 (1,282) 807 47,135 (1,488) 45,647 TotalCorporate, Commercial & Institutonal Banking 110,993 (95) 110,898 20,004 (487) 19,517 7,652 (4,610) 3,042 138,649 (5,192) 133,457 TotalGroup 300,452 (548) 299,904 23,010 (741) 22,269 9,214 (5,341) 3,873 332,676 (6,630) 326,046 1As a result of industry classifcation changes in 2021, FY 2020 gross has been restated by $416 millon (Stage 1 $120 millon and Stage 2 $296 millon) to make the numbers comparable Loans and advances by region (net of credit imparment) 2021 2020(Restated) Asia $millon Africa & Middle East $millon Europe & Americas $millon Total $millon Asia 2 $millon Africa & Middle East $millon Europe & Americas $millon Total $millon Industry: Aviaton 1 1,356 1,214 888 3,458 1,795 1,492 968 4,255 Commoditytraders 4,352 660 3,720 8,732 4,617 780 3,267 8,664 Metals & minng 2,736 492 388 3,616 2,825 597 460 3,882 Commercialreal estate 17,150 1,048 1,649 19,847 15,945 1,755 1,390 19,090 Hotel & tourism 1,464 397 529 2,390 1,692 512 353 2,557 Oil & gas 2,770 2,248 1,808 6,826 3,334 2,036 1,829 7,199 Total 29,828 6,059 8,982 44,869 30,208 7,172 8,26745,647 1As a result of industry classifcation changes in 2021, FY 2020 has been restated by $416 millon (Europe &Americas) to make the numbers comparable 2Following 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 beenrestated ![]() 232 Standard Chartered – Annual Report 2021 Risk review Risk profile Credit quality – loans and advances Amortised cost Creditgrade 2021 Aviaton Gross $millon Commodity traders Gross $millon Metals & minng Gross $millon Commercial real estate Gross $millon Hotels & tourism Gross $millon Oil & gas Gross $millon Total Gross $millon Strong 896 5,878 1,730 9,581 731 3,594 22,410 Satisfactory 2,257 2,7881,781 9,735 1,353 2,892 20,806 Higher risk 141 11 22 151 200 108 633 Defaulted 239 713 219 833 182 486 2,672 Total gross balance 3,533 9,390 3,752 20,300 2,466 7,080 46,521 Strong – (1) – (92) –– (93) Satisfactory (8) (5) (14) (21) (4) (24) (76) Higher risk (3)(3) (4) (5) (6) (15) (36) Defaulted (64)(649) (118) (335) (66) (215) (1,447) Total credit imparment (75) (658) (136) (453) (76) (254) (1,652) Strong 0.0%0.0%0.0% 1.0% 0.0%0.0% 0.4% Satisfactory 0.4% 0.2% 0.8% 0.2%0.3%0.8% 0.4% Higher risk 2.1% 27.3% 18.2% 3.3% 3.0% 13.9% 5.7% Defaulted 26.8% 91.0% 53.9% 40.2% 36.3% 44.2%54.2% Cover ratio 2.1% 7.0% 3.6% 2.2% 3.1% 3.6%3.6% Creditgrade 2020 (Restated) Aviaton¹ Gross $millon Commodity traders Gross $millon Metals & minng Gross $millon Commercial real estate Gross $millon Hotels & tourism Gross $millon Oil & gas Gross $millon Total Gross $millon Strong 1,406 4,968 1,055 7,795 696 3,177 19,097 Satisfactory 2,5403,554 2,423 11,110 1,672 3,745 25,044 Higher risk 156 18 327 10 118 276 905 Defaulted 258 799 210 408 138 276 2,089 Total gross balance 4,360 9,339 4,015 19,323 2,624 7,47447,135 Strong (7) (1)(1) (9) – (6) (24) Satisfactory (7) (12) (16) (37) (19) (53) (144) Higher risk (13) (2) (4) (1)(1) (17) (38) Defaulted (78) (660) (112) (186) (47) (199) (1,282) Total credit imparment (105) (675) (133)(233) (67) (275) (1,488) Strong 0.5% 0.0% 0.1%0.1% 0.0% 0.2% 0.1% Satisfactory 0.3%0.3% 0.7% 0.3% 1.1% 1.4% 0.6% Higher risk 8.3% 11.1% 1.2% 10.0% 0.8% 6.2%4.2% Defaulted 30.2% 82.6% 53.3% 45.6% 34.1%72.1% 61.4% Cover ratio 2.4% 7.2% 3.3% 1.2% 2.6% 3.7% 3.2% 1As a result of industry classifcation changes in 2021, FY 2020 gross has been restated by $416 millon (Satisfactory) to make the numbers comparable 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 265). Total gross debt securites and other eligble bills increased by $9.8 billon to $162.8 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, 82 per cent is in stage 1 with the remainng 18 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 $9.4 billon. ![]() 233 Standard Chartered – Annual Report 2021 Risk review and Capital review 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 1 157,352 (67) 157,285 149,316 (56) 149,260 AAA 75,920 (23) 75,897 64,209 (10) 64,199 AA- to AA+ 40,577 (8) 40,569 40,377 (2) 40,375 A- to A+ 23,993 (3) 23,990 26,551 (3) 26,548 BBB- toBBB+ 11,071 (27) 11,044 12,588 (31) 12,557 Lower than BBB- 1,123 (1) 1,122 398 (1) 397 Unrated 4,668 (5) 4,663 5,193 (9) 5,184 Stage 2 5,315 (42) 5,273 3,506 (26) 3,480 AAA 641 (7) 634 24 – 24 AA- to AA+ 592 (3) 589 ––– A- to A+ 22 (1) 21 50 (2) 48 BBB- toBBB+ 2,869 (10) 2,859 2,693 (7) 2,686 Lower than BBB- 809 (21) 788 415 (11) 404 Unrated 382 – 382 324 (6) 318 Stage 3 113 (66) 47 114 (58) 56 Lower than BBB- ––– ––– Unrated 113 (66) 47 114 (58) 56 Gross balance¹ 162,780 (175) 162,605 152,936 (140) 152,796 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 $162,700 millon (31 December 2020: $152,861 millon). Refer to the Analysis of financal instrument by stage table on page 203 IFRS 9 expected credit loss methodology (audited) Approach for determinng expected credit losses Credit loss terminology Component Defintion Probabilty ofdefault(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-lookingeconomic assumptions. Loss given default (LGD) The loss that is expected to arise on default, incorporating the impact of forward-looking economic assumptions where relevant,whichrepresents 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 and Institutonal Banking businesses 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 Consumer, Private and Business Banking 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. ![]() 234 Standard Chartered – Annual Report 2021 Risk review Risk profile • For smaller retail portfolios, loss rate models are applied. These use an adjusted gross charge-off rate, developed using monthly write-off and recoveries over the preceding 12 months and total outstanding balances. • While the loss rate models do not incorporate forward- looking informaton, to the extent thatthere 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 againstapproved thresholds. • Annual independent validatons of the performance of material models by Group Model Valuation (GMV); an abridged validaton iscompleted for non-material models. Applicaton oflifet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 tothemaximum 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. Compositon of credit imparmentprovisons (audited) The table below summarises the key components of the Group’s credit imparment provison balances at 31 December 2021 and 31 December 2020. Modelled ECLprovisons, which includes postmodel adjustments, management overlays andthe impact of multiple economic scenarios, were 23 per cent(31 December 2020: 24 per cent) of total credit imparment provisons at 31 December 2021. 24 per cent of the modelled ECL provisons at 31 December 2021 related to judgemental management overlays compared with 21 per cent at 31 December 2020. Post model adjustments (PMAs)reduced signficantly compared with 31 December 2020 as the volatilty in macroeconomic forecasts subsided which removed the need for PMAs to correct for a model’s overreaction to the macroeconomic forecast. 31 December 2021 Corporate, Commercial & Institutonal Banking $ millon Consumer, Private & Business Banking $ millon Central & other items $ millon Total $ millon Modelled ECL provisons (base forecast) 365539 103 1,007 Impact ofmultiple economic scenarios 1 32 14 9 55 Total ECL provisons before management overlays 397 553 112 1,062 Of which: Post model and other model adjustments 24 (8) 824 Management overlays 2 - –COVID-19 102 147 - 249 – China Commercial Real Estate 95 -- 95 Total modelled provisons 594700 112 1,406 Of which:Stage 1 163 378 68 609 Stage 2 425 18744656 Stage 3 6 135 - 141 Stage 3 non-modelled provisons 4,073 662 68 4,803 Total credit imparment provisons 4,667 1,362180 6,209 31 December 2020 Modelled ECL provisons (base forecast) 564724 92 1,380 Impact ofmultiple economic scenarios (8) - (8) Total ECL provisons before management overlays 556 724 92 1,372 Of which: Post model and other model adjustments (56)(36) (66) (158) Management overlay – COVID-19 2 197 162 - 359 Total modelled provisons 753 886 92 1,731 Of which:Stage 1 154 445 65 664 Stage 2 599259 27 885 Stage 3 - 182 - 182 Stage 3 non-modelled provisons 4,803 548 63 5,414 Total credit imparment provisons 5,556 1,434 155 7,145 1Includes a PMA of $51 millon 2$115 millon (2020: $78 millon) is in stage 1, $208 millon (2020: $275 millon) in stage 2 and $21 millon (2020: $6 millon) in stage 3 ![]() 235 Standard Chartered – Annual Report 2021 Risk review and Capital review Post model and other model adjustments Where a model’s performance breaches the monitorng thresholds or validaton standards, anassessment is completed to determine whether an ECL PMA is required to correct for the identfied model issue. PMAs will be removed when the models are updated to correct for the identfied model issue or the estimates return to being withn the monitorng thresholds. The unprecedented volatilty in the quarterly macroeconomic forecasts that was seen over 2020 meant that a number of the Group’s IFRS 9 ECL models were operating outside the boundaries to which they were calibrated. Over the COVID-19 period we have commonly seen GDP decreases over a single quarter of around 10 to 20 per cent while a country is in lockdown, followed by a recovery of 10 to 20 per cent the following quarter when the lockdown is assumed to end. As the quarterly macroeconomic forecasts and associated model estimates have become less volatile in 2021, PMAs relating to volatilty have not been required. As at 31 December 2021, PMAs have been applied for 11 models out of the total of 172 models. In aggregate, the PMAs increase the Group’s imparment provisons by $17 millon (1 per cent of modelled provisons) compared with a $133 millon decrease at 31 December 2020, and primarly relate to a non-linearty PMA (see page 239 for the impact of multiple economic scenarios)and unsecured Consumer lending models. The PMAs range between a $51 millon increase (the non-linearty PMA) to a $16 millon decrease in ECL (for Malaysia Business Clients). Corporate,Commercial and Institutonal Banking PMAs reduced signficantly compared to 31 December 2020 as new models were implemented during the period. As at 31 December 2021, judgemental model adjustments have been applied to certain Consumer, Private and Business Banking models to hold backreleases ofECL identfiedfrom model monitorng breachesbecause moratoriaand other support schemes have suppressed observed defaults. These will be released when theobserved defaults normalise. As set out on page 239, a separate management overlay that covers risk not captured by the models has been applied after taking into account these PMAs. 31.12.21 $ millon 31.12.20 $ millon Volatilty-related PMAs Corporate, Commercial & Institutonal Banking – 17 Consumer, Private & Business Banking – (12) Central & other items – (66) – (61) Model performance PMAs Corporate, Commercial & Institutonal Banking 24 (73) Consumer, Private & Business Banking (15) 1 Central & other items 8 – 17 (72) TotalPMAs 17 (133) Judgemental model adjustments Consumer, Private & Business Banking 7 (25) Totalmodel adjustments 24 (158) Key assumptions and judgements in determinng expected creditloss 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onsbanks holdagainst potential future creditrisk losses should depend not just on the health of the economy today but should also take into accountpotentialchanges 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 moreprovis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. ![]() 236 Standard Chartered – Annual Report 2021 Risk review Risk profile 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 curtailedby supply-sidedisrupt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 underpressure.In general, developedmarkets 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 ofeconomiesor the re-introductonof restrictons limting public contact and movement. This will pose downside risks to economicactivty andemployment. A delayed employment recovery would likely extend supply chain disruptons, weakening growth and keeping inflaton elevatedfor longer. This combinatonwill createchallenges for policy-makers globally as they attempt to strike a delicate balance between responding to upward inflatonary pressures and managing downsiderisks to the economicoutlook. While the quarterly Base Forecasts inform the Group’s strategic plan, one key requirement of IFRS 9 is that the assessment of provisonsshouldconsider multiplefuture economic environments. For example, the globaleconomy may grow more quickly or more slowly than the Base Forecast, and these variatons would have different implcations for the provisonsthattheGroup shouldholdtoday. 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 ofskewness (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 oneanother (or correlation). This naturallymeans that each of the 50 scenarios do not have a specifc narrative, although collectively they explore a range of hypothetical alternativeoutcomes for theglobal economy, includng scenarios that turn out better than expected and scenarios that amplify anticpated stresses. The table on page 237 to 238 provides a summary of the Group’s Base Forecast for key footprint markets, alongside the corresponding rangeseen acrossthe multiple scenarios. The peak/trough amounts in the table show the highest and lowest points withn the Base Forecast, and the GDP graphs illustrate the shape of the Base Forecast in relation to prior periods’ actuals and the long-term growth rates. 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. Hong Kong is also expected to show a sharp slowdown in 2022 from a growth of almost 7 per cent in 2021. While hopes are risng that quarantine-free travel between Hong Kong and the mainland may resume, full reopening of the border is unlikely until H2 2022 at the earliest as the authorites are expected to take a cautious approach. The resumption ofinternatonal travel toother destinatons could take even longer. In Singapore, growth is expected to hold up better in 2022 compared with Hong Kong. Earlier progress with border reopening and a high domestic vaccinaton rate should support economic activty. Korea and India’s growth are also expected to be relatively more robust compared with 2021. Easing COVID-19 restrictons and a recovery in employment will provide support to Korea. In India, a rapid pick-up in vaccine distrbution and expansionary polices are supporting the recovery. Momentum from the strong rebound in 2021 is also expected to 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 realincomes.Europe also faces simlarchallenges 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-19are 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 in 2021. ![]() 237 Standard Chartered – Annual Report 2021 Risk review and Capital review 15 Q116Q118 Q117 Q119 Q120 Q121 Q122Q123 Q125 Q1 26 Q1 24 Q1 -8 -4 0 4 8 12 16 20 ChinaGDP YoY% Actual Long-term growth Forecast -10 -8 -6 -4 -2 0 2 4 6 8 10 HongKong GDP YoY% Actual Long-term growth Forecast 15 Q116Q118 Q117 Q119 Q120 Q121 Q122Q123 Q125 Q1 26 Q1 24 Q1 15 Q116Q118Q117Q119Q120Q121Q122Q123 Q125 Q1 26 Q1 24 Q1 -4 -3 -2 -1 0 1 2 3 4 5 6 7 Korea GDP YoY% Actual Forecast Long-term growth 15 Q116Q118 Q117 Q119 Q120 Q121 Q122Q123 Q125 Q1 26 Q1 24 Q1 -15 -10 -5 0 5 10 15 20 SingaporeGDP YoY% Actual Forecast Long-term growth 15 Q116Q118 Q117 Q119 Q120 Q121 Q122Q123 Q125 Q1 26 Q1 24 Q1 -30 -20 -10 0 10 20 30 IndiaGDP YoY% Actual Forecast Long-term growth Long-term growth = forward-looking future GDP growth potential 2021 China Hong Kong GDP growth (YoY%) Unemployment % 3-month interestrates % House prices (YoY %) GDP growth (YoY %) Unemployment % 3-month interestrates % House prices (YoY %) Base forecast 2022 5.6 3.4 2.3 2.4 3.0 4.2 0.3 4.2 2023 5.5 3.4 2.6 4.1 2.5 3.8 1.1 3.0 2024 5.4 3.4 2.8 4.4 2.5 3.7 1.7 2.8 2025 5.3 3.4 3.0 4.4 2.5 3.7 2.1 2.8 2026 5.2 3.4 3.1 4.4 2.5 3.7 2.3 2.7 5-yearaverage 5.4 3.4 2.8 4.0 2.63.8 1.5 3.1 Peak 6.1 3.4 3.1 4.5 3.54.4 2.3 5.3 Trough 4.7 3.4 2.1 1.81.8 3.7 0.3 2.7 Monte Carlo Low 2 2.6 3.3 1.3 (2.8) (1.7) 2.4 (0.3) (12.4) High 3 8.33.5 4.6 11.1 6.9 5.8 5.0 22.8 2021 Singapore Korea GDP growth (YoY%) Unemployment % 3-month interestrates % House prices (YoY%) GDP growth (YoY%) Unemployment % 3-month interestrates % House prices (YoY %) Base forecast 1 2022 3.6 3.3 0.5 3.6 2.7 3.7 1.2 5.8 2023 2.7 3.1 1.0 3.3 2.5 3.4 1.3 0.0 2024 2.03.0 1.5 3.4 2.5 3.3 1.6 2.2 2025 2.03.0 1.9 3.6 2.5 3.2 1.9 2.8 2026 2.0 3.12.1 3.8 2.5 3.12.1 2.8 5-yearaverage 2.5 3.1 1.4 3.6 2.5 3.3 1.6 2.7 Peak 4.8 3.4 2.2 4.2 2.8 3.7 2.2 10.9 Trough 1.8 3.0 0.5 3.32.4 3.1 1.2 (0.3) Monte Carlo Low 2 (4.0) 2.10.1 (4.1) (3.1) 2.7 0.5 (5.2) High 3 9.4 4.54.2 15.4 7.1 4.54.3 9.5 ![]() 238 Standard Chartered – Annual Report 2021 Risk review Risk profile 2021 India 4 Brent Crude $ pb GDP growth (YoY%) Unemployment % 3-month interestrates % House prices (YoY%) Base forecast 2022 8.0 N/A 5 4.6 6.9 66.6 2023 5.5 N/A 5 5.2 7.2 60.0 2024 6.0 N/A 5 5.7 7.2 63.0 2025 6.0 N/A 5 6.1 7.2 65.0 2026 6.5 N/A 5 6.2 7.1 64.0 5-yearaverage 6.4 N/A 5 5.4 7.1 63.7 Peak 16.6 N/A 5 6.2 7.2 73.5 Trough 4.2 N/A 5 4.0 5.8 60.0 Monte Carlo Low 2 2.0 N/A 5 3.2 (1.9)8.9 High 3 10.5 N/A 5 8.8 24.9 211.4 2020 China HongKong GDP growth (YoY%) Unemployment % 3-month interest rates % House prices (YoY%) GDP growth (YoY%) Unemployment % 3-month interest rates % House prices (YoY%) 5-yearaverage 6.0 3.4 2.3 5.8 2.8 3.90.9 3.7 Peak 19.4 3.7 2.4 6.2 5.5 6.3 1.3 7.5 Trough 3.2 3.4 2.2 4.7 2.5 3.1 0.7 (4.3) Monte Carlo Low 2 1.9 3.3 0.9 1.2 (1.9) 2.3 (0.3) (12.8) High 3 20.4 3.74.58.7 7.37.2 3.2 23.0 2020 Singapore Korea GDP growth (YoY%) Unemployment % 3-month interest rates % House prices (YoY%) GDP growth (YoY%) Unemployment % 3-month interest rates % House prices (YoY%) 5-yearaverage 2.8 3.5 0.7 4.0 2.8 3.3 1.2 2.3 Peak 13.7 4.3 1.2 4.3 5.3 3.7 2.3 3.2 Trough (2.3) 3.1 0.5 1.5 1.4 3.0 0.50.4 Monte Carlo Low 2 (5.4) 2.00.0 (4.4) (1.4) 2.6 (0.1) (2.3) High 3 17.5 5.5 2.2 16.9 7.9 4.5 3.5 7.6 2020 Singapore Korea GDP growth (YoY%) Unemployment % 3-month interest rates % House prices (YoY%) GDP growth (YoY%) Unemployment % 3-month interest rates % House prices (YoY%) 5-yearaverage 2.8 3.5 0.7 4.0 2.8 3.3 1.2 2.3 Peak 13.7 4.3 1.2 4.3 5.3 3.7 2.3 3.2 Trough (2.3) 3.1 0.5 1.5 1.4 3.0 0.50.4 Monte Carlo Low 2 (5.4) 2.00.0 (4.4) (1.4) 2.6 (0.1) (2.3) High 3 17.5 5.5 2.2 16.9 7.9 4.5 3.5 7.6 2020 India Brent crude $ pb GDP growth (YoY%) Unemployment % 3-month interest rates % House prices (YoY%) 5-yearaverage 6.4 N/A 5 4.36.7 54.0 Peak 32.6 N/A 5 5.4 7.2 61.0 Trough 0.0 N/A 5 3.3 4.8 39.0 Monte Carlo Low 2 (2.1) N/A 5 2.0 (4.1) 22.0 High 3 34.9 N/A 5 6.9 21.8 116.0 1Base forecasts are evaluated from Q1 2022 to Q4 2026. The forward-looking simulaton starts from Q1 2022 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 4India GDP follows the Fiscal Year beginnng in Q2. All other variables are on a calendar year basis 5N/A – Not available ![]() 239 Standard Chartered – Annual Report 2021 Risk review and Capital review Impact of multipleeconomic scenarios The final probabilty-weighted ECL reported by the Group is a simple average of the ECL for each of the 50 scenarios simulated using a Monte Carlo model. The Monte Carlo approach has the advantage that it generates many plausible alternative scenarios that cover our global footprint; however, a recognised challenge with the Monte Carlo approach is that the range of scenarios it forecasts can be narrow. The Monte Carlo model is being redeveloped to widen the range of the scenarios; however, prior to this new model being implemented a $51 millon non-linearty PMA has been applied. The total amount of non-linearty has been estimated by assignng probabilty weights of 70 per cent, 25 per cent and 5 per cent respectively to the ECL from the Base Forecast, Supply ChainDisrupton andNew COVID-19 Variant scenarios which are presented on pages 240 to 241 and comparing this to the unweighted base forecast ECL. The non-linearty PMA represents the difference betweenthe probabilty weighted ECL calculated using the three scenarios and the probabilty weighted ECL calculated by the Monte Carlo model. The impact ofmultiple economic scenarios (which includes the non-linearty PMA) on stage 1, stage 2 and stage 3 modelled ECL is set out in the table below together with the management overlay. Base forecast $millon Multiple economic scenarios $millon Management overlay $millon Total $millon Total expected credit loss at 31 December 2021 1 1,007 55 344 1,406 Total expected credit loss at 31 December 2020 1 1,380 (8) 359 1,731 1Total modelled ECL comprises stage 1 and stage 2 balances of $1,265 millon (31 December 2020: $1,549 millon) and $141 millon (31 December 2020: $182 millon) of modelled ECLon stage 3 loans The average expected credit loss under multiple scenarios is 5 per cent higher than the expected credit loss calculated using only the most likely scenario (the Base Forecast). Portfolios that are more sensitve to non-linearty include those with greater leverage and/or a longer tenor, such as Project and Shippng Finance and credit card portfolios. Other portfolios display minmal non-linearty owing to limted responsiveness to macroeconomic impacts for structural reasons such as signficant collateralisaton as with the Consumer, Private and Business Bankingmortgage portfolios. Management overlay As at 31 December 2021, the Group held: • A $249 millon (31 December 2020: $359 millon) management overlay relatingto uncertaintes as a result of the COVID-19 pandemic, $102 millon (31 December 2020: $197 millon) of which relates to Corporate, Commercial and Institutonal Banking and $147 millon (31 December 2020: $162 millon) to Consumer, Private and Business Banking. $84 millon (31 December 2020: $78 millon) of the overlay is held in stage 1, $144 millon (31 December 2020: $275 millon) in stage 2 and $21 millon (31 December 2020: $6 millon) in stage 3. • A $95 millon (31 December 2020: $nil) management overlay relating to uncertaintesaround exposures to China Commercial Real Estate, all of which relates to Corporate, Commercial and Institutonal Banking. $31 millon is held in stage 1 and $64 millon in stage 2. The overlays have been determined after taking account of the PMAs reported on page 235 and they are re-assessed quarterly. They are reviewed and approved by the IFRS 9 Impairment Committee. COVID-19 overlay Corporate, Commercial and Institutonal Banking Although the amount ofloans placed on non-purely precautionary early alert hasdecreased 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. The basis of determinng the overlay remained unchanged during 2020 and 2021, although the assumed level of further deterioraton was reduced in 2021 in line with our experience. The overlay has steadily reduced from $197 millon at 31 December 2020 to $102 millon at 31 December 2021 as the level of non-purely precautionary early alerts has reduced. Consumer, Private andBusiness Banking A number of components contribute to the judgemental overlay for Consumer, Private and Business Banking. Withn Business Banking, the Group has evaluated those sectors that havebeen adverselyimpactedbyCOVID-19, both through internal credit processes as well as through a ‘Voice of Customer’ survey tounderstand 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 where compulsory extended moratoria schemeswere inplace. For those markets, theGrouphas estimated theimpact ofincreased delinquencesand 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. TheGroup assessment also considered employee banking relationshps with high-impactsectors and the impact on Mortgages in Africa and the Middle East which generally have high LTVs. $84 millon of the overlay is held in stage 1, $42 millon in stage 2 and $21 millon in stage 3. The basis ofdeterminng theoverlay remained unchanged during 2020 and 2021. The overlay has reduced from $162 millon at 31 December 2020 to $147 millon at 31 December 2021. While general moratoria schemes have ended in a number of markets and increased delinquency flows were captured by the ECL models, moratoria schemes were further extended in certain Asian and Africa and Middle Eastmarkets. ![]() 240 Standard Chartered – Annual Report 2021 Risk review Risk profile China Commercial Real Estate overlay Chinese property developers are experiencng liqudity issues, triggered by government policy changes aimed at deleveraging the property sector andensuring property developers have the financal abilty to complete residental properties under construction. Thegovernment’s ‘three red lines’ matrix was introduced in August 2020 to tighten the funding conditons for property developers by limting the growth rate in external debt. With additonal controls on sales of properties toend buyers (e.g. mortgage lending control, pricng control, eligbilty control) and on restrictng developers’ abilty to access cash from ‘escrow accounts’ with cash paid by retail residental buyers, the cashflow of developers has been signficantly squeezed. Also, with capital markets reacting negatively to the tightenng polices, we have seen greater volatilty in bond pricng and reduced access to capital markets liqudity for developers. As such, some developers have faced/are facingdiffculties inservicng and repayingfinancngobligatons. The Group’s banking book net exposure to China Commercial Real Estate was $4.0 billon at 31 December 2021 (31 December 2020: $3.5 billon). Client level analysis continues to be done, with the high-risk clients being placed on purelyprecautionary or non-purely precautionary early alert. Given the evolving nature of the risks in the China Commercial Real Estate sector, a management overlay of $95 millon has been taken by estimatng the impact of further deterioraton to those clients placed on early alert. Stage 3 assets Credit-impared assets managed by Group Special Assets Management incorporate forward-looking economic assumptions in respect of the recovery outcomes identfied, and are assigned indvidual probabilty weightngs using management judgment. These assumptionsare 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 ECLcalculation relies onmultiple variables andis inherently non-linear andportfolio-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 the overall ECL. These encompassed single variable and multi-variable exercises, using simpleup/ down variaton and extracts from actualcalculation data, as well as bespoke scenario design assessments. The primary conclusionof these exercises is thatno indvidual macroeconomic variableis materially influental. The Group believesthis 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 believesthat consideraton ofmacroeconomicsshould 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 themacroeconomic 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 andtourism sectors. Baseline Supplychain disrupton New COVID-19 variant Five year average Peak/Trough Five year average Peak/Trough Five year average Peak/Trough China GDP 5.4 6.1/4.7 5.0 5.5/3.65.2 13.4/(5.2) China unemployment 3.43.4/3.4 3.5 4.0/3.4 4.1 5.9/3.4 China property prices 4.0 4.5/1.8 3.4 4.5/(1.5) 3.8 6.6/(1.6) Hong Kong GDP 2.6 3.5/1.8 2.0 2.5/0.1 2.3 11.6/(9.1) Hong Kongunemployment 3.8 4.4/3.7 4.0 4.6/3.74.7 6.8/3.8 Hong Kong propertyprices 3.15.3/2.7 1.9 3.8/(2.0) 3.5 25.2/(21.3) US GDP 2.3 4.7/1.7 1.6 4.0/(0.4) 2.0 13.1/(11.6) Singapore GDP 2.5 4.8/1.8 1.9 3.3/(0.2) 2.2 11.1/(8.9) India GDP 6.4 16.6/4.2 5.4 15.0/1.4 6.0 19.3/(12.4) Crude oil 63.7 73.5/60.0 66.3 76.2/62.0 49.4 57.0/32.7 ![]() 241 Standard Chartered – Annual Report 2021 Risk review and Capital review Base (GDP, YoY%) Supply chaindisrupton(GDP, YoY%) Difference from Base 20222023 2024 2025202620222023 2024 2025202620222023 2024 20252026 China 5.65.5 5.4 5.35.2 4.34.8 5.4 5.35.2 (1.4) (0.8) 0.00.00.0 Hong Kong 3.0 2.52.52.52.5 1.1 1.4 2.52.52.5 (1.9) (1.1) 0.00.00.0 US 3.7 2.3 1.81.81.8 1.6 1.0 1.81.81.8 (2.1) (1.3) 0.00.00.0 Singapore 3.6 2.7 2.02.02.02.0 1.7 2.02.02.0 (1.7) (1.0) 0.00.00.0 India 1 8.0 5.5 6.06.0 6.5 5.6 4.3 5.4 5.6 6.5 (2.4) (1.2) (0.6) (0.4) 0.0 Base (GDP, YoY%)New COVID-19 variant (GDP, YoY%)Difference from Base 20222023 2024 2025202620222023 2024 2025202620222023 2024 20252026 China 5.65.5 5.4 5.35.2 (3.5) 8.9 9.5 5.7 5.2 (9.2) 3.3 4.1 0.3 0.0 Hong Kong 3.0 2.52.52.52.5 (7.2) 6.2 7.1 2.9 2.5 (10.2) 3.74.6 0.4 0.0 US 3.7 2.3 1.81.81.8 (8.4) 6.7 7.3 2.3 1.8 (12.1) 4.4 5.5 0.5 0.0 Singapore 3.6 2.7 2.02.02.0 (6.0) 6.26.3 2.4 2.0 (9.7) 3.5 4.3 0.3 0.0 India 1 8.0 5.5 6.06.0 6.5 (6.5) 15.8 10.3 6.26.5 (14.5) 10.3 4.3 0.2 0.0 1With the exception of India each year is defined as calendar years, starting in Q1 and ending in Q4. For India the variables are presented for the fiscal year with each year starting in Q2 and ending in Q1 of the next year The total reported stage 1 and 2 ECL provisons (includng both on and off-balance sheet instruments) would be approximately $110 millon higher under the supply chain disrupton scenario and $545 millon higher under the new Covid-19 variant scenario than the baseline ECL provisons (which excluded the impact of multipleeconomic scenarios and management overlays which may already capture some of the risks in these scenarios). The proportion of stage 2 assets would increase from 4.2 per cent to 4.6 per cent and 7.7 per centrespectivelyunderthesupply chaindisrupton and New Covid-19 Variant scenarios. This includes the impact of exposures transferring to stage 2 from stage 1 but does not consider anincrease in stage 3 defaults. Under both scenarios the majorty of the increase was in Corporate, Commercial and Institutonal Banking with the main corporate portfolios in the United Kingdom, Hong Kong and theUnited States beingimpacted. Underbothscenarios around 26 per cent of the increase was in Consumer, Private and Business Banking portfolios with most of the increases coming from the big unsecured retail portfolios (the Korea and Hong Kong Personal Loan portfolios were impacted under the supply chain disrupton scenario, whereas the Malaysia and Singapore Credit Cards portfolios were impacted under the new Covid-19 variant scenario). There was no material change in modelled stage 3 provisons as these primarly relate to unsecured Consumer, Private and Business Banking 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 to mitgatepotential increases in risk and changes in the underlying portfolio. Modelled provisons Base forecast ECL $m Supply chain disrupton ECL $m New COVID-19 variant ECL $m Corporate, Commercial & Institutonal Banking 359 437 749 Consumer, Private & Business Banking 425 455 570 Central & other items 103 105 112 Total stage 1 and 2 before overlays and multiple scenarios 887 997 1,432 Stage 1 and 2 management overlay 323 Impact ofmultiple economic scenarios 55 Total reported stage 1 and 2 ECL 1,265 Stage 3 ECL 1 4,944 Total ECL 6,209 1Includes $21 millon management overlay Proportion ofassets instage 2 1 Base forecast scenario % Supply chain disrupton scenario % New COVID-19 variant scenario % Corporate, Consumer & Institutonal Banking 6.9 7.9 14.2 Consumer, Private & Business Banking 1.5 1.6 2.3 Central & other items 2.22.22.3 Total4.24.6 7.7 1Excludes cash and balances at central banks, accrued income, assets held for sale and other assets ![]() 242 Standard Chartered – Annual Report 2021 Risk review Risk profile Signficant increase incredit risk (SICR) Quantitatvecritera SICR is assessed by comparing the risk of default at the reporting date to the riskof default at orignation.Whether a change in the risk of default is signficant or not is assessed using quantitatve andqualitatvecritera. These quantitatve signficantdeterioraton thresholds havebeen 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 SICR thresholds have been calibrated based on the following 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 arestringent 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 are aligned to business processes For Corporate, Commercial andInstitut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 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. Certaincountries have ahigher absolutethreshold 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 relatingto collateral top-upsor sell-downs. Debt securites orignated before 1 January 2018 with an internal credit rating mapped to aninvestment 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 and Institutonal Banking clients. Qualitatvecriter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 asplacing 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. Corporate, Commercial and 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vecritera All assets of clients that have been placed on early alert (for non-purely precautionaryreasons)are deemed to have experienced a signficant increase in credit risk. An accountis placed onnon-purely precautionary early alert if it exhibts risk or potential weaknesses of a material nature requirng closermonitorng,supervison orattention by management. Weaknesses in such a borrower’s account, if left uncorrected, could resultin deterioraton of repayment prospects and the likelhood of being downgraded. 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 otherfactors. 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 and 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 example Hong Kong mortgages, Taiwan credit cards) for which a statistcal model has been built, are assessed based on boththe absolute and relativemovement in the PD from orignation to the reporting date as described previously in page 233. 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vecriter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. ![]() 243 Standard Chartered – Annual Report 2021 Risk review and Capital review 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vecriter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. 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vecritera Debt securites utilse the same qualitatve critera as the Corporate, Commercial and 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 andBusiness 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 itis established thatthe 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 and 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 stage3 credit imparment provison israised. 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 cashflows include realisablecollateral, the values used will incorporate the impact offorward-lookingeconomic informaton. The indvidual circumstances of each client are considered when GSAM estimates future cashflows and the timng of future recoveries which involves signficant judgement. All availablesources, such as cashflow arisngfrom 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. Governance and applicatonof expert credit judgement in respect of expected credit losses The Group’s Credit Policy and Standards framework details the requirements for continuousmonitorng to identfy any changes in credit quality and resultant ratings, as well as ensuring a consistentapproach tomonitor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 models used in determinng expected credit losses are reviewed and approved by the Group Credit Model Assessment Committee (CMAC) which is appointed by the 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 tomodel development, performance monitorng and model validaton activties includng standards, regulatory andGroup 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 analysiscomprisesreviewof model documentation, model design and methodology, 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 performancebreaches the monitorng thresholds, an assessment of whether a PMA is required to correctfor 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 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. ![]() 244 Standard Chartered – Annual Report 2021 Risk review Risk profile The IFRS 9Impairment Committee: • Oversees the appropriateness of all Business Model Assessment and Solely Payments of Princpal and Interest (SPPI) tests • Reviews and approves expected credit loss for financal assets classifed as stages 1, 2 and 3 for each financal reportingperiod • Reviews and approves stage allocation rules and thresholds • Approves material adjustments in relation to expected credit loss for fair valuethroughother 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 Panelconsists of members of Enterprise Risk Management(whichincludes the ScenarioDesign team), Finance, Group Economic Research and country representatives ofmajor 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. ![]() 245 Standard Chartered – Annual Report 2021 Risk review and Capital review Traded Risk Traded Risk is the potential for loss resulting from activties undertaken by the Group in financal markets. Under the Enterprise Risk Management Framework, the Traded Risk Framework brings together Market Risk, Counterparty Credit Risk andAlgorithmc Trading. Traded Risk Management is the coreriskmanagementfunction supporting market- facing businesses, predominantly FinancalMarkets and TreasuryMarkets. 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 MarketRisk 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tiesis primarly driven by the volume of client activty rather than risk-taking • Non-tradingbook: – The Treasury Markets desk is required to hold a liqud assets buffer, much of which is held in high-quality marketable debtsecurites – The Group has capital invested and related income streams denominated in currencies other than US dollars. To the extent that these are not hedged, the Group is subject toStructural 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 267). 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 the level 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 $54.8 millon, 43.9 per cent lower than in 2020 ($97.6 millon). The actual level of total trading and non-trading VaR as at the year end of 2021 was $43.4 millon, 65.3 per cent lower than in 2020 ($125.2 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 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 $17.2 millon, 1.2 per cent higher than in 2020 ($17.0 millon). Trading activties haveremained relatively unchanged and client-driven. Daily value at risk (VaR at 97.5%, one day) (audited) Tradingand 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 InterestRateRisk 6 31.3 68.3 16.4 26.0 38.0 46.9 25.141.1 Credit Spread Risk 6 34.0 97.6 14.8 21.5 69.2 103.1 20.2 81.0 Foreign Exchange Risk 7.3 19.0 4.2 7.0 6.3 15.1 3.0 15.1 Commodity Risk 4.5 10.4 2.3 3.6 2.5 5.5 0.7 4.9 Equity Risk 1.3 1.7 1.0 1.4 2.6 5.4 1.51.5 Total 3 54.8 140.730.7 43.4 97.6 135.0 28.9 125.2 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 InterestRateRisk 6 7.6 10.2 5.2 7.2 8.4 12.5 5.0 9.1 Credit Spread Risk 6 8.6 19.2 4.2 6.2 13.0 19.3 4.8 16.3 Foreign Exchange Risk 7.3 19.0 4.2 7.0 6.3 15.1 3.0 15.1 Commodity Risk 4.5 10.4 2.3 3.6 2.5 5.5 0.7 4.9 Equity Risk –––– –––– Total 3 17.2 28.4 12.3 15.3 17.0 26.9 8.3 24.7 ![]() 246 Standard Chartered – Annual Report 2021 Risk review Risk profile 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 InterestRateRisk 6 32.4 68.218.2 24.3 34.744.521.6 43.0 Credit Spread Risk 6 29.2 80.0 14.4 20.2 57.1 81.9 18.1 66.5 Equity Risk 5 1.3 1.7 1.0 1.4 2.6 5.41.4 1.5 Total 3 47.1 106.3 25.3 38.3 69.4 94.8 27.5 85.9 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 shown in the tables above 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 5Non-trading Equity Risk VaR includesonly listed 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 Tradingand non-trading 1 54.8 140.730.7 43.4 97.6 135.0 28.9 125.2 Trading 4 Rates 6.9 9.3 4.8 7.1 7.6 11.1 4.5 8.5 Foreign Exchange 7.3 19.0 4.2 7.0 6.3 15.1 3.0 15.1 Credit Trading & Capital Markets 6.9 18.7 3.64.8 7.8 14.6 3.3 8.4 Commodites 4.7 10.4 2.5 3.8 2.5 5.5 0.7 4.9 Equites –––– –––– XVA 5.2 11.9 2.52.5 9.0 13.7 2.7 11.2 Total 3 17.2 28.4 12.3 15.3 17.0 26.9 8.3 24.7 Non-trading 1 Treasury Markets 40.5 83.1 22.7 36.4 57.9 74.724.7 71.8 Treasury Capital Management 9.2 22.7 4.9 6.5 10.2 14.9 4.6 14.4 Global Credit 5.2 11.7 2.3 2.5 4.9 7.5 2.7 5.0 Listed Private Equity 1.3 1.7 1.0 1.4 2.6 5.41.4 1.5 Total 3 47.1 106.3 25.3 38.3 69.4 94.8 27.5 85.9 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 Risks not in VaR In 2021, the main market risks not reflected in VaR were: • Potentialdepeg risk fromcurrencies currently pegged or managed,asthe historcalone-year VaR observation period does not reflect the possiblity of a change in the currency regime such as sudden depegging • Basis risks for which the historcal market price data is limted and is therefore proxied, givng rise to potential proxy basis risk that is not captured in VaR • Deal contingent risk where a client is granted the right to cancel a hedging trade contingent on conditons not being met withn a time window • Volatilty skew risk due to movements in options volatilties at different strikes while VaR reflects only movements in at-the- moneyvolatilties Additonal capital is set aside to cover such ‘risks not in VaR’. For further details on Market Risk capital, see the Market Risk section in the Standard Chartered PLC Pillar 3 Disclosures for 31 December 2021. ![]() 247 Standard Chartered – Annual Report 2021 Risk review and Capital review Backtesting In 2021, there were three regulatory backtesting negative exceptions at Group level (in 2020, there were three regulatory backtesting negative exceptions at Group level). Group exceptions occurred on: • 18 October: When markets fell and yields rose following hawkish central bank comments and higher than expected core inflaton results in New Zealand • 26 October: When Nigeran FX NonDeliverable Forward fixngs dropped sharply, raisng impled Non Deliverable Forward yields; oil prices and options impled volatilties also fell • 1 December: When oil and financal markets fell with concerns about the efficacy of COVID-19 vaccines against the Omicron variant In total, there have been three Group exceptions in the previous 250 business days which is withn the ‘green zone’ applied internatonally tointernal models by bank supervisors (Basel Committee on Banking Supervison,Supervisory framework for the use of backtesting in conjuncton with the internal models approach to market risk capital requirements, January 1996). The graph below illustrates the performance of the VaR model used in capital calculations. It compares the 99 percentile loss confidence level given by the VaR model with the hypothetical profit and loss of each day given the actual market movement without taking into account any intra-day trading activty. -50 -40 -30 -20 -10 0 10 20 30 40 50 2021 Backtesting chart Internalmodel approach regulatorytrading book atGrouplevel Hypotheticalprofitand loss(P&L) versusVaR (99 per cent,oneday) HypotheticalP&L PositveVaR at99%NegativeVaR at99% Negativeexceptions Jan2021Feb 2021Mar 2021Apr 2021May 2021Jun 2021Jul 2021Aug 2021Sep 2021Oct2021Nov2021Dec 2021 Positveexceptions Trading loss days 2021 2020 Number of loss days reported for Financal Markets trading book total product income 1 15 15 1Reflects total product income for Financal Markets: •Including credit valuation adjustment (CVA) and funding valuation adjustment (FVA) •Excluding Treasury Markets business (non-trading) and periodc valuation changes for Capital Markets, expected loss provisons and overnight indexed swap (OIS) discountng andaccounting adjustments such as debitvaluation adjustments Average daily income earned from Market Risk-related activties¹ The average level of total trading daily income in 2021 was $9.8 millon, 8.4 per cent lower than in 2020 ($10.7 millon), due to lower trading income compared to prior year which had witnessed unprecedented levels of market volatilty and hence increased trading activty and wider spreads. Trading 2 2021 $millon 2020 $millon InterestRateRisk 3.3 3.6 Credit Spread Risk 0.9 1.1 Foreign Exchange Risk 4.7 5.1 Commodity Risk 0.9 0.9 Equity Risk – – Total 9.8 10.7 Non-trading 2 $millon $millon InterestRateRisk 0.4 1.2 Credit Spread Risk 0.2 0.2 Equity Risk – – Total 0.6 1.4 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 underCredit SpreadRisk 22020 figures have been restated to exclude income from non fair value positons ![]() 248 Standard Chartered – Annual Report 2021 Risk review Risk profile 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 Hong Kong dollar 4,757 8,739 Indian rupee 4,323 4,222 Renminb 4,186 4,071 Singapore dollar 2,228 2,543 Koreanwon 1,756 2,856 Taiwanese dollar 1,188 1,556 UAEdirham 643 1,863 Malaysian ringgt 1,532 1,575 Thai baht 775 892 Indonesianrupiah 289 332 Pakistan rupee 429 471 Other 4,976 4,422 27,082 33,542 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 Korean won of $2,856 millon (2020: $1,984 millon), Taiwanese dollar of $1,149 millon (2020: $834 millon), Renminb of $1,642 millon (2020: $1,527 millon), Indian rupee of $656 millon ( 2020: $652 millon), Hong Kong dollar of $4,975 millon (2020: Nil), UAE dirham of $1,198 millon (2020: Nil) and Singapore dollar of $729 millon (2020: Nil). 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 ofthese currencies to the US dollar. The impact on the positons above would be an increase of $399 millon (2020: $381 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 288). 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 andrisk 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, whichin 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 applicablederivatve transactions. The value of exposure under master netting agreements is $39,502 millon (2020: $47,097 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 theexposure. Cash collateral includes collateral called under a variaton margin process from counterparties if total uncollateralised mark-to- market exposure exceeds the threshold and minmum transfer 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 andexceed an agreed threshold. 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 asthey fall due. The Group’s Liqudity and Funding Risk framework requires each country to ensure that it operates withn predefined liqudity limts and remains in compliance with Group liqudity polices and practices, as well as local regulatory requirements. The Group achieves this through a combinaton of setting Risk Appetite and associated limts, policy formation, risk measurement and monitorng, prudential and internal stress testing, governance andreview. Despite the challenges brought by COVID-19, the Group has been resilent throughout and kept a strong liqudity positon. The Group continues to focus on improvng the quality of its funding mix and remains committed to supporting its clients during these uncertain times. Primary sources of funding (audited) The Group’s funding strategy is largely driven by its policy to maintan adequate liqudity atall times, inall geographic locations and for all currencies, and hence to be in a positon to meet all obligatons as they fall due. The Group’s funding profile istherefore well diversfied across different sources, maturites and currencies. Our assetsare funded predominantly by customer deposits, supplemented with wholesale funding (which is diversfied by type and maturity). We maintan access to wholesale funding markets in all major financal centres in which we operate. This seeks to ensure that we have market intellgence, maintan stable funding lines and can obtain optimal pricng when performing our Interest RateRisk management activties. In 2021, the Group issued approximately $6.8 billon of senior debt securites, $1.2 billon of subordinated debt securites and $2.75 billon of Additonal Tier 1 securites from its holding company(HoldCo) Standard Chartered PLC. (2020: $6.8 billon of term senior debt, $2.4 billon of subordinated securites and $1 billon of Additonal Tier 1). In the next 12 months approximately $7.5 billon of the Group’s senior debt, subordinated debt and Additonal Tier 1 securites in total are either falling due for repayment contractually orcallable by the Group. ![]() 249 Standard Chartered – Annual Report 2021 Risk review and Capital review Group’s compositionof liabilities 31 December 2021 4.6 6.5 8.1 Geographic distrbution of customer accounts 31 December 2021 Derivatve financal instruments Deposits by banks Debt securites inissue Customer accounts Other liablites Equity Subordinated liablites and otherborrowedfunds 65.5 6.9 2.0 6.4 100% Asia Africa & Middle East Europe &Americas 100% 65.0 6.4 28.6 Liqudity and FundingRisk metrics We monitor key liqudity metrics regularly at country, regional, and aggregate Grouplevel. 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nBoard Risk Appetite. Liqudity coverageratio (LCR) The LCR is a regulatory requirement set to ensure that the Group has sufficentunencumbered high-quality liqud assets to meet its liqudity needs in a 30-calendar-day liqudity stress scenario. The Group monitors and reports its liqudity positons under UK onshored Commisson Delegated Regulation 2015/61 and has maintaned its LCR above the prudential requirement. The Group maintaned strong liqudity ratios despite the continued impacts of the COVID-19 stress. For further detail see the Liqudity section in the Standard Chartered PLC Pillar 3 Disclosures for FY 2021. The LCR has remained unchanged at 143 per cent (2020: 143 per cent), despite revisng our approach to calculating the LCR. We have re-assessed the methodology to more prudently reflect the portabilty of liqudity across the Group, whilst stillconsiderng currency convertiblity and regulatory intra group limts. Portable liqudity is defined as unsecured liqudity, usually in the form of cash, that is freely transferable across Group entites during a period of stress, thereby enabling the Group to meet its financal obligatons as they fall due. We also held adequate liqudity across our footprint to meet all localprudential LCR requirements where applicable. 2021 $millon 2020 $millon Liqudity buffer 172,178 175,948 Total net cash outflows 120,788 122,664 Liqudity coverage ratio 143% 143% Stressed coverage The Group intends to maintan a prudent and sustainable funding and liqudity positon, in all countries and currencies, such that it can withstand a severe but plausible liqudity stress. Our approach to managing liqudity and funding is reflected in the following Board-level Risk Appetite Statement: “The Group should hold an adequate buffer of high-quality liqudassets to surviveextreme but plausible liqudity stress scenarios for at least 60 days without recourse to extraordinary central bank support.” The 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 bothStandard Chartered-specifc and Market-wide events affecting the Group simultaneously and hence is the most severe scenario. All scenarios include, but are not limted to, modelled outflows for retail and wholesale 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. Stress testing results show that a positve surplus was maintaned under all scenarios at 31 December 2021, i.e. respective countries are able to survive for a period of time as defined under each scenario. The results take into account currency convertiblity and portabilty constraints while calculatingthe liqudity surplus at Group level. Standard Chartered Bank’s credit ratings as at 31 December 2021 were A+ with negative outlook (Fitch), A+ with stable outlook (S&P) and A1 with stable outlook (Moody’s). At 31 December 2021, the estimated contractual outflow of a three-notch long-term ratings downgrade is $1.7 billon. ![]() 250 Standard Chartered – Annual Report 2021 Risk review Risk profile External wholesale borrowing The Board sets a risk limt to prevent excessive reliance on wholesale borrowing. Withn the defintion of Wholesale Borrowing, limts are applied to all branches and operating subsidaries in the Group and as at the reporting date, the Group remained withn Board Risk Appetite. Advances-to-deposits ratio This is defined as the ratio of total loans and advances to customers relative tototal 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 ongenerating a high level of funding from customers. The Group’s advances-to-deposits ratio has decreased by 2.0 per cent to 59.1 per cent, driven by an 8 per cent growth in customer deposits, most of which came from corporate customers. 2021 $millon 2020 $millon Total loans and advances to customers 1,2 285,922 273,861 Total customer accounts 3 483,861 448,236 Advances-to-depositsratio 59.1% 61.1% 1Excludes reverse repurchase agreement and other simlar secured lending of $7,331 millon and includes loans and advances to customers held at fair value through profit and loss of $9,953mill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 $9,291 millon (31 December 2020: $8,897 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 appliedto assets and off-balance sheet exposures according to the amount of stable funding they require. The NSFR became a regulatory requirement in January 2022 with a minmum of 100 per cent. At the last reporting date, the Group NSFR remained above 100 per cent. Liqudity pool The liqudity value of the Group’s LCR eligble liqudity pool at the reporting date was $ 172 billon. The figures in the table belowaccount for haircuts, currency convertiblity and portabilty constraints, and therefore are not directly comparable withtheconsolidated balancesheet. Liqudity pool is held to offset stress outflows as defined in UK onshored Commisson Delegated Regulation2015/61. Followingthe Group’s reassessment of the portabilty methodology, on a like-for-like approach December 2021 HQLA increased which was offset by a simlar size decrease in HQLA. 2021 Asia $ millon Africa & Middle East $ mill $ millon Europe & Americas $ millon Total $ millon Level 1 securites Cash and balances at central banks 28,076 890 46,97375,939 Central banks, governments/public sector entites 40,328 2,096 27,389 69,813 Multilateraldevelopment banks andinternatonal organisatons 7,812 356 7,366 15,534 Other –– 478478 Total Level 1 securites 76,216 3,342 82,206 161,764 Level 2A securites 3,447186 5,047 8,680 Level 2B securites 114 – 1,620 1,734 TotalLCR eligbleassets 79,777 3,528 88,873 172,178 2020 (Restated) Asia 1 $ millon Africa & Middle East $ millon Europe & Americas $ millon Total $ millon Level 1 securites Cash and balances at central banks 26,726 1,421 42,502 70,649 Central banks, governments/public sector entites 41,014 1,569 33,652 76,235 Multilateraldevelopment banks andinternatonal organisatons 5,372 236 6,818 12,426 Other – 14 1,6451,659 Total Level 1 securites 73,112 3,240 84,617 160,969 Level 2A securites 11,515 79 2,891 14,485 Level 2B securites 207 – 287 494 Total LCR eligble assets 84,834 3,319 87,795 175,948 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 beenrestated ![]() 251 Standard Chartered – Annual Report 2021 Risk review and Capital review Encumbrance Encumbered assets Encumbered assets represent on-balance sheet assets pledged or subjectto any form ofarrangementto secure, collateralise or credit enhance a transaction from which it cannot be freely withdrawn. Cash collateral pledged against derivatves and HongKongGovernment certifcatesof indebtedness, which secure the equivalent amount of Hong Kong currency notes in circulaton, are included withn Other assets. Unencumbered – readily available for encumbrance Unencumbered assets that are considered by the Group to be readily available in the normal course of business to secure funding, meet collateral needs, or be sold to reduce potential future funding requirements and are not subject to any restrictons on theiruse for thesepurposes. Unencumbered – other assets capable of being encumbered Unencumbered assets that, in their current form, are not considered by the Group to be readily realisable in the normal course of business to secure funding, meet collateral needs, or be sold to reduce potential future funding requirements and are not subject to any restrictons on their use for these purposes. Included withn this category are loans and advances which would be suitable for use in secured funding structures such assecuritsations. Unencumbered – cannot be encumbered Unencumbered assets that have not been pledged and cannot be used to secure funding, meet collateral needs, or be sold to reduce potential future funding requirements, as assessed by the Group. Derivatves, reverse repurchase assetsand stocklending These assets are shown separately as these on-balance sheet amounts cannot be pledged. However, these assets can give rise to off-balance sheet collateral which can be used to raise secured funding or meet additonal funding requirements. The following table provides a reconcilation of the Group’s encumbered assets to total assets. 2021 Assets $millon Assets encumbered as a result of transactions with counterparties other than central banks Other assets (comprisng assets encumbered at the central bank and unencumbered assets) As a result of securitsations $millon Other $millon Total $millon Assets positonedat the central bank (ie pre- positoned plus encumbered) $millon Assets not positoned at the central bank Readily availablefor encumbrance $millon Other assets that are capable of being encumbered $millon Derivatves and reverse repo/stock lending $millon Cannot be encumbered $millon Total $millon Cash andbalances at central banks 72,663 ––– 8,147 64,516 ––– 72,663 Derivatve financal instruments 52,445 –––––– 52,445 – 52,445 Loans and advances to banks 1 66,957 – 8989 – 34,834 9,93119,806 2,297 66,868 Loans and advances to customers 1 369,703 – 4,5394,539 –– 282,761 68,61213,791 365,164 Investment securites 2 198,723 – 13,94013,940 96 142,965 35,637 – 6,085 184,783 Other assets 49,958 – 16,50116,501 –– 13,140 – 20,317 33,457 Current tax assets 766 ––––––– 766766 Prepaymentsand accrued income 2,176 ––––– 937 – 1,239 2,176 Interests in associates and jont ventures 2,147 ––––––– 2,1472,147 Goodwill and intangbleassets 5,471 ––––––– 5,4715,471 Property, plant and equipment 5,616 ––––– 448 – 5,168 5,616 Deferred tax assets 859 ––––––– 859859 Assets classifed as held for sale 334–––––––334334 Total 827,818 – 35,06935,069 8,243 242,315 342,854 140,863 58,474 792,749 1Includes held at fair value through profit or loss and amortised cost balances 2Includes held at fair value through profit or loss, fair value through other comprehensive income and amortised cost balances ![]() 252 Standard Chartered – Annual Report 2021 Risk review Risk profile 2020 Assets $millon Assets encumbered as a result of transactionswith counterparties other than central banks Other assets (comprisng assets encumbered at the centralbank and unencumbered assets) As a result of securitsations $millon Other $millon Total $millon Assets positoned at the central bank (iepre- positoned plus encumbered) $millon Assets not positoned at the central bank Readily availablefor encumbrance $millon Other assets that are capable of being encumbered $millon Derivatves and reverse repo/stock lending $millon Cannot be encumbered $millon Total $millon Cash andbalances at central banks 66,712 ––– 7,341 59,371 ––– 66,712 Derivatve financal instruments 69,467 –––––– 69,467 – 69,467 Loans and advances to banks 1 66,429 –––– 38,023 8,091 19,452 863 66,429 Loans and advances to customers¹ 336,276 – 3,8263,826 –– 268,930 48,118 15,402 332,450 Investment securites² 183,443 – 11,28211,282 – 131,304 36,097 – 4,760 172,161 Other assets 48,688 – 19,05419,054 –– 18,741 – 10,893 29,634 Current tax assets 808 ––––––– 808808 Prepaymentsand accrued income 2,122 ––––– 980 – 1,1422,122 Interests in associates and jont ventures 2,162 ––––––– 2,1622,162 Goodwill and intangbleassets 5,063 ––––––– 5,0635,063 Property, plant and equipment 6,515 ––––– 448 – 6,067 6,515 Deferred tax assets 919 ––––––– 919919 Assets classifed as held for sale 446 ––––––– 446446 Total 789,050 – 34,16234,162 7,341 228,698 333,287 137,037 48,525 754,888 1Includes held at fair value through profit or loss and amortised cost balances 2Includes held at fair value through profit or loss, fair value through other comprehensive income and amortised cost balances The Group received $117,408 millon (31 December 2020: $99,238 millon) as collateral under reverse repurchase agreements that was eligble for repledging; of this, the Group sold or repledged $57,879 millon (31 December 2020: $46,209 millon) under repurchase agreements. ![]() 253 Standard Chartered – Annual Report 2021 Risk review and Capital review 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, interbankplacements 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 59 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 behaviouralprofiles thatextend beyond their contractual maturites 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 fiveyears and undated $millon Total $millon Assets Cash and balances at central banks 64,516 –––––– 8,147 72,663 Derivatve financal instruments 11,695 10,489 7,332 3,583 2,731 4,738 6,493 5,384 52,445 Loans and advances to banks 1,2 25,486 17,987 11,347 4,415 4,506 1,455 1,466 295 66,957 Loans and advances to customers 1,2 92,181 68,361 26,276 13,255 14,992 21,391 36,299 96,948 369,703 Investment securites 11,813 13,590 12,070 13,266 13,407 26,424 53,189 54,964 198,723 Other assets 24,283 19,776 989 67 491 35 32 21,654 67,327 Total assets 229,974 130,203 58,014 34,586 36,127 54,043 97,479 187,392 827,818 Liablites Deposits by banks 1,3 34,858 1,134 1,244 408 477 116 206 438,447 Customer accounts 1,4 430,071 52,051 27,436 11,738 12,023 4,857 2,1522,127 542,455 Derivatve financal instruments 11,71511,573 7,254 4,061 2,788 5,042 7,117 3,849 53,399 Senior debt 5 190 6421,036 320 397 5,336 15,225 11,845 34,991 Other debt securites in issue 1 2,233 12,968 7,786 3,118 3,281 782 1,411 320 31,899 Other liablites 14,545 22,582 2,044 1,1481,180 797 990 14,059 57,345 Subordinated liablites and other borrowed funds 1,007 64 24 240 894 2,430 2,593 9,394 16,646 Total liablites 494,619 101,014 46,824 21,03321,040 19,36029,694 41,598 775,182 Net liqudity gap (264,645) 29,189 11,190 13,553 15,087 34,683 67,785 145,794 52,636 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 13 Financal instruments (pages 339 to 364) 2Loans and advances include reverse repurchase agreements and other simlar secured lending of $88.4 billon 3Deposits by banks include repurchase agreements and other simlar secured borrowing of $7.1 billon 4Customer accounts include repurchase agreements and other simlar secured borrowing of $58.6 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 ![]() 254 Standard Chartered – Annual Report 2021 Risk review Risk profile 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 59,371 –––––– 7,341 66,712 Derivatve financal instruments 14,091 13,952 9,630 6,210 3,840 5,555 9,492 6,697 69,467 Loans and advances to banks 1,2 29,325 17,120 8,375 4,455 2,876 1,091 2,910 277 66,429 Loans and advances to customers 1,2 84,657 48,152 26,205 11,740 11,635 21,454 38,009 94,424 336,276 Investment securites 11,191 20,426 11,960 13,26013,792 30,783 45,718 36,313 183,443 Other assets 22,440 18,753 1,314 191 120 43 37 23,825 66,723 Total assets 221,075 118,403 57,484 35,856 32,263 58,926 96,166 168,877 789,050 Liablites Deposits by banks 1,3 33,082 1,288 2,563 216 545 221 194 42 38,151 Customer accounts 1,4 389,896 52,604 20,345 9,126 11,364 5,313 1,647 1,859 492,154 Derivatve financal instruments 15,247 13,633 10,449 6,739 4,221 5,976 11,223 4,045 71,533 Senior debt 5 1,215 2,138 2,181 515 168 3,253 13,090 12,482 35,042 Other debt securites in issue 1 1,275 7,619 10,441 2,863 2,424 61 1,132 504 26,319 Other liablites 18,795 19,958 3,089669 914 485 314 14,244 58,468 Subordinated liablites and other borrowed funds – 17 ––– 1,956 3,766 10,915 16,654 Total liablites 459,510 97,257 49,068 20,128 19,636 17,265 31,366 44,091738,321 Net liqudity gap (238,435) 21,146 8,416 15,728 12,62741,661 64,800 124,786 50,729 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 13 Financal instruments (pages 339 to 364) 2Loans and advances include reverse repurchase agreements and other simlar secured lending of $67.6 billon 3Deposits by banks include repurchase agreements and other simlar secured borrowing of $6.6 billon 4Customer accounts include repurchase agreements and other simlar secured borrowing of $43.9 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 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,mortgagebalances 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nganalysis of observed customer behaviour over time. ![]() 255 Standard Chartered – Annual Report 2021 Risk review and Capital review Maturity of financal liablites on an undiscounted basis (audited) The following table analyses the contractual cashflows payable for the Group’s financal liablites by remainng contractual maturiteson an undiscounted basis. The financal liablity balances in the table below will not agree with 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 areundated. Interestpayments on these instruments are included withn the relevant maturites up to five years. 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 fiveyears and undated $millon Total $millon Deposits by banks 34,866 1,140 1,246 409 481 117 208 338,470 Customer accounts 430,19052,112 27,510 11,813 12,120 4,930 2,212 2,495 543,382 Derivatve financal instruments 1 52,783 9 22 12 106 76 212 179 53,399 Debt securites in issue 2,526 13,618 9,015 3,586 3,891 6,743 17,96617,659 75,004 Subordinated liablites and other borrowed funds 1,114 134 48 261 928 2,546 3,030 16,044 24,105 Other liablites 17,759 22,460 1,952 1,1331,170 797 990 9,955 56,216 Total liablites 539,23889,47339,793 17,214 18,696 15,209 24,618 46,335 790,576 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 33,107 1,297 2,574 227 576 225 195 54 38,255 Customer accounts 390,203 52,749 20,446 9,188 11,507 5,362 1,679 2,144 493,278 Derivatve financal instruments 1 70,216 48 219 160 60 199 510 121 71,533 Debt securites in issue 2,494 9,596 12,924 3,401 2,9213,945 15,556 14,456 65,293 Subordinated liablites and other borrowed funds –– 251 – 371 2,5915,202 15,466 23,881 Other liablites 17,002 19,754 2,996 657 904 483 317 9,914 52,027 Total liablites 513,022 83,444 39,410 13,633 16,339 12,805 23,459 42,155 744,267 1Derivatves are on a discounted basis ![]() 256 Standard Chartered – Annual Report 2021 Risk review Risk profile Interest Rate Risk in the Banking Book The following table provides the estimated impact to a hypothetical base caseprojectonof 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 interest rateshock scenarios assumeall other economic variables remainconstant. The sensitvites shown represent the estimated change toa hypothetical 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 thedifferent 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 one-year horizon, includng the time taken to implement changes topricng before becoming effective.The assessment assumes that 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. No assumptions are made in relation to the impact on credit spreads in a changing rate environment. 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 thisare considered unlikely. Reported sensitvites will vary over time due to a number of factors includng changes inbalance sheet compositon,market conditons, customerbehaviour andrisk management strategy and should therefore not be considered an income or profitforecast. 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 HKD bloc $millon SGD bloc $millon KRWbloc $millon CNY bloc $millon Other currency bloc $millon Total $millon + 50 basis points 200 150 70 5050 140 660 - 50 basis points (210) (170)(70) (40) (50)(130) (670) + 100 basis points 380 280130 80 90 300 1,260 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 HKD bloc 1 $millon SGD bloc $millon KRWbloc $millon CNY bloc $millon Other currency bloc $millon Total 1 $millon + 50 basis points 100100 5050 1060 370 - 50 basis points (180) (70)(50) (60) (20)(70) (450) + 100 basis points 200 9090 100 30 110 620 1Sensitvity for 2020 has been restated due to correction of interest rate basis for certain USD denominated interest rate swaps and HKD denominated mortgages 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 $660 millon. The equivalent impact from a parallel decrease of 50 basis points would result in a reduction in projected NII of $670 millon. The Group estimates the one-year impact of an instantaneous, parallel increase across allyield curves of 100 basis points to increase projected NII by $1,260 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 recognisethe 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 $170 millon, and to a 100 basis point parallel up shock by $340 millon, primarly in USdollars. 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 largely offsets the assumed impact of flooring liablity pricng under the same scenario, primarly in Greater China and North Asia. The decison to pass on changes in interest rates is highly subjectveand depends on a rangeof factors includng market environmentand competitor behaviour. ![]() 257 Standard Chartered – Annual Report 2021 Risk review and Capital review Operational and Technology Risk Operational Risk is defined as the “Potential for loss from inadequate or failed internal processes, technology events, 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 operational risks. Operational Risk profile In 2021, the Group has taken steps for further embedding of the enhanced framework to augment the management of operational risk with theaim of ensuring that risk ismanaged withn Risk Appetite and we continue to deliver services to our clients. 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. 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 execution delivery 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 2020 1 Agency Services 0.0% 1.2% Asset Management 0.0% – Commercial Banking 5.6% 18.4% Corporate Finance – – CorporateItems 43.2% 23.8% Payment and Settlements 35.8% 16.1% Retail Banking 10.1% 29.9% RetailBrokerage 0.0% 0.2% Trading and Sales 5.4% 10.2% 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 Operational Losses by Basel event type % Loss 2021 2020 1 Business disrupton and system failures 3.4% 2.0% Clients products andbusiness practices 1.1% 5.8% Damage to physical assets 0.0% 0.1% Employmentpractices and workplace safety 0.0% 0.5% Execution delivery and process management 79.7% 70.3% External fraud 9.0% 20.7% Internal fraud 6.7% 0.6% 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. ![]() 258 Standard Chartered — Annual Report 2021 Risk review Risk management approach #### Enterprise Risk Management Framework Effective risk management is essential in deliverng consistent and sustainable performance for all 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 Enterprise Risk ManagementFramework (ERMF)enables the Group to manageenterprise-wide risks, with the objectve of maximsingrisk-adjusted returns while remainngwithn our Risk Appetite. The ERMF has been designed with the explict goal of improvng the Group’s risk management, and since its launch in January 2018, it has been embedded across the Group and rolled out to its branches and subsidaries 1 . In 2021, we completed a comprehensive review of the ERMF, and the following changes were approved by the Board: • Cross-cuttingrisks have been repositonedas 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 ERMF 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 ERMF. • 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). The revised ERMF was approved in February 2022 and will become effective in March 2022. Risk culture The Group’s risk culture providesguidng princplesfor the behavioursexpected from our people when managingrisk. The Board has approved a risk culture statement that encourages the following 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 accountablefor 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 newrisks or existngrisks 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onalRisk Appetite for Board 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 Board. The Board 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 ERMF and the Group Risk Appetite Statement where projectons allow. • Country Risk managementapproach 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. Roles and responsiblites Senior Managers Regime 2 Roles and responsiblites under the ERMF are aligned to the objectves of the Senior Managers Regime. The Group Chief Risk Officer isresponsiblefor the overall development and maintenance of the Group’s ERMF 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 Risk Type Frameworks (RTFs) 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 itrelates to financal and non-financal risks to the Group arisng from climate change. Thisdoes 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. Risk identficaton Group strategy Stress testing Risk Appetite 1The Group’s Risk Management Framework and System of Internal Control applies only to wholly controlled subsidaries of the Group, and not to Associates, Joint Ventures or Structured Entites of the Group. 2Senior managers refer to indviduals designated as senior management functions under the FCA and PRA Senior Managers Regime (SMR). ![]() 259 Standard Chartered — Annual Report 2021 Risk review and Capital review The Risk function The Risk function isresponsiblefor the sustainablity of our business through good management of risk across the Group by providng oversight andchallenge, 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 andsales functions of thebusinesses. The Risk function isresponsiblefor: • Maintaning the ERMF, ensuring that it remains relevant and appropriate to the Group’s business activties, and is effectively communicated and implemented across the 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 transparentlyon the basis of proper assessments and that risks are controlled in accordance with the Group’s standards and Risk Appetite. • Overseeing and challenging the management of Princpal Risk Types and Integrated Risk Types under the ERMF. The independence of the Riskfunction ensuresthat the necessary balance in making risk and return decisons is not compromised by short-term pressurestogenerate revenues. In additon,the Risk functionis a centre of excellence that provides specialst capabilties of relevance to risk management processes in thebroader 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 compliancestandards and aculture of appropriate conduct at theforefront 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 ERMF to deliver a unifed second line of defence. Three lines ofdefence model Roles andresponsib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 ofdefence Defintion Keyresponsiblites include  st The businesses and functions engaged inor supporting revenue-generating activties that own and manage the risks • Propose therisks required to undertakerevenue-generating activties • Identify, assess, monitor and escalate risks and issues to the second line and senior management 1 and promotea 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 riskdata aggregation, risk reporting and data quality requirements set by the second line.  nd The control functions independent ofthe first line that provide oversight and challenge of risk management toprovideconfidenceto the Group Chief Risk Officer, senior management and the Board • Identify, monitor and escalate risks and issues to the Group Chief Risk Officer, senior management and the Board and promote a healthy risk culture and good conduct • Oversee and challenge first-line risk-takingactivties and review first-line risk proposals • Propose Risk Appetite to the Board, monitor and report adherenceto Risk Appetiteand intervene tocurtail 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 noteffectivelymanage risk • Set risk data aggregation, risk reporting and dataquality requirements • Ensure that there are appropriate controls to comply with applicable laws and regulations, and escalate signficant non-compliance matters to senior managementand the appropriate committees.  rd The InternalAudit functionprovides independent assurance on theeffectiveness of controls that support first line’s risk management of businessactivties, and the processes maintanedby the secondline • Independently assess whethermanagementhasidentfied the key risks in thebusinesses andwhether these are reported and governed in line with the established risk management processes • Independently assess the adequacy of the design of controls and theiroperating effectiveness. 1Senior management in this table refers to indviduals designated as senior management functions under the FCA and PRA Senior Managers Regime (SMR). ![]() 260 Standard Chartered — Annual Report 2021 Risk review Risk management approach 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 a sustainable 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 Board. 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 Board 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 theaggregate 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 anoverarching statement outlinng the Group’s Risk Appetite princples. Risk Appetite princples The Group Risk Appetite isdefined in accordancewith risk management princples that inform ouroverall approachto 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 our investors and all internal and external stakeholders. 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 issupplemented by risk control tools suchas 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 Board, Board Risk Committee and the Group Risk Committee, includng the status ofbreaches and remediatonplans where applicable. To keep the Group’s risk profile withn Risk Appetite (and therefore also risk capacity), we have cascaded critcal Group Risk Appetite metrics across our Princpal Risk Types to our footprint markets with signficant business operations. Country Risk Appetite is managed at a country or local level with Group and regional oversight. 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 RiskAppetite Statements will be given in 2022 for additonal integrated risks such as Third-Party Risk and Digtal Asset Risk. These risk types are currently supportedby RiskAppetite metrics embedded withn the respective PRTs. The Group Risk Committee, the Group Financal Crime Risk Committee, the Group Non- Financal Risk Committee and the Group Asset and Liablity Committee are responsible for ensuring that ourrisk profile is managed in compliance with the Risk Appetite set by the Board. The Board Risk Committee and the Board Financal Crime Risk Committee (for Financal Crime Compliance) advise the Board on and monitor the Group’s compliance with the Risk Appetite Statement. The indvidual Princpal RiskTypes’ RiskAppetite Statements approved by the Board are set out in the PrincpalRisks section ( pages 264 to 279 ). 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 tomultiple types of risk exposure; risk concentrations may arise from multiple exposures thatare 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 accountablefor risksarisng from the actions of suchthird-parties, failure toadequately monitor and manage these relationshps could materially impactthe 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 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. 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 arelonger-term matters that should be on the radar but are not yet fully measurable. The Group Chief Risk Officer and the Group 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ngemerging risks. They use this informaton toescalatematerialdevelopments in each risk event and make recommendations to the Board annually on any potential changes to our Corporate Plan. Further informaton on the Group’s emerging risks can be found on pages 280 to287 . Stress testing The objectve of stress testing is to support the 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 andconsiders 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. ![]() 261 Standard Chartered — Annual Report 2021 Risk review and Capital review Enterprise stress tests incorporate Capital and Liqudity Adequacy Stress Tests, includng inthe context ofcapital adequacy, recovery and resolution, and stress tests that assess scenarios whereour business modelbecomes challenged, such as the BoE Biennal Exploratory Scenario, or unviable, such as reverse stress tests. Stress tests are performed at Group, 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 Group. The Board delegates approval of stress test submissons to the Bank of England to the Board Risk Committee, which reviews the recommendations from the Group Risk Committee. Based on the stress test results, the Group Chief Financal Officer and Group Chief Risk Officer can recommend strategic actions to the Board to ensure that the Group strategy remains withn the Board-approved Risk Appetite. Princpal Risk 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 ERMF. These risks are managed through distnct RTFs which are approved by the Group Chief Risk Officer. The Princpal Risk Types and associated Risk Appetite Statements are approved by the Board. The Group currently recognises Climate Risk, Digtal Asset Risk and Third-Party Risk as Integrated Risk Types. Climate Risk is defined as“the potentialfor 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 regulatorypenalties, 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 oradverse impactfromfailure 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 continued todevelop and enhance its Digtal Asset Risk Management approach during 2021 in order tofurtherembed risk management practices and ensure that digtal asset activties across the Group are appropriately risk managed, and withntheGroup’s Risk Appetite. The approach requirescomprehensive assessments of risks arisng from such intiatves and seeks to integrate the approach withnexist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. A Digtal Assets Risk Management policy, outlinng requirements for digtal asset intiatves, has been implemented and is supported by defined processes, templates and guidance relating to the identficaton of higher-risk digtal asset activties, coin admisson requirements, and enhanced due dilgence practices for products, projects and clients. The Group has formalised a stand-alone 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 Types Defintion Credit Risk • Potential for loss due to the failure of a counterparty to meet its agreed obligatons to pay the Group. TradedRisk • 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 • Potentialfor loss resulting from inadequateor failed internalprocesses, technology events, human error, or from the impact of external events (includng legal risks). Information and CyberSecurity 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 destructionof 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 complywith laws orregulations. Financal Crime Risk • Potentialfor legal or regulatory penalties, material financalloss or reputational damage resulting from the failure to comply with applicable laws and regulations relating to internatonalsanctions, 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 mis-estimaton that could be princpally based on the output of models, due to errors in the development, implementatonor use of such models. Reputationaland 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 orinactons, includng a failure touphold responsible businessconduct or lapsesin 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 264 to 279 ). ![]() 262 Standard Chartered —Annual Report 2021 Risk review Risk management approach ERMF effectiveness reviews The Group ChiefRisk Officer is responsible forannually affirmng the effectiveness of the ERMF to the Board Risk Committee. To faciltate this, an ERMF effectiveness review was established in 2018, which follows the princple of evidence-based self-assessments for all the Risk Type Frameworks and relevant polices. A top-down review and challenge of the results is conducted by the Group Chief Risk Officer with all Risk Framework Owners, and an opinon on the internal control environment is provided by Group Internal Audit. The ERMF effectiveness review is conducted annually and enables measurement of progress against the 2018 baseline. The key outcomes of the 2021 effectiveness review are: • While the ERMF has evolved over the past four years to reflect changes in the risk profile, the focus in 2021 continued on the effective embedding of the framework across the organisaton. • The more mature financal risks continued to be more effectively managed on a relative basis compared to non-financal risks, and other aspects of the ERMF are established and operating to amore consistent standard, includng the key risk committees and key supporting standards. • Self-assessments performed in our footprint markets reflect the maturing ERMFadoptionwithemphasis on first-line ownership of risks. Country and regional risk committees continue to play an active and vital role in managing and overseeing material issues arisng in countries. Over the course of 2022, the Group aims to further strengthen its risk management practices through further improvng on the managementof non-financal risks withn its businesses, functions and across the footprint, as well as management of risks which areintegrated in nature. Executive and Board risk oversight Overview The Board has ultimateresponsiblity forrisk management and is supported by six Board-level committees. The Board approves the ERMF based on the recommendation from the Board Risk Committee, which also recommends the Group Risk Appetite Statement for all Princpal Risk Types other than Financal Crime Risk. Financal Crime Risk Appetite is reviewed and recommended to the Board by the Board Financal Crime Risk Committee. In additon, the Culture and Sustainablity Committee (CSC) oversees the Group’s culture and key sustainablity priorties. Board and Executive level risk committee governance structure The Committee governance structure below presents the view as of 2021. Group Asset and Liablity Committee Group Risk Committee Board of Directors Board Risk Committee Culture and Sustainablity Committee Governance and Nominaton Committee Board Financal Crime Risk Committee Remuneration Committee Audit Committee Group Non-Financal RiskCommittee Group Financal Crime Risk Committee Group Responsiblity and ReputationalRisk Committee IFRS 9 Impairment Committee Model Risk Committee Corporate, Commercialand Institutonal Banking RiskCommittee Consumer, Private and Business Banking Risk Committee Asia Risk Committee Africa and Middle East Risk Committee InvestmentCommittee Investment Committee forTransportation Assets StandardChartered Ventures Committee The committee governancestructure ensuresthat risk-taking authority andrisk managementpolices are cascaded down from the Board to the appropriate functional, client segment and country-level senior management and committees. Information regarding material risk issues and compliance with polices and standards iscommunicated tothe appropriate country, client segment, functional and Group-level senior management and committees. Boardlevel committees Executive level committees Asia Risk Committee derives authority from both the Group Risk Committee (for oversight of the Asia region) and the Executive Committee of Standard Chartered Bank (Hong Kong) Limted (“SCBHK”) for oversight of SCBHK Group. ![]() 263 Standard Chartered — Annual Report 2021 Risk review and Capital review Group Risk Committee The Group Risk Committee, which derives its authority from the Group ChiefRisk Officer, is responsible for ensuring the effective management of riskthroughout theGroupin support of the Group’s strategy. The Group Chief Risk Officer chairs the Group Risk Committee, whose members are drawn from the Group’s Management Team. The Committee determines the ERMF and oversees its effective implementaton across the Group,includng the delegation of any part of its authorites to appropriate indviduals or properly constituted sub-committees. Group Risk Committee sub-committees The Group Non-Financal Risk Committee, co-chaired by the Global Head, Enterprise Risk Management and Deputy CRO SC Bank and Group Head, Central Finance and Deputy CFO SC Bank, governs the non-financal risks across clients, businesses, products andfunctions. The non-financal Risk Types in scope are Operational and Technology Risk, Compliance Risk, ConductRisk, Information and Cyber Security Risk, Fraud Risk and Secondary Reputational Risk that is consequential in nature arisng from risks pertainng to Princpal Risk Types. The Committee also reviews the adequacy of the internal control system across all Princpal Risk Types. The Group Financal Crime Risk Committee, chaired by the Group Head, Conduct, FinancalCrime and Compliance governs the Financal Crime Risk Type (excluding Fraud Risk and SecondaryReputationalRisk that isconsequentialin nature arisng from risks pertainng to Financal Crime Risk) across the Group. The Committee ensures that the Financal Crime Risk profile is managed withn approved Risk Appetite and polices. The Committee is also responsible for recommending the Financal Crime Risk Appetite Statement and Risk Appetite metrics to the Board Financal Crime Risk Committee. The Group Responsiblity and Reputational Risk Committee, chaired by the Group Head, Conduct, Financal Crime and Compliance, ensuresthe effective management of Reputational and Sustainablity Risk across the Group. This includes providng oversight of matters arisng from clients, products, transactions and strategic coverage-related decisons and matters escalated by the respective Risk Framework Owners. The IFRS 9 Impairment Committee, chaired by the Global Head, Enterprise Risk Management, ensures the effective management of the expected credit loss computations as well as stage allocation of financal assets for quarterly financal reporting withn the authorites set by the Group Risk Committee. The Model Risk Committee, chaired by the Global Head, Enterprise Risk Management, ensures the effective measurement and management of Model Risk in line with internal polices and Model Risk Appetite. The Corporate, Commercial and Institutonal Banking (CCIB) Risk Committee, chaired by the Chief Risk Officer, CCIB and Europe & Americas, ensures the effective management of risk throughout CCIB in support of the Group’s strategy. The Consumer, Private and Business Banking (CPBB) Risk Committee, chaired by the Chief Risk Officer, CPBB, ensures the effective management of risk throughout CPBB in support of the Group’s strategy. The two regional risk committees are chaired by the Chief Risk Officer for the respective region. These ensure the effective management of risk in the regions in support of the Group’s strategy. The Investment Committee ensures the optimsed wind- down of the Group’s existng direct investment activties in equites, quasi-equites (excluding mezzanine), fundsand other alternative investments (excludingdebt/debt-like instruments). The Committee is chaired by a representative of the Risk function (which includes theGlobal Head,Enterprise Risk Management, Global Head, Group SpecialAssets Management and other members appointed by the Group Chief Risk Officer). The Investment Committee for Transportation Assets, chaired by the Chief Risk Officer, CCIB and Europe & Americas, ensures the optimsation of the Group’s investment in aviaton and shippng operating lease assets, with the aim of deliverng better returns through the cycle. The Standard Chartered Ventures (SCV)Committee, chaired by the Chief Risk Officer, SCV, receives authority directly from the GCRO and ensures the effective management of risk throughoutSCV andindvidual entites operating underSCV. Group Asset and Liablity Committee The Group Asset and Liablity Committee is chaired by the Group Chief Financal Officer. Its members are drawn princpally from the Management Team. The Committee is responsible for determinng the Group’sapproach to balance sheet strategy and recovery planning. The Committee is also responsible for 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. ![]() 264 Standard Chartered – Annual Report 2021 Risk review Risk management approach #### Princpal risks We manage and control our Princpal Risk Types through distnct Risk Type Frameworks, polices and Board-approved Risk Appetite. 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pleof diversficaton across products, geographies, client segments and industry sectors. Roles and responsiblites The Credit Risk Type Frameworks for the Group are set and owned by the Chief Risk Officers for the business segments. The Credit Risk function is the second-line control function responsible for independentchallenge,monitorng and oversight of the Credit Risk management practices of the business and functions engaged inor 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, credit polices and standards. Mitgation Segment-specifc polices are in place 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ngand control, and documentation. 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 thesesegments. The Group also sets out standards for the eligbilty, enforceabilty and effectiveness of Credit Risk mitgation arrangements. Potentialcredit 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,legalenforceabil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. The Group also seeks to diversfy its collateral holdings across 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 Board level, the Board Risk Committee oversees the effective management of Credit Risk. At the executive level, the Group Risk Committee (GRC) oversees and appoints sub-committees for themanagement of Credit Risk– 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. The GRC also receives reports from other key Group Committees such as the Standard Chartered Bank Executive Risk Committee. These committees are responsible for overseeing the Credit Risk profile of the Group withn the respective business areas and regions. Meetings are held regularly, and the committees monitor all material Credit Risk exposures, as well as key internal developments and external trends, and ensurethat appropriate action istaken. Decison-making authorites and delegation The Credit Risk Type Frameworks are the formal mechanism which delegate Credit Riskauthoritescascading fromthe 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 creditofficers based on risk-adjusted scales by customer type or portfolio. 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 CreditRisk authorites perform oversight by reviewng a sample of the limt applicatons approved by the delegated credit officers ona 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. Wheremanual or discretonary credit decisons are applied, these are subject to periodc quality controlassessment and assurance checks. #### Credit Risk ![]() 265 Standard Chartered – Annual Report 2021 Risk review and Capital review Monitorng We regularly monitorcredit 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, portfoliodelinquency 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 aplatform 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ples andstress test ins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 an obligaton with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 arere-evaluated. In additon, remedial actions, includng exposure reduction, security enhancement or exitng the account, could beundertaken, 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 Banking Client Coverage that operates independently from our main business. 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 monitoredon 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. For discretonary lending portfolios, simlar processes as of Commercial clientcoverage 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. Creditrating 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’sliqudity and leverage positon. Where applicable,the assessment includesa 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 aclient’s credit quality leading to default. Risk measurement plays a centralrole, along withjudgement 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 tocalculate CreditRisk capital requirements. The Group has also established a global programme to undertakea 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. Lowernumericcredit 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 Banking internal ratings- based portfolios use applicaton and behavioural credit 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 determineCPBB 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afor the unsecured consumer business segment. 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 internalratings-based risk measurement models are approved by the 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nthemodels. Models undergoannual validaton by an independent model validaton team. Reviews are also triggered if the performance of a model deteriorates materially againstpredetermined thresholds during the ongoing model performance monitorngprocesswhich takes place between the annual validatons. ![]() 266 Standard Chartered – Annual Report 2021 Risk review Risk management approach Credit ConcentrationRisk Credit ConcentrationRisk may arise from a singlelarge exposure to a counterparty or a group of connected counterparties, or from multiple exposures across theportfolio that are closely correlated. Large exposure Concentration Risk is managed through concentration limts set for a counterparty or a group of connected counterparties based on controland economic dependencecritera. Risk Appetite metrics are set at portfolio level and monitored to control concentrations, where appropriate, byindustry, specifc products, tenor, collateralisatonlevel,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 Group Risk Committee and Board RiskCommittees. 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. ECLis computed as an unbiased, probabilty-weighted provison determined by evaluating a rangeof plausible outcomes, the time valueof money, and forward-looking informaton such as critcal global or country-specifc macroeconomic variables. For more detailed informatonon macroeconomic data feeding into IFRS 9 ECL calculations, please refer to the Risk profile section (pages 233 to 244). 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 frompossible default events up to12 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 ordefault (stage 3), ECL continue to bemeasured on a lifetme basis. To provide the Board with oversight and assurance that the quality of assets orignated are aligned to the Group’s strategy, there is a Risk Appetite metric to monitor the stage 1 and stage 2 expected credit losses from assets orignated in the past 12 months. In Corporate, Commercial and Institutonal Banking Client Coverage, aloan isconsideredcredit-impared whereanalysis 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, ora loss of princpalis expected. Estimatng the amount and timng of future recoveries involvessign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vetochangesin 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 the Risk profile section (pages 233 to 244). 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-wideand country-level stress tests are mandated by regulators to assess the abilty of the Group and its subsidaries to continue to meet their capital requirements during a plausible,adverse shock tothe business. These regulatory stress tests are conducted in line with the princples stated in the Enterprise Stress Testing Policy. Stress tests for key portfolios are reviewed by the Credit Risk Type Framework Owners (or delegates) as part of portfolio oversight; and matters considered material to the Group are escalated to the Group Chief Risk Officer and respective regionalrisk committee. ![]() 267 Standard Chartered – Annual Report 2021 Risk review and Capital review 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 andAlgorithmc Trading. Traded Risk Management (TRM) is the core risk management function supporting market-facing businesses, specifcally Financal Markets andTreasury. Roles and responsiblites 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, isresponsiblefor the effective managementof risks withn the scope of its direct organisatonal responsiblites set by the Board. The TRM function is the second-line control function that performs independent challenge,monitorng and oversightof the TradedRisk management practices of the first line of defence. The first and second lines of defence are supported bytheorganisatonstructure, jobdescriptons and authorites delegated by Traded Risk controlowners. Mitgation The Group controls its trading portfolio and activties withn Risk Appetite by assessing thevarious TradedRisk 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 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 TRTF, andunderlying policesand standardsensure that these Traded Risk limts areimplemented. All Traded Risk exposures throughout the Group aggregate up to TRM’s Group-levelreporting. Thisaggregation approach ensures that the limts structure across the Group is consistent with the Group’s Risk Appetite. 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 orwherematerialriskremains.This additonal informaton isused toinform the management of the Traded Risk taken withn the Group. The outcome of stress tests is discussed across the various business lines and management levels so that existng and potential risks can be reviewed, and related managementactions can be decided upon where appropriate. Polices are reviewed and approved by the Global Head, TRM annually to ensure their ongoing effectiveness. Governance committee oversight At Board level, the Board Risk Committee oversees the effective management of Traded Risk. At the executive level, the Group Risk Committee delegatesresponsiblites to the CCIBRC to act as the primary risk governance for Traded Risk. 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 thelocal board to the local risk committee, CountryChief Risk Officer andTraded 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 Board with responsiblity for Traded Risk limts, then tiered accordingly. Subject to theGroup’s RiskAppetite for Traded Risk, the Group Risk Committee sets Group-level Traded Risk limts, via delegation to the Group Chief Risk Officer. The Group Chief Risk Officer delegatesauthority 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onallimts are placed onspecif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 control standards and risk-return objectves are met. Authority delegators are responsible for monitorngthe quality of the riskdecisons taken by their delegates and the ongoing suitablity of their authorites. Market Risk 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. VaRprovides 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. 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 controlits tradingportfolio and activties to ensure that Traded Risk losses (financal or reputational) do not cause material damage to theGroup’s franchise. #### Traded Risk ![]() 268 Standard Chartered – Annual Report 2021 Risk review Risk management approach For day-to-dayrisk management, VaR is calculated asat 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 of all existng positons to reflect the effect 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 themajorty of specifc (credit spread) risk VaRs. • Monte Carlo simulaton: this methodology is simlar to historcalsimulaton but with considerablymore input risk factor observations. These are generated by random samplingtechniques, but the results retain the essential variablity and correlations ofhistorcally observedrisk factor changes. Thisapproach is applied for some 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 appliedin 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. An analysis of VaR and backtesting results in 2021 is available in the Risk profile section (pages 245 to 248). 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 TradedRisk. 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. Underwritng The underwritng of securites and loans is in scope of the Risk Appetite set by the Group for Traded Risk. Additonal limts approved by the Group Chief Risk Officer are set on the underwritng portfolio stress loss, and the maximum holding period. The Underwritng Committee,under the authority of the Group Chief Risk Officer, approves indvidual proposals to underwrite new security issues and loans for our clients. 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 exposuresare 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 discussedwith the business and approved where appropriate, based on delegated authority levels. Stress testing The VaR and PFEmeasurements 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 frameworkand considers both historcal market events and forward-looking scenarios. A consistent stress testing methodology is applied to trading and non- tradingbooks. The stresstesting methodologyassumesthat scope for managementaction 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. Stress scenarios are regularly updated to reflect changes in risk profile and economic events. The TRM function reviews stress testingresults and, where necessary, enforces reductions in overall Traded Risk exposures. The Group Risk Committee considers the results of stress tests as part of its supervison ofRisk Appetite. Where required, 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. ![]() 269 StandardChartered – Annual Report 2021 Risk review and Capital review Roles and responsiblites The Global Head, Enterprise Risk Managementis responsible for the Risk Type Framework for Treasury Risk. 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 risksub-type will move from Traded Risk toTreasury Risk, and the risk will be governed under the Treasury Risk Type Framework. Mitgation The Group develops polices to address material Treasury Risks and aims to maintan its risk profile withn Risk Appetite. In order to do this, metrics are set against Capital Risk, Liqudity and Funding Risk and Interest Rate Risk in the Banking Book (IRRBB). Where appropriate, Risk Appetite metrics are cascaded down to regions and countries in the form of limts andmanagement action triggers. 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 Board annually. The capital plan ensures that adequate levels of capital, includng loss-absorbingcapacity, 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 ongoingassessment of the demand for capital and the updating of the Group’s capital plan. Risk Appetite metrics includng capital, leverage, minmum requirement for own funds and eligble liablity (MREL) and double leverage 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 Group’s non-US dollar investment in the share capital and reserves of subsidaries and branches. The FX translationgains, or losses are recorded in the Group’s translation reserves with a direct impact on the Group’s Common Equity Tier 1 ratio. The Group contracts hedges to manageits structural FX positon in accordance with the Board-approved Risk Appetite, and as a result the Group has taken net investment hedges to partially cover its exposure to certain non-US dollar currencies to mitgate the FX impact of such positons on its capital ratios. Liqudity and Funding Risk At Group, region and country level we implement various business-as-usual andstress risk metrics and monitor these against limts and management actiontriggers. This ensures that the Group maintans an adequate and well-diversfied liqudity buffer, as well as a stable funding base, and that it meetsits liqudity andfunding regulatory requirements.The approach to managing risks and the Board Risk Appetite are assessed annually through the Internal Liqudity Adequacy Assessment Process. A funding plan is also developed for efficent liqudity projectons to ensure that the Group is adequately funded in the required currencies, tomeet its obligatons and client funding needs. 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. The Group monitors IRRBB against the Board Risk Appetite. 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 The Group should maintan a strong capital positonincludng themaintenance of management buffers sufficent to support its strategic aims and hold an adequate buffer of high quality liqud assets to survive extreme but plausible liqudity stress scenarios for at least 60 days without recourse to extraordinary central bank support. #### Treasury Risk ![]() 270 StandardChartered – Annual Report 2021 Risk review Risk management approach Recovery and Resolution Planning In line with PRA requirements, the 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 Group to a stable and sustainable positon. The Recovery Plan includes a set of recovery indcators, an escalation framework and a set of management actions capable of being implemented ina stress. A Recovery Plan is also maintaned withn each major entity, and all recovery plans are subject to periodc fire- drill testing. As the UK resolution authority, the Bank of England (BoE) is required to set a preferred resolution strategy for the Group. The BoE’s preferred resolution strategy is whole 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 Group’s home resolution authority. Insupport ofthis strategy, the Group has been developing a set of capabilties, arrangements and resources to achieve the required outcomes. The 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. Governance committee oversight At the Board level, the Board Risk Committee oversees the effective management of Treasury Risk. At the executive level, the Group Asset and Liablity 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 that the Group operates withn the internally approved Risk Appetite and other internal and external treasury 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 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 ChiefRisk Officer has delegated the Risk Framework Owner responsiblites associated with Treasury Risk to theGlobal Head, Enterprise RiskManagement. The Global Head, Enterprise Risk Managementdelegates 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-daybasis, the managementof 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 arise from internal and external events. Internal risk management reports covering the balance sheet and the capital and liqudity positon are presented to the relevant Asset and Liablity Committee. The reports contain key informaton on balancesheet trends, exposuresagainst Risk Appetite andsupporting 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 Group’s internal assessment of capital and liqudity considers the impact ofextreme but plausible scenarios onits risk profile. A number of stress scenarios, some designed internally, some required by regulators, arerun periodcally. They provide an insght into the potential impact of signficant adverse events on the Group’s capital and liqudity positon and how this could be mitgated through appropriate management actions to ensure that the Group remains withn the approved Risk Appetite and regulatory limts. Daily liqudity stress scenarios are also run to ensure that the Group holds 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. ![]() 271 Standard Chartered – Annual Report 2021 Risk review and Capital review Roles and responsiblites 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, Functionsand Operational Risk (GHRFOR). This framework collectively definestheGroup’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ngand 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 andsecurity, and technology risk). The O&T RTF reinforces clear accountabilty for managing risk throughout the Group and delegates second line of defence responsiblites toidentfied subject matter experts. Foreach risk sub-type, the expert sets polices and standards for the organisatonto comply with, and providesguidance,oversight and challenge over the activties of the 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 Group’s risk-return objectves are met. Mitgation 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esforthe identficaton, control and monitorng ofrisks (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 andtimelyactions for elevatedrisks. Risks that exceed the Group’s Operational and Technology Risk Appetite requiretreatment plans to address underlying causes. Governance committee oversight At Board level, the Board Risk Committee oversees the effective management of Operational Risk. At the executive level,the Group Risk Committee is responsible forthe governance and oversight of Operational Risk for the Group, monitors the Group’s Operational and Technology Risk Appetite and relies on other key Group committees for the management of OperationalRisk, in particular the Group Non-Financal Risk Committee (GNFRC). Regional business segments and functional committees also provide enterprise oversight of their respective 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 ExecutiveRisk Committee (for subsidaries). Decison-making authorites and delegation The O&T RTF is the formal mechanism through which the delegation of OperationalRisk authorites is made. The GHRFOR places reliance on the respective SeniorManagers who are outside the Risk function for second-line oversight of the risk sub-types through this framework. The Senior Managers may further delegatetheirsecond-line responsiblites to designated indvidualsat a globalbusiness, 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 andmanages risks which are signficant to clients and to the financal services sectors. Control indcators areregularly monitoredto 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 profileensures appropriatepriortisaton and timelness of riskdecisons, includng risk acceptanceswith treatment plans for risks that exceed acceptable thresholds. The Board 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 ofthe risk. These Operationaland Technology Risk Appetite metrics are consolidated on a regular basis and reported at relevant Group committees. This provides senior management with the relevant informaton to inform their risk decisons. Stress testing Stress testingand scenario analysis are used toassess capital requirements for operational risks. This approach considers the impact of extreme but plausible scenarios on the Group’s Operational Risk profile. A number of scenarios have been identfied to test the robustness of the Group’s processes and assess the potential impact on the Group. These scenarios include anti-money laundering and sanctions, as well as informaton and cyber security. 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alor reputational), includngany related to conduct of business matters, do not cause material damage to theGroup’s franchise. #### Operational and Technology Risk ![]() 272 Standard Chartered – Annual Report 2021 Risk review Risk management approach Roles and responsiblites The Group’s Information and Cyber Security Risk Type Framework (ICS RTF) defines the roles and responsiblites of the first and second lines of defence in managing and governing ICS Risk respectively across the Group with emphasis onbusiness ownership and indvidual accountabilty. The Group Chief Operating Officer has overall first line of defence responsiblity for ICS Riskand 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 ICS Risk is managed through a structured ICS Risk framework comprisng ariskassessment methodology andsupporting 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 CISROfunction monitors compliance totheICS 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 and country governance committees. Governance committee oversight At Board level, the Board Risk Committee oversees the effective management of ICS Risk. The GroupRisk Committee (GRC) hasdelegated authority tothe Group Non-Financal Risk Committee (GNFRC)to ensure effective implementaton of the ICS RTF. The GRC and 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. At a management level, the Group has also created the Cyber Security Advisory Forum, chaired by the Group Chief Executive Officer, as a way of ensuring the Management Team, the Group Chairman and several non-executive directors are well informed on ICS Risk, and to increase business understanding and awareness so that business priorties drive the security and cyber resilence agenda. Decison-making authorites and delegation The ICS RTF defines how ICS Risk Management will operate withn the Group. The Group CISRO delegates authority to designatedindviduals through the ICS RTF, includng second-line ownership at a business and function level as well as regional or country level The ICS RTF defines the levels of approval required for different risk ratings. The Group CISO isresponsiblefor implementng and operating ICS Security Risk Management withn the Group, leveraging Business Heads of ICS to extend ICS risk managementinto thebusinesses, 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 presenta holistc Group-level ICSRisk 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 are in placewherenecessary. Stress testing The Group’s cyber resilence testing approach entails: • The Group CISROis responsible for risk based, intellgence led, scenario driven assessments that simulate the actions of real-world cyberadversaries 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 responsiblefor supportingcontrol improvement and risk reduction by emulating cyber attacks to enhance the Group’s cyber defence capabilties. 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, or destruction of informaton assets 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. #### Information and Cyber Security (ICS) Risk ![]() 273 Standard Chartered – Annual Report 2021 Risk review and Capital review Roles and responsiblites The Group Head, Conduct, Financal Crime and Compliance (Group Head, CFCC) as Risk Framework Owner for Compliance Riskprovides support to senior management on regulatoryand compliance matters by: • providng interpretaton and advice onCFCC regulatory requirements and their impact on the Group • setting enterprise-wide standards for management of compliancerisks throughthe establishment and maintenance of the Compliance Risk Type Framework (Compliance RTF) • setting a programme for monitorngComplianceRisk. The Compliance RTF sets out the Group’s overall approach to the management of Compliance Risk and the roles and responsiblitesin respect of ComplianceRisk for the Group. All activties that the Group engages in must be designed to comply withthe 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 managementactivties that relate to Compliance Risk. Where ComplianceRisk 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 RiskFramework Owner orcontrol function to ensure that effective oversight and challenge of the first line can be provided by the appropriate second-line function. Each of the assigned second-line functions has responsiblites includngmonitorng relevant regulatory developments from Non-Financal Services regulators atboth Group and country levels, policy development, implementaton, andvalidat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sation of the Compliance Risk types. Mitgation 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 applicablelawsand regulations. Through acombinaton of standard setting, risk assessment, control monitorngand 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 ofCompliance Risk. In this, the requirements of the Operational and Technology Risk Type Framework are followed toensurea consistent approach to the management of processes and controls. Deployment of technological solutions to improve efficencies and simplfy processes has continuedin 2021. These include further expansion of digtal chatbots. Governance committee oversight At amanagement level, ComplianceRisk and the risk of non-compliance with laws andregulations 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 andCFCC Non-Financal Risk Committee for CFCC owned processes. Relevant matters, as required, are further escalated to the Group Non-Financal Risk Committee andGroup Risk Committee. At Board level, oversight of Compliance Risk is primarly provided by the Audit Committee, and also by the Board Risk Committee forrelevant issues. While not aformalcommittee, the Compliance Risk Framework Owner has also established a CFCC Oversight Group to provide oversight of CFCC risks includng the effective implementaton of the ComplianceRTF. Decison-making authorites and delegation The Compliance Risk Type Framework is the formal mechanism through which the delegationof ComplianceRisk authorites is made. The Group Head, CFCC has the authority to delegate second-line responsibliteswithn the CFCC function to relevant and suitably qualifed indviduals. Monitorng The monitorng ofcontrols designed to mitgate the risk of regulatory non-compliance in processes isgoverned inline 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 andCFCCNon-Financal Risk Committee, Group Non- Financal Risk Committee, Group Risk Committee, Board Risk Committee and AuditCommittee, as appropriate. Stress testing Stress testingand scenario analysis are used toassess 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 onthe Group’sComplianceRisk profile. 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 appetite for breaches in laws and regulations relatedto regulatorynon- compliance; recognisng that whilst incdents are unwanted, they cannot be entirely avoided. #### Compliance Risk ![]() 274 Standard Chartered – Annual Report 2021 Risk review Risk management approach The Group defines Financal Crime Risk as the 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. Risk Appetite Statement The Group has no appetite for breaches in laws and regulations relatedto financal crime, recognisng that while incdents are unwanted, they cannot be entirely avoided. #### Financal Crime Risk Roles and responsiblites The Group Head, CFCC has overall responsiblity for Financal Crime Risk andis responsible for the establishmentand maintenance of effective systems and controls to meet legal and regulatory obligatons in respectof Financal Crime Risk. The Group Head, CFCC is the Group’s Compliance and Money-LaunderingReporting Officer and performs the Financal Conduct Authority (FCA)controlled function and senior management function in accordancewith 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 communicaterisks and any policy non-complianceto the second line for review and approval following the model for delegation ofauthority. Mitgation There are four Group polices in support of the Financal Crime Risk Type Framework: • Group Anti-Bribery and Corruption Policy • Group Anti-MoneyLaundering and Counter Terrorist Financng Policy • Group Sanctions Policy • Group FraudRisk Management Policy. The 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 Group monitors enterprise- wide Financal Crime Risks through the CFCC Risk Assessment process consistng of FinancalCrime Risk and Compliance Risk assessments. The Financal Crime Risk assessment is a Group-wide risk assessment undertaken annually to assess the inherent Financal Crime Risk exposures and the associated processesand controls by which these 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 Group’s Operational and Technology Risk Type Framework, in additon to oversight by CFCC Assurance and Group Internal Audit. Governance committee oversight Financal Crime Risk withn the Group is governed by the Group Financal Crime Risk Committee (GFCRC)and the Group Non-Financal RiskCommittee (GNFRC)for Fraud Risk which is appointed by and reports into the Group Risk Committee. Throughout the Group, the GFCRC is responsible for ensuring effective oversight for Operational Risk relating to Financal Crime Risk, while theGNFRC is responsible for ensuring effective oversight of Operational Risk relating to Non- Financal Risks includng Fraud Risk. The Board appoints the Board Financal Crime Risk Committee to provide oversight on anti-bribery and corruption, anti-money laundering (and terrorist financng) and sanctions, and the Board Risk Committee for oversight onFraud Risk. The committees provide oversight of the effectiveness of the Group’s polices, procedures, systems, controls and assurancemechanisms designed to identfy, assess, manage,monitor, detect or preventmoney laundering, non-compliancewith sanctions, bribery, corruption, internal/external fraud and tax crime by third parties. Decison-making authorites and delegation The Financal Crime Risk Type Framework is the formal mechanism through which the delegationof Financal Crime Risk authorites ismade. The Group Head, CFCCis the Risk Framework Owner for Financal Crime Risk under the Group’s Enterprise 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 on client onboarding, potential breaches of sanctions regulation or policy, situatons ofpotentialmoney 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 Board. These metrics are reviewed periodcally and reported regularly to the Group Financal CrimeRisk Committee, Group Non-Financal RiskCommittee, Board RiskCommittee and Board Financal Crime Risk Committee. Stress testing The assessment ofFinanc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 where scenario analysis is used to assess capital requirements for Financal Crime Risk as part of the overallscenario 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 Financal Crime Risk events. This approach considers the impact of extreme but plausible scenarios onthe Group’sFinancalCrime Risk profile. ![]() 275 Standard Chartered – Annual Report 2021 Risk review and Capital review Roles and responsiblites The Global Head, Enterprise Risk Managementis the Risk Framework Owner for Model Riskunder the Group’s Enterprise Risk Management Framework. Responsiblity for the oversight and implementaton of the ModelRisk Type Framework is delegated to the Global Head, Model Risk Management. The 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 ofModelRisk resideswith 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, ensuringmodel performance through regular model monitorng, and communicatngmodel limtations, model assumptions and risks.Model Owners alsocoordinate thesubmisson ofmodels for validaton and approval and ensureappropriatemodel implementaton and use.Second-line oversight is provided by Model Risk Management, whichcomprises GroupModel Validaton and Model Risk Policy and Governance. Group Model Validaton independently reviews andgrades 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 provides oversight of Model Risk activties, performing regular Model RiskAssessment andrisk profile reporting to senior management. Mitgation 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 throughtheapplicaton of model monitorng, model overlays and/or a model redevelopment plan, which undergo robust review, challenge and approval. Operational controls govern allModel Risk-related processes, with regular riskassessments performed to assess appropriatenessand 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 Board level, the Board Risk Committee exercises oversight of Model Risk withn the Group. At the executive level, the Group Risk Committee has appointedthe Model Risk Committee to ensure effective measurement and management of Model Risk. Sub-committees such as the Credit Model Assessment Committee and Traded Risk Model Assessment Committeeoversee theirrespective in-scope models and escalatematerialModelRisks 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 Model Risk Type Framework is the formal mechanism through whichthe delegationof Model Risk authorites is made. The Global Head, Enterprise Risk Managementdelegates authorites todesignated indviduals or Policy Owners through the RTF. The second-line ownership for Model Risk at country level isdelegated to Country Chief Risk Officers at theapplicable branches and subsidaries. The Model Risk Committee isresponsiblefor approving models for use. Modelapproval authority is alsodelegated to the CreditModel Assessment Committee, Traded Risk Model AssessmentCommittee and indvidualdesignated model approvers forlessmaterialmodels. Monitorng The Group monitors Model Risk viaa set of Risk Appetite metrics that are approved by the Board. Adherence to Model Risk Appetite and any threshold breaches are reported regularly to the Board RiskCommittee,Group Risk Committee and Model Risk Committee. These metrics and thresholds are 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ngbased ontheirlevel of perceived Model Risk, withmonitorng resultsand breaches presented to Model RiskManagement and delegated model approvers. Model Risk Managementproduces Model Riskreports covering the model landscape, which include performance metrics, identfied model issues andremediaton plans. These are presented for discusson at the Model Risk governancecommittees on a regular basis. Stress testing Models play an integral role in the Group’s stress testing and are rigorously user-tested to ensure that they are fit-for-use under stressed market conditons. Compliance with Model Risk management requirements and regulatory guidelnes are also assessed as part of each stress test, with any identfied gapsmitgated through model overlays and defined remediaton plans. 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ngfrom misuse of models orerrors in the development or implementatonof models; whilst accepting model uncertainty. #### Model Risk ![]() 276 Standard Chartered – Annual Report 2021 Risk review Risk management approach 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 harmthrough 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 anybusiness activty is satisfactorly assessed and managed by the appropriate level of management and governanceoversight. This includes a potentialfailure to uphold responsible business conduct or lapses in our commitment to do no signficant environmental and social harm. #### Reputational and Sustainablity Risk 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plesof Responsible Business Conduct and continue to do the right thing for our stakeholders, the environment andaffected communites. Throughout 2021, we have 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 environmental, social and governance (ESG) regulatory obligatons and accelerating commitments across our markets. Roles and responsiblites The Global Head, Enterprise Risk Managementis the Risk Framework Owner for Reputational and Sustainablity Risk under the Group’s Enterprise Risk Management Framework. The responsiblity for Reputational and Sustainablity Risk management is delegated toReputational and Sustainab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 managementactivties of reputational and sustainablity-relatedrisks 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 environmentaland social risks and impacts arisng from theGroup’s clientrelationshps and transactions. Mitgation In line with the princples of Responsible Business Conductand 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 to the natural environment (environmental) through actions/inactons of the Group • potential material harm to indviduals or communites (social)risks through actions/inactonsof the Group. The Group’s Reputational Risk policy sets out the princpal sources of Reputational Risk driven by negative shifts in stakeholder perceptions aswell as responsiblites, control and oversight standardsfor identfying, assessing, escalatingand effectively managing Reputational Risk. The Group takesa 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onand itsactivties, based on explict princples includng, but not limted to gambling, defence and dual use goods. Whenever potential for 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 therisk orimpose conditons upon proposals, to protect the Group’s reputation. The 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genceGuidancefor Responsible Business Conduct, Equator Princples, UN Sustainable Development Goals and the Paris Agreement. Through our operations, the 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mumregulatory and compliance requirements, includng critera from the Group’s Positon Statements. Suppliers must comply with the Group’s Supplier Charter which sets out the Group’s expectations on ethics, anti-bribery and corruption, human rights, environmental, health and safety standards, labour and protection of the environment. Governance committee oversight At Board level, the Culture and Sustainablity Committee provides oversight for our Sustainablity strategy while the Board Risk Committee oversees Reputational and Sustainablity Risk as part of the ERMF. The Group Risk Committee (GRC) provides executive-level committee oversightand delegates the authority to ensureeffective management of Reputational and Sustainablity Risk to the Group Responsiblity and Reputational Risk Committee (GRRRC). ![]() 277 Standard Chartered – Annual Report 2021 Risk review and Capital review The GRRRC’s remit is to: • Challenge, constrain and, if required, stop business activties where risks are not aligned with the Group’s Risk Appetite. • Make decisons on Reputational Risk matters assessed as high or very high based on the Group’s primary Reputational Risk materialty assessment matrix, andmatters escalated from the regions or client businesses. • Provide oversight of material Reputational Risk and/or thematic issues arisng from the potential failure of other risk types. • Oversee Sustainablity Risk management of the Group. The Sustainable Finance Governance Committee, appointed by the GRRRC provides leadership, governance and oversight for deliverngtheGroup’s sustainable financeoffering. This includes: • Reviewng and supporting the Group’s frameworks for Green and Sustainable Products, and Transiton Finance for approval of GRRRC. These frameworks set out the guidelnesfor approvalof products and transactions which carry the sustainable finance and/or transiton finance label. • Decison-making authority on the eligbilty of a sustainable asset for any risk-weighted assets (RWA) relief. The Group Non-Financal Risk Committee has oversight of the control environment and effective management of Reputational Risk incurred when there are negative shifts in stakeholderperceptions of the Group dueto failure of other PRTs. The regional and client-business risk committees provide oversight on the Reputational and Sustainablity Risk profile withn their remit. The Country Non-Financal Risk Committee (CNFRC)provides oversight of the Reputational and Sustainablity Risk profile at a country level. Decison-making authorites and delegation The Reputational and Sustainablity RTF is theformal mechanism through which the delegationof Reputational and Sustainablity Riskauthorites ismade. The Global Head, Enterprise Risk Management delegatesrisk acceptance authorites for stakeholder perception risks to designated indviduals in the first line and second 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 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 Group polices and standards. Exposure tostakeholder perception risks arisngfrom 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 toSustainablity Risk is monitored through triggers embedded withn the first-line processes whereenvironmental 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, we have approved new Risk Appetite metrics for Environmental and Social risks as well as managing modern slavery risks inoursupply chain. Stress testing Reputational Risk outcomes are taken into account in enterprise stress tests and incorporated into the Group’s stress testing scenarios. For example, the 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 focuswith variousmarkets developing ESG regulatory guidance, we arekeepingpacewithexternal developments to enable us toexplore meaningful scenario analysis with the aim of advancing Reputational and Sustainablity Risk management. ![]() 278 StandardChartered – Annual Report 2021 Risk review Risk management approach 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 Climate Risk has been recognised as an emerging risk since 2017 and was elevated to an Integrated Risk Type (previously known as material cross-cutting risk) withn the ERMF, our central risk framework in 2019. We have 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. Roles and responsiblites The three lines of defence model as per the Enterprise Risk Management Framework applies to Climate Risk. The Group Chief Risk Officer (GCRO) has the ultimate second-line and senior management responsiblity for ClimateRisk. TheGCRO 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. 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 andmitgation plans using client level Climate Risk questionnares and a first phase of integraton into the credit decisoning process is under way for CCIB Credit Risk. As part of quarterly credit portfolio reviews in CPBB, physical risk assessments fortheresidentalmortgage portfolios are also being monitored for concentration levels.WithnTraded 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 tofactor inClimate Risk consideratons and a focus area in 2022 will be to deliver the implementaton of these requirements. Governance committee oversight Board-level oversight is exercised through the Board Risk Committee (BRC), and regular Climate Risk updates are provided to the Board and BRC. At the executive level, the Group Risk Committee oversees implementaton of the Climate Risk workplan. The GCRO has also appointed a Climate Risk Management Forum consistng ofsenior 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 workplan, andto provide structured governance around engagement withthe relevant PRTs impacted by Climate Risk. Through 2022, we will strengthen country and regionalgovernance oversight forthe Climate Risk profile across our key markets. Tools and methodologies 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: • 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 andemiss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 andexecuting the delivery ofthe Climate Risk workplan which will define decison-making authorites and delegations across theGroup. ![]() 279 Standard Chartered – Annual Report 2021 Risk review and Capital review Monitorng The Climate Risk Appetite Statement is approved and reviewed annually by the Board. The Group has developedits 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 Group Risk Information Report and BoardRisk Information Report, respectively, in September 2021. Going forward, these will be included in the Group and Board risk reports quarterly, and management informaton is also being progressively rolled out at the regional and country level. 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 testingand scenario analysis are used toassess capital requirements for Climate Risk and since 2020, physical and transiton risks have been included in the Group Internal Capital Adequacy Assessment Process (ICAAP). In 2021, we undertook a number of Climate Risk stress tests, includng by the Hong Kong Monetary Authority and the Bankof England’s Climate Biennal Exploratory Scenario (CBES). This required signficant client engagement and helped grow our understanding and management of Climate Risk. In 2022, the Group intends to develop management scenarios, strengtheningbusiness strategy andfinancalplanning and supporting the Group’s net zero journey. Details on the Group’s Taskforce on Climate-related Financal Disclosures can be found on sc.com/tcfd . ![]() 280 Standard Chartered – Annual Report 2021 Risk review Risk management approach #### Emerging risks In additon to our Princpal Risk Types that we manage through Risk Type Frameworks, polices and 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 Enterprise Risk Management Framework 1 section (page 258 to 263). The key results of the review are detailed below. Key changes to 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 Group has a well- established globalIBOR 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 includeshortages ofmaterialsand labour, increased demand as economic recoveries take hold and long-term monetary stimulus, with growing acceptance that 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 securitybecomes 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 economiesrecover there areshortages in some key source materials and delivery delays which are affecting many industres’ abilty to meet the rapid increase in demand • ‘Expanding stakeholderexpectations for environmental, social and corporate governance (ESG)’ – Added as an emerging risk toreflect the broader sustainablity agendaof the Group and capture ESG concerns beyond Climate Risk such as biodversity loss and depletion of natural resources, which areincreasng areas of focusfor 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 ofglobal politcal and economicagenda items that create disrupton and potential flashpoints between countries. These are reshaping global politcal alliances and 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 threaten a K-shaped global recovery, where countries or sectors recover at different rates depending on their abilty to adapt to a post- COVID world • ‘New businessstructures,channels and competiton’ – Reflects the linkage between the Group’s increasng reliance on partnerships and alliances in exploring new technologies and digtal enhancement,and the heightenedrisks 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, beyond just the practical 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. 1The Group’s Risk Management Framework and System of Internal Control applies only to wholly controlled subsidaries of the Group, and not to Associates, Joint Ventures or Structured Entites of the Group. ![]() 281 Standard Chartered – Annual Report 2021 Risk review and Capital review Geopolitcal consideratons (Risk ranked according to severity) Emergingrisk Risk trend since 2020 1 Context Howthese are mitgated/nextsteps 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 suchas education, technology andreal estate, which couldhave spillover effects into other markets given the size of China’seconomy • 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ngbetween historcallies withn NATO and the G7, around flashpoints such as the withdrawalfrom Afghanistan, the launch ofAUKUS, 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ngpublichealth 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 toconsolidate power, whichcould lead to further tension and potentialretaliatory 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 reducedependence on external counterparties and ensure national security • The Group,with its notable exposureand presencein 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-bordertrade and material offshore support operations • Sharp slowdowns in the US, China, and morebroadly, worldtrade and global growth are a feature of Group stress scenarios.These stress tests provide visbilty to key vulnerabilties so that management can implement timely interventons • Detailed portfolio reviews are conducted onan ongoing basis, most recentlyregarding increasng tensions around Ukraine, and action is taken where necessary • The Group is closely monitorng the China–G7 relationshpand assessing the impact on our business with teams in the first and second line of defence • The Group remains 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, causingpriceinflaton and exacerbating disruptons inglobal supply chains • Emerging markets which rely on imports of energy risk being disadvantaged due to the massive energy needs required todevelop • Developed nationsalso face a trade-off, aspressure to adopt clean energy has constrained their abilty to rely on traditonalsources to meet demand,likely leadingto signficant price volatilty until production capacity for renewable sources is sufficent to meet the energy gap • There areincreasng geopolitcal tensionsas 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 accruingto traditonal oil-producingnations may further complicate the goals of a net zero economy • Lack of investment by oil producers as we transiton could also lead to an increase in oil prices in the short term • As part of our stress tests, an oil shock scenario wasdeveloped • Sovereign ratings, outlooks and country risk limts are regularly monitored with periodc updates to senior stakeholders • The Group is implementng a Climate Risk workplan and aims to embed climate risks across all relevant princpal risks in 2022. This includes scenario analysis and stress testing capabilty tounderstandfinancal risks and opportunites from climatechange 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’ ![]() 282 Standard Chartered – Annual Report 2021 Risk review Risk management approach Macroeconomic consideratons (Risk ranked according to severity) Emergingrisk Risk trend since 2020 Context How these aremit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 thanexpected • The easing of COVID-19 restrictons has created a demand surge indeveloped marketeconomiesthat have reopened, and labour supplyshortages 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 stagflation in 2022 where economic growth is muted but inflaton persists • It ispossible thatmonetary policy tightenngin Western countries could lead to a depreciaton in emerging markets currenciesversus the US dollar, increasng debt refinancng costs for emerging marketeconomies. Sharpincreases 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 • As part of our stress tests, a severe stress in the global economy associated with a sharp slow-down was assessed • Both 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 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 todisrupt 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 adaptto 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 oftradit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 mandatesare causingdomestic 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 • As part of our stress tests, a severe stress in the global economy associated with a sharp slow-down was assessed • Sensitve sectors (e.g. aviaton and hospitalty) are regularly reviewed and exposures to these sectors are activelymanaged as part of Credit Risk reviews • Exposures that could result in materialcredit 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 operationsby leveraging our robustBusiness Continuty Plans which enable the majorty of our colleagues to work remotely where possible 3This theme was previously covered under ‘Unintended consequences of accommodative monetary policy and the risk of asset bubbles and inflaton’ 4 A K-shaped global recovery occurs where 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’ ![]() 283 Standard Chartered – Annual Report 2021 Risk review and Capital review Emergingrisk Risk trend since 2020 Context How these aremitgated/next steps 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 demandand 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ngregulations 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 fragmentationfor strategic industres • Exposures that may result in materialcredit imparment and increased risk-weighted assets are closelymonitored and actively managed • Sectors which exhibthigh supply chain pressure and vulnerabilty (e.g. electronics) areregularly reviewed and exposures to these sectors are activelymanaged as part of Credit Risk reviews • We actively utilse Credit Risk mitgationtechniques includng credit insurance and collateral 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dityand 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 requesteddebt 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, couldpush up debt- servicng costs for emerging markets • Exposures that may result in materialcredit imparment and increased risk-weighted assets are closelymonitored and actively managed • We conductstress tests and portfolio reviews at a Group, country and business level to assess the impact ofextreme but plausible eventsand manage the portfolio accordingly • We actively utilse Credit Risk mitgationtechniques includng credit insurance and collateral • We actively track the particpation ofour footprint countries in G20’s Common Framework Agreement and Debt Service Suspension Initative for Debt Treatments and the associatedexposure 6This theme was previously covered under ‘Rise of populism and nationalsm driven by unemployment and a shift in global supply chains’ 7This theme was previously covered under ‘Risng sovereign default risk and private sector creditor particpation in the Common Framework Agreement’ ![]() 284 Standard Chartered – Annual Report 2021 Risk review Risk management approach Environmental and social consideratons (Risk ranked according to severity) Emergingrisk Risk trend since 2020 1 Context Howthese aremitgated/nextsteps Expanding stakeholder expectations for environmental, social and corporate governance (ESG) 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 increasedpressure to set ambitous sustainablity goals. However,complexity remains in drivng sustainablity across diverse markets which priortisetopics 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. Understandingof 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. Thisexposes the Group to transiton risks and emerging themes in regulatory compliance • Disclosure requirements are increasng each year as regulators andotherstakeholders requiregreater 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 andscale of adoption aroundtheworld • Banks are already making commercial decisons on account ofemissons and lackof credible reduction targets. At the same time, companies are being celebrated forprogress around reducingemissons despite thepresence of othersocial and governance risks – highlghting a tension between Environmental and Socialriskassessments. This ‘carbon-tunnel-vison’, combined with increasng fragmentation in ESG taxonomies,mayleadto unintended consequences • The COVID-19 pandemic, climate change and geopolitcalriskhave underscoredthe importance of supply chain transparency. This iscreating pressure to expand supply chain metrics to include greater visbilty around human rights issues, carbon emissons and governancefactors • We remain committed to being a responsible bank, minmisng our environmentalimpact andembedding our values through ourstrengthened PositonStatements for sensitve sectors and a list of Prohibted Activties that theGroup willnot finance • We are proactively particpating in industryintiatvesand 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 • Detailed portfolio reviews are conducted onan ongoing basis and action is taken where necessary • Stress tests areconducted to test resilence to climate-related risks in line with localregulatory requirements • The Group hasannounced our net zero pathway and specifc emisson reduction targets forcarbon sensitve sectors. The Group’s TCFD report includes more details on Climate Risk and net zero • Our Green andSustainable Product Framework,developedwith the support of Sustainalytcs, has been informed by industry and supervisory princplesand standardssuch as the Green Bond Princples and EU Taxonomy forsustainable activties • We have defined three Stands to use our unique abilty to work across boundaries andconnect capital, people, ideas and best practices to help addresssomekey socioeconomc challenges and enable ajust transiton • We are developing an approach to furtherintegrate ESG risk management across the ERMF Read moreaboutour positon statements: sc.com/positonstatements See pages 455 and 456 for a full list of our 2022 Sustainablity Aspiratons 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 ofresurgent nationalsm and ideology, have heightenedexistngsocial tensions • Vaccinemandates arecausingdomestic tensions and may lead to labour shortages in some states or industres such ashealthcare and aviaton. There have also been tensions in some markets where lockdowns have beenreintroduced despitehigher vaccinaton rates • In additon, COVID-19 has continued to exacerbate economic equality, includng reducingtheavailab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 Human Rights Working Group has developedan approach to monitor, report and escalate human rights issues to our Management Team for consideraton with our Group’s strategy • We continue tosupport ouroperations and communites who are greatly impacted by COVID-19 through various aid programmes and financng • We conduct portfolio reviews at a Group, country and business level to assess the impact ofextreme 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’ ![]() 285 Standard Chartered – Annual Report 2021 Risk review and Capital review Technological consideratons (Risk ranked according to severity) Emergingrisk Risk trend since 2020 1 Context Howthese aremitgated/nextsteps 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 BCBS239’s requirements on effective riskdata aggregation andrisk reporting require enhanced controls over data lineage and quality. There has been increased use of powers afforded under datalegislaton by regulators to impose punitvefines or to demanddata disclosures. Regulatory drivers and requirements vary by market, and the risk of fragmentation ofrequirements across ourmarkets is growing over time • There areincreased bilateral geopolitcaldisputes, 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 fromdifferentregulatory authoriteswithn thesame 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,Standardsand Controlsare updatedand 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 andthrough 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 attackmethods • Increasingconnectivty is drivnggrowth andnew technologies, butalso increasngthe Group’scyber- attack surface and possible entry points for cyber crimnals • The Group accepts invtations from its regulators to lead onspecifc data and artifcial intellgence (AI) related industryconsultations. The Groupalso actively works with AI industry bodies to helpinfluence AI regulations • The Group actively monitors, both in house andthrough external counsel, regulatory developments in relation to data management, includng records management, dataprotection and privacy, data sovereignty and AI • The Group has further embedded the existng riskcontrol framework for data management risks, which has strengthened andstreamlined risk oversight • Given the growth of AI tools and the inherent risks, the deployment and release into Groupoperational processes is monitored through an AI Council • Controls from the cyber and cloud domains areleveraged fordata management risks where appropriate • The Group established a dedicated Data and Privacy Operations team and mobilsed a Group-wide transformationprogramme to build data management capabilties and expertise to ensure compliancewith data managementregulations • We have an inflght programme of work to drive compliance to BCBS 239 requirements on effective riskdata aggregation andrisk reporting • We continue to deliver new controls and capabilties to increase our abilty to identfy, detect, protectand respond to ICS threats 9This theme was previously covered under ‘Increased data privacy and security risks from strategic and wider use of data’ ![]() 286 Standard Chartered – Annual Report 2021 Risk review Risk management approach Emergingrisk Risk trend since 2020 1 Context Howthese aremitgated/nextsteps New business structures, channels and competiton 10 Potential impact: High Likelhood: High Velocity of change: Fast • There isincreasng usageof 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 asRevenueSharing Partnerships thatpresent new risks andduedilgence consideratons • Technological advances such as AI, Machine Learning (ML) and cloud-based systems are creating new opportunites butalso bringngnew challenges. There is also a risk that failure to expediently adapt and harness such technologies would place the Group at a competitvedisadvantage • As new technologies grow in sophistcation and become further embedded across thebanking and financal servicesindustry, banks maybecome more susceptible to technology-related risks. Banks may also face increased risks of business model disrupton as new products andtechnologies 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 remoteworkforceintroduces 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 andother resources. Inaddit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 casesfor blockchain technologies • In additon, digtal assets aregainng adoption and linked business models are increasng inprominence. These present material opportunites as well as risks • We monitor emerging trends, opportunites and riskdevelopments in technology thatmayhave implcations on the banking sector • We are enhancing capabilties to ensure our systems areresilent, we remain relevant and can capitalse quickly ontechnology trends • Enhanced digtal capabilties have been rolled out in Consumer, Private and BusinessBanking, particularly around onboarding, sales and marketing • We have developed and implemented a risk management approachto address the specifc risks arisng from digtal asset activties, as well as internal guidance onhow to leverage existng riskmanagement practices for new activties and nascent risks • Strategic partnershipsand 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 ensureappropriate security oversight and governance is in place for different types of strategic partnerships • Third-Party Risk managementpolices, procedures and governance are being reviewedto ensure adequate coverage across all Group activties 10This theme was previously covered under ‘Third-party dependency’ and ‘New technologies and digtisaton’ ![]() 287 Standard Chartered – Annual Report 2021 Risk review and Capital review Emergingrisk Risk trend since 2020 1 Context Howthese aremitgated/nextsteps Talent pools 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 ofoperational, informaton andcyber 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 • The Group proactively assesses and manages people-relatedrisks; for example, organisaton, capabilty, conduct and culture, as part of our Group risk management framework and our People Strategy • The Group undertook a Future of Work change risk assessment which considered operational, compliance, data privacy and cyber security risks in additon towellbeing, cultureand leadership • The Group has rolled out hybrid- working options across28 markets and over 73 per cent of colleagues in these locations are now on flexi- working arrangements • Wellbeing is one of the key pillars of the Group’sDiversty andInclusion strategy and wehave embedded multiple tools and resources tosupport colleague wellbeing. These includetoolkits for managers and employees, a confidentalEmployee Assistance Programme, an online programme to support physicalwellbeing, increased trainng for Mental Health First Aiders, an on-the-go mobile app and proactivetrainng in resilence • The 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 2021 Risk reduced in 2021 Risk remainedconsistent 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 ofchange 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 ornon-financalrisk) Low (unlikely or rare) Steady (gradual or orderly developments) ![]() 288 Standard Chartered – Annual Report 2021 Capital review #### Capital review Capital summary The Group’s capital, leverage and minmum requirements for own funds and eligble liablites (MREL) positon is managed withn the Board-approved Risk Appetite. The Group is well capitalsed with low leverage and high levels of loss-absorbing capacity. 2021 2020 CET1 capital 14.1% 14.4% Tier 1 capital 16.6% 16.5% Total capital 21.3% 21.2% UK leverage 4.9% 5.2% MREL ratio 31.7% 30.9% Risk-weighted assets (RWA) $millon 271,233 268,834 The Group‘s capital, leverage and MREL positons were all above current requirements and Board-approved Risk Appetite. For further detail see the Capital section in the Standard Chartered PLC Pillar 3 Disclosures for FY 2021. The Group’s CET1 capital decreased 28 basis points to 14.1 per cent of RWA since FY2020. Profits were more than offset by distrbutions (includng ordinary share buy-backs of $0.5 billon during the year), RWA growth, movements in reserves and an increase in regulatory deductions. The PRA updated the Group’s Pillar 2A requirement during H2 2021. As at 31 December 2021 the Group’s Pillar 2A was 3.4 per cent of RWA, of which at least 1.9 per cent must be held in CET1 capital. The Group’s minmum CET1 capital requirement was 10.1 per cent at 31 December 2021. The UK counter cyclical buffer will increase to 1.0 per cent from December 2022; however, the impact on the Group’s minmum CET1 capital requirement is expected to be immateral. Following updated guidance from the PRA, Structural Foreign Exchange risk will be capitalsed under the Pillar 1 approach for Market Risk from 31 December 2021. This change in regulatory treatment contributed $3.7 billonto the reported Market Risk RWA at year-end. To avoidany possible double count of capital requirements for Structural Foreign Exchange risk across Pillar 1 and Pillar 2, the PRA has agreed to reset the Group’s Pillar 2A requirement for this specifc risk. There are three policy changes expected to impact the calculation of CET1 and or RWAs in 2022. Firstly, the PRA has confirmed that software relief will be excluded from CET1 from 1 January 2022 which will reduce CET1 by approximately 32 basispoints. Secondly, recent industry wide regulatory changes to align IRB model performance (the IRB model repair program) will add approximately $4.7 billon of additonal RWA from 1 January 2022. Finally, the introducton of standardised rules for counterpartycredit risk onderivatves and other instruments (SA-CCR) will add approximately $1.6 billon of additonal RWA. The combinaton of the IRB model repair program and SA-CCR are expected to reduce the CET1 ratio by approximately 31 basis points from 1 January 2022. On a pro forma basis, after the deduction of software relief andotherregulatory changes and adjustments, the CET1 ratio as at 1 January 2022 is 13.5 per cent. The Group CET1 capital ratio at 31 December 2021 reflects the share buy-backs of $254 millon completed in the first quarter of 2021 and $250 millon completed in the third quarter of 2021. The CET1 capital ratio also includes an accrual for the FY 2021 divdend.The Boardhas recommended a final divdend for FY 2021 of $277 millon or 9 cents per share resulting in a total 2021 divdend of 12 cents per share, a one-third increase on the 2020 divdend. In additon, the Board has announced a share buy-back of $750 millon, the impact of this will reduce the Group’s CET1 capital by around 28 basis points in the first quarter of 2022. The Group expects to manage CET1 capital dynamically withn our 13–14 per cent target range in support of our aim of deliverngfuture sustainableshareholder distrbutions. The Group’s fully phased MREL will be 26.4 per cent of RWA from 1 January 2022. This is composed of a minmum requirement of 22.7 per cent of RWA and the Group’s combined buffer (comprisng the capitalconservation buffer, the G-SII buffer and the countercyclical buffer). The Group’s MREL ratio was 31.7 per cent of RWA and 9.4 per cent of UK leverage exposure at 31 December 2021. During 2021, the Group successfully raised around $10.8 billon of MRELeligble securites fromits holding company, Standard Chartered PLC. Issuance was across the capital structure includng $2.8 billon of Additonal Tier 1 (AT1), $1.2 billon of Tier 2 and around $6.8 billon of callable senior debt. During 2021 the Group repurchased $1 billon 7.5 per cent AT1 securites via a tender offer alongside a new 4.3 per cent AT1 issue of $1.5 billon. This transaction was part of the Group’s proactive approach to capital management and reduced the weighted average cost of the Group’s AT1 capital base. The Group successfully completed the formation ofan ASEAN hub during 2021 in which our existng businesses in Malaysia, Thailand and Vietnam were moved under our existng Singapore subsidary entity, which itself remains under Standard Chartered Bank. The Group is a G-SII, with a 1.0 per cent G-SII CET1 capital buffer. The Standard Chartered PLC G-SII disclosure is published at: sc.com/en/investors/financal-results. The Capital review provides an analysis of the Group’s capital and leverage positon, #### and requirements. ![]() 289 Standard Chartered – Annual Report 2021 Risk review and Capital review CRD capital base 1 (audited) 2021 $millon 2020 $millon CET1 capital instruments and reserves Capital instruments and the related sharepremium accounts 5,528 5,564 Of which:share premium accounts 3,989 3,989 Retainedearnings 2 24,968 25,723 Accumulated othercomprehensive income (and otherreserves) 11,805 12,688 Non-controlling interests (amount allowed in consolidatedCET1) 201 180 Independently audited year-end profits 2,346 718 Foreseeable divdends (493) (481) CET1 capital beforeregulatory adjustments 44,355 44,392 CET1regulatory adjustments Additonalvalue adjustments (prudential valuation adjustments) (665) (490) Intangible assets (net of related tax liablity) 3 (4,392) (4,274) Deferred tax assets that rely on future profitablity (excludes those arisng from temporary differences) (150) (138) Fair value reserves related to net losses on cashflow hedges 34 52 Deduction of amounts resulting from the calculation of excess expected loss (580) (701) Net gains on liablites at fair value resulting from changes in own Credit Risk 15 52 Defined-benefitpensionfund assets (159) (40) Fair value gains arisng from the insttution’s own Credit Risk related to derivatve liablites (60) (48) Exposure amounts which could qualify for risk weightng of 1,250% (36) (26) Total regulatory adjustments to CET1 (5,993) (5,613) CET1 capital 38,362 38,779 Additonal Tier 1 capital (AT1)instruments 6,811 5,632 AT1 regulatory adjustments (20) (20) Tier 1 capital 45,153 44,391 Tier 2 capital instruments 12,521 12,687 Tier 2regulatoryadjustments (30) (30) Tier 2 capital 12,491 12,657 Total capital 57,644 57,048 Totalrisk-weighted assets (unaudited) 271,233 268,834 1CRD capital isprepared on the regulatory scope ofconsolidaton 2Retained earnings includes IFRS 9 capital relief (transitonal) of $252 millon, includng dynamic relief of $40 millon 3The deductionof intangble assets includessoftware deductionrelief of $1,005millon available asper CRR‘Quick Fix’measures. (FY20 software deductionrelief of $677 millon) ![]() 290 Standard Chartered – Annual Report 2021 Capital review Movement in total capital (audited) 2021 $millon 2020 $millon CET1 at 1 January 38,779 36,513 Ordinary shares issued in the period and share premium – – Share buy-back (506) (242) Profit for the period 2,346 718 Foreseeable divdendsdeductedfromCET1 (493) (481) Difference betweendivdendspaidand foreseeable divdends (303) 476 Movement in goodwill and other intangble assets (118) 1,044 Foreign currency translation differences (652) 700 Non-controlling interests 21 (543) Movementin eligble other comprehensive income (306) 324 Deferred tax assets that rely on future profitablity (12) (9) Decrease/(increase) inexcess expectedloss 121 121 Additonalvalue adjustments (prudential valuationadjustment) (175) 125 IFRS 9 transitonal impact on regulatory reserves includng day one (142) 35 Exposure amounts which could qualify for risk weightng (10) 36 Fair value gains arisng from the insttution’s own Credit Risk related to derivatve liablites (12) (10) Other (176) (28) CET1at 31 December 38,362 38,779 AT1 at 1 January 5,612 7,164 Net issuances (redemptions) 1,736 (995) Foreign currency translation difference (2) 8 Excess on AT1 grandfathered limt (inelgible) (555) (565) AT1 at31 December 6,791 5,612 Tier 2 capital at 1 January 12,657 12,288 Regulatory amortisaton (1,035) (463) Net issuances (redemptions) 573 (69) Foreign currency translation difference (181) 257 Tier 2 inelgible minorty interest (81) 82 Recogniton ofinelgible AT1 555 565 Other 3 (3) Tier 2capital at31 December 12,491 12,657 Totalcapital at31 December 57,644 57,048 The main movements in capital in the period were: • CET1 capital decreased by $0.4 billon as retained profits of $2.3 billon were more than offset by share buy-backs of $0.5billon, distrbutions paid and foreseeable of $0.8 billon, foreign currency translation impact of $0.7 billon, movement in other comprehensive income of $0.3 billon and an increase in regulatory deductions and other movements of $0.4 billon. • AT1 capital increased by $1.2 billon following the issuance of $1.25 billon 4.75 per cent and $1.5 billon 4.3 per cent AT1 securites partly offset by the repurchase of $1 billon 7.5 per cent AT1 securites via a tender offer and the phasing out of $0.6 billon of grandfathered instruments. • Tier 2 capital decreased by $0.2 billon as issuance of $1.2 billon of new Tier 2 instruments and recogniton of inelgible AT1 were more than offset by regulatory amortisaton and the redemption of $0.5 billon of Tier 2 during the year. ![]() 291 Standard Chartered – Annual Report 2021 Risk review and Capital review Risk-weighted assets by business 2021 Credit Risk $millon OperationalRisk $millon MarketRisk $millon Totalrisk $millon Corporate, Commercial & Institutonal Banking 125,904 16,595 20,789 163,288 Consumer, Private & Business Banking 42,733 8,504 – 51,237 Central & other items 50,951 2,017 3,740 56,708 Totalrisk-weighted assets 219,588 27,116 24,529 271,233 2020 (Restated) Credit Risk $millon Operational Risk $millon Market Risk $millon Total risk $millon Corporate, Commercial & Institutonal Banking 1 127,663 15,963 21,465165,091 Consumer, Private & Business Banking 1 44,755 8,338 – 53,093 Central & other items 48,023 2,499 128 50,650 Totalrisk-weighted assets 220,441 26,800 21,593 268,834 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 and Private Banking and Retail Banking to Consumer, Private & Business Banking. Prior period has been restated Risk-weighted assets by geographic region 2021 $millon 2020 (Restated) $millon Asia 1 170,381 174,283 Africa & Middle East 48,852 51,149 Europe & Americas 50,283 45,758 Central & other items 1,717 (2,356) Totalrisk-weighted assets 271,233 268,834 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. Priorperiod hasbeen restated Movement in risk-weighted assets Credit Risk Operational Risk $millon Market Risk $millon Total risk $millon Commercial, Corporate & Institutonal Banking 2 $millon Consumer, Private & Business Banking 2 $millon Central & other items $millon Total $millon At 31 December 2019 123,667 42,819 49,178 215,664 27,620 20,806264,090 At 1 January 2020 1 123,611 42,875 49,178 215,664 27,620 20,806264,090 Assets growth mix (9,743) 520 3,711 (5,512) –– (5,512) Asset quality 12,190 323 2,409 14,922 –– 14,922 Risk-weighted assets efficencies (71) –– (71) –– (71) Model, methodology andpolicy changes 247 134 661 1,042 – (1,500) (458) Disposals –– (7,859)(7,859) (1,003) (159) (9,021) Foreign currency translation 1,429 903 (77) 2,255 –– 2,255 Other non-credit risk movements –––– 183 2,446 2,629 At 31 December 2020 127,663 44,755 48,023 220,441 26,800 21,593 268,834 Assets growth mix 2,278 3,614 4,350 10,242 –– 10,242 Asset quality (1,537) (662) 13 (2,186) –– (2,186) Risk-weighted assets efficencies (415) (30) (657) (1,102) –– (1,102) Model, methodology andpolicy changes – (3,701) – (3,701) – 2,065 (1,636) Disposals ––––––– Foreign currency translation (2,085) (1,243) (1,106) (4,434) –– (4,434) Other non-credit risk movements –– 328328 316 871 1,515 At 31 December 2021 125,904 42,733 50,951 219,588 27,116 24,529 271,233 1Following a reorganisaton of certain clients, there has been a reclassifcation of balances across client segments. 1 January 2020 balances have been restated 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 and Private Banking and Retail Banking to Consumer, Private & Business Banking. Prior period has been restated ![]() 292 Standard Chartered – Annual Report 2021 Capital review Movements in risk-weighted assets RWA increased by $2.4 billon, or 0.9 per cent from 31 December 2020 to $271.2 billon. This was mainly due to increases in Market Risk RWA of $2.9 billon and Operational Risk RWA of $0.3 billon, partly offset by a decrease in Credit Risk RWA of $0.9 billon. Corporate, Commercial & InstitutonalBanking Credit Risk RWA decreased by $1.8 billon to $125.9 billon mainly due to: • $2.1 billon decrease from foreign currency translation • $1.5 billon decrease due to improvement in asset quality reflecting client upgrades and actions concerning specifc stage 3 exposures • $0.4 billon decrease from RWA efficencies relating to unsecured recoveries • $2.2 billon increase due to asset balance growth mainly from Lending in Asia. Consumer, Private & Business Banking Credit Risk RWA decreased by $2.0 billon to $42.7 billon mainly due to: • $3.7 billon decrease from a model change benefit in Korea • $1.2 billon decrease from foreign currency translation • $0.7 billon decrease due to improvement in asset quality across retail portfolios in Asia • $3.6 billon increase in asset balance growth in Asia. Central & other items Central & other items RWA mainly relate to the Treasury Markets liqudity portfolio, equity investments and current & deferred tax assets. Credit Risk RWA increased by $2.9 billon to $51.0 billon mainly due to: • $4.4 billon increase from asset balance growth primarly in Europe and the Americas and Africa and the Middle East, partially offset by asset balance decline in Asia • $0.3 billon increase relating to software intangble assets with a correspondingdeduction to CET1 • $1.1billon decrease from foreign currency translation • $0.7 billon decrease due to efficencies relating to covered bonds. Market Risk Total Market Risk RWA increased by $2.9 billon, or 14 per cent from 31 December 2020 to $24.5 billon. The increase was mainly due to the impact of updated PRA guidance ($2 billon). Structural Foreign Exchange risk of $3.7 billon is now treated as Pillar 1 market risk RWA. Previously this was recognised entirely as Pillar 2A risk. This increase was offset in part by the $1.6 billon benefit of PRA permisson to consolidate market risk RWA for SCB Malaysia Berhad, SCB Thai PCL and SCB (Vietnam) Ltd. Consolidaton reflects diversficaton and thus gives lower RWA. Other movements contributed a $0.9 billon increase due to: • $1.1 billon increase in Standardised Approach Specifc Interest Rate Risk RWA due to increased credit spread positons • $1.0 billon increase in Internal Models Approach (IMA) stressed VaR RWA due to increased IMA positons • $1.0 billon decrease in IMA VaR RWA with reduced market volatilty in the one-year historcal rates applied for daily VaR • $0.5 billon decrease in IMA Risks not in VaR • $0.3 billon of other small increases. Operational Risk Operational Risk RWA increased by $0.3 billon, or 1 per cent from 31 December 2020 to $27.1 billon. This was mainly due to an increase in average income as measured over a rolling three-year time horizon, with higher 2020 income replacing lower 2017 income. ![]() 293 Standard Chartered – Annual Report 2021 Risk review and Capital review UK leverage ratio The Group’s UK leverage ratio was 4.9 per cent at FY2021, which was above the current minmum requirement of 3.7 per cent. The leverage ratio was 29 basis points lower than FY20. Leverage exposure increased by $76 billon from an increase in on- balance sheet items (excluding derivatves) of $58 billon, off-balance sheet items of $11 billon and a securites financng transactions add-on of $9 billon. End point Tier 1 increased by $1.3 billon as CET1 capital reduced by $0.4 billon and the issuance of $1.25 billon 4.75 per cent and $1.5 billon 4.3 per cent AT1 securites completed during the year was partly offset by the repurchase of $1 billon 7.5 per cent AT1 securites via a tender offer. In October 2021, the PRA published a policy statement outlinng changes to the UK leverage ratio framework. The minmum leverage ratio requirement applicable to the Group was maintaned at 3.25 per cent. Additonal buffers based on the countercyclical and G-SII buffers are set at 35 per cent of their risk-weighted equivalent and must be met with 100 per cent of CET1 capital. Firms that breach their leverage ratio buffers will not face any capital distrbution restrictons. The exposure value of derivatve contracts will be based on the standardised approach to Counterparty Credit Risk, while central bank reserves continue to be excluded from the UK leverage ratio exposure measure. The rules came into force on 1 January 2022. The impact from implementaton of the new leverage rules is estimated to be immateral. UK leverage ratio 2021 $millon 2020 $millon Tier 1capital (transitonal) 45,153 44,391 Additonal Tier 1 capital subject to phase out (557) (1,114) Tier 1 capital (end point) 1 44,596 43,277 Derivatve financal instruments 52,445 69,467 Derivatve cashcollateral 9,217 11,759 Securites financng transactions (SFTs) 88,418 67,570 Loans and advances and other assets 677,738 640,254 Totalon-balance sheetassets 827,818 789,050 Regulatory consolidaton adjustments 2 (63,704) (60,059) Derivatves adjustments Derivatvesnetting (34,819) (44,257) Adjustments to cashcollateral (17,867) (21,278) Net written credit protection 1,534 1,284 Potential future exposure on derivatves 50,857 42,410 Totalderivatvesadjustments (295) (21,841) Counterparty Risk leverage exposuremeasure forSFTs 13,724 4,969 Off-balance sheet items 139,505 128,167 Regulatory deductions from Tier 1 capital (5,908) (5,521) UK leverage exposure (end point) 911,140 834,765 UK leverage ratio (end point) 4.9% 5.2% UK leverage exposure quarterlyaverage 897,992 837,147 UK leverage ratio quarterly average 5.0% 5.2% Countercyclicalleverage ratiobuffer 0.1% 0.0% G-SII additonal leverage ratio buffer 0.4% 0.4% 1Tier 1 capital (end point) is adjusted only for grandfathered Additonal Tier 1 instruments 2Includes adjustment for qualifyng central bank claims ![]() 294 Standard Chartered – Annual Report 2021 #### Financal statements 296Independent auditor’s report 308Consolidated incomestatement 309Consolidated statement of comprehensive income 310Consolidated balance sheet 311Consolidated statement of changes in equity 312Cash flow statement 313Company balance sheet 314Company statement of changes in equity 315Notes to the financal statements ª Moxgoesfrom strengthto ## strength º Mox, our digtal banking service for Hong Kong-based customers, went from strength to strength in 2021 and now has more than 200,000 users – more than triple the figure for 2020. The app, which includes a Goals and Savings Calculator, helps customers better manage their money. A new feature called Flip allows customers to instantly switch between debit and credit payments using the same Mox card and number. Read more online at www.mox.com ![]() Financal statements 295 Standard Chartered – Annual Report 2021 ![]() 296 Standard Chartered –Annual Report 2021 Financal statements Independent auditor’s report Opinon In our opinon: • the financal statements ofStandard CharteredPLC (the ‘Company’), its subsidaries (together, the ‘Group’) and the Group’s interest in associates and jontly controlled entites (together, the ‘Group financal statements’) 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alstatements 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 have been properly prepared in accordance with UK adopted IAS 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 haveaudited the financal statements of Standard Chartered PLC (the ‘Company’) and its subsidaries (together, the ‘Group’) for the year ended 31 December 2021 which comprise: Group Parent company Consolidated income statement for the year ended 31 December 2021; Company cashflow statement for the year ended 31 December 2021; Consolidated statement of comprehensive incomefor the year ended 31 December 2021; Company balance sheet as at 31 December 2021; Consolidated balance sheet as at 31 December 2021; Companystatement of changes in equity for the year then ended;and Consolidated statement of changes in equity for the year then ended; Relatednotes 1 to 40, where relevant to the financal statements, includng a summary ofsign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; Informationmarked as ‘audited’ withn the Directors’ remuneration report from page 141 to 180; and Risk review and capital review disclosures marked as ‘audited’ from page 200 to 290. 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 ouraudit in accordance with International Standards on Auditng (UK) (ISAs (UK)) and applicable law. Our responsiblitesunderthose standards arefurther described in the Auditor’s responsiblites for the audit of the financal statements section of our report. We believe that the audit evidence we have obtained is sufficent and appropriate to provide a basis forour opinon. Independence 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’) Ethical Standard as applied to listed public interest entites, and we have fulfilled our other ethical responsiblites in accordance with these requirements. The non-audit services prohibted by the FRC’s Ethical Standard were not provided to the Group or the Company and we remain independent of the Group and the Company in conductingthe audit. Conclusions relating to going concern In auditng the financalstatements, we haveconcluded that the directors’ use of the going concern basis of accounting in the preparation of the financal statements isappropriate. Our evaluation of the directors’ assessment of the group and Company’s abilty to continueto adopt the going concern basis of accountingincluded: • Understanding management’s going concern assessment process, includng the impact of the COVID-19 pandemic (COVID-19); • Review of the Corporate Plan, includng assessing the reasonableness of assumptions and historcal forecasting accuracy; • Assessing the results ofmanagement’s stress testing, includngconsideraton of princpaland emerging risks, on funding, liqudity and regulatory capital; • Reviewng correspondence with prudential regulators and authorites for matters that may impact the going concern assessment; and • Evaluating the appropriateness ofthe going concern disclosure included in note 1 to 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. In relation to the Group and Company’s reporting on how they have applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to the directors’ statement in the financal statements about whether the directors consideredit appropriateto adopt the going concern basisof accounting. #### Independent Auditor’s Report #### to the members of Standard Chartered PLC ![]() 297 Standard Chartered – Annual Report 2021 Financal statements Our responsiblitesand the responsiblitesof 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 and Company’s abilty to continue as a going concern. Overview ofour audit approach Audit scope • We performed an audit of the complete financal informaton of 21 components in 14 countries and audit procedures on specifc balances for a further 7 components in 4 countries. • The components where we performed full or specifc audit procedures accounted for 81% of absolute adjusted profit before tax (PBT) measure used to calculate materialty, 89% of absoluteoperating incomeand 96% of Total assets. Key audit matters • Credit imparment • User access management • Impairment of non-financal assets (Aircraft, Goodwill and Investments in subsidary undertakings) • Basis of accounting and imparment assessment of China Bohai Bank (Interest in Associate) • Valuation of financal instruments held at fair value with higher risk characteristcs Materialty • Overall group materialty of $195m which represents 5% of adjusted PBT. 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 usto 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vecoverage ofsignficantaccountsin the financal statements, of the 352 reporting components of the Group, we selected 28 components in 18 countries covering entiteswithn Bangladesh,Germany, Hong Kong, India, Indonesia, Ireland, Japan, Kenya, Mainland China, Malaysia, Nigera, Pakistan, Singapore, South Korea, Taiwan, United Arab Emirates, United Kingdom, and the United States of America, which represent the princpalbusiness 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 28 components selected in 18 countries, we performed an audit of the complete financal informaton of 21 components in 14 countries (‘full scope components’) which were selected based on their size or risk characteristcs. For the remainng 7 components in 4 countries (‘specifc scope components’),we performedaudit procedureson 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 81% (2020: 86%) of the Group’s absolute adjusted PBT, 89% (2020: 89%) of the Group’s absolute operating income and 96% (2020: 97%) of the Group’s total assets. For the current year, the full scope components contributed 74% (2020: 82%) of the Group’s absolute adjusted PBT, 81% (2020: 82%) of the Group’s absolute operating income and 88% (2020: 90%) of the Group’s total assets. The specifc scope component contributed 7% (2020: 4%) of the Group’s absolute adjusted PBT, 8% (2020: 7%) of the Group’s absolute operating income and 8% (2020: 7%) of the Group’s total assets. The audit scope ofthesecomponents may not haveincluded 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ng324 components that together represent 19% of the Group’s absolute adjusted PBT, none are indvidually greater than 1.7% 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 andintercompany 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. The charts below illustrate the coverage obtained from the work performed by our audit teams. Absolute adjustedprofit before tax 74%Full scope components 7% Specifc scope components 19%Otherprocedures Absolute operating income 81% Full scope components 8% Specifc scope components 11% Other procedures Totalassets 88%Full scopecomponents 8% Specifc scope components 4%Otherprocedures ![]() 298 Standard Chartered – Annual Report 2021 Financal statements Independent auditor’s report Changes from the prior year We assessed our 2021 audit scope with consideraton of history orexpectationof unusual or complextransactions and potential for or history of material misstatements. We also kept our audit scope under review throughout the year. A total of 5 components in 4 countries which were previously included in our prior year audit scope, that together represent 1.3% of the prior year absolute adjusted 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 yearbased onour updated risk assessment. Involvementwithcomponent 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 and another firm operating under our instructon. Of the 21 full scope components, audit procedures were performed on 2 of these (includng the audit of the Company) directly by the Group audit engagement team (EY London) in the United Kingdom. For the 7 specifc scope components, where the work was performed by component auditors, we determined the appropriate levelof involvement toenable 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. Our programme ofplanned 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 forthe secureand timely delivery of requested audit evidence. We also undertook virtual engagement with local audit teams andmanagement. These virtual meetingsinvolveddiscussng the audit approach with the component andsharedservice centres team and any issues arisng from their work, meeting with localmanagement, attending meetingswith the key audit partners ofmaterial 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 signficant element of the work on signficant risk areas such as credit and financal instrument valuation isperformed. He attendedmeetings with management andhelddiscuss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 involvementand oversight of the component teams. This includes the Group auditengagement partners andsenior 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 toand 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 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 and Company 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 Task Force for Climate related Financal Disclosures and in the Princpal Risks and Uncertaintes section of the Annual Report (collectively the “Climate Disclosures”). The Climate Disclosures form part of the ‘Other informaton,’ rather than the audited financal statements. Our procedures on the ClimateDisclosurestherefore consisted solely of considerng whether they are materially inconsstent with the financ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 capture all possible future outcomes as these are not yet known. The degree of uncertainty of these changes may also meanthat 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 risks 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 316 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 ofclimate change in their assessment of going concern and viablity 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 316 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. ![]() 299 Standard Chartered – Annual Report 2021 Financal statements Key audit matters Key audit matters are those matters that, in our professional judgement, 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. Risk Our response to the risk Credit Impairment Refer to the Audit Committee Report (page 117); Accounting polices(page 328); Note 8 ofthefinancalstatements; and relevant credit risk disclosures (includng pages 203 and 234) At 31 December 2021, the Group reported total credit imparment balance sheet provison of $6,209 millon (2020: $7,145 millon). Management’sjudgements and estimatesare especially subjectve due to signficant uncertainty associated with the assumptions used. Assumptionswithincreased 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ngthe appropriateness, completeness andvaluationof 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 weightedrecovery scenarios, exitstrategies, 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. The level of risk remains consistent with the prior year. We evaluated the design and operating effectiveness of controls relevant to the Group’s processes over material ECL balances, includngthe judgements and estimates noted, involvng EY specialsts to assist us in performing our procedures to the extent it was appropriate. Theseincluded: • credit monitorng; • controls over the allocation of assets into stages such as management’s monitorng ofstage effectiveness; • completeness and accuracyof data; • review and approval of multiple economic scenarios; • model governance, includngmodel 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 reviewand 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 financal assets and assessed the reasonablenessof staging downgrades applied by management. To test credit monitorng which largely drives the probabilty of default estimates usedin thestaging 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 vulnerablesectors (as defined on page 229 in the annual report) impacted by COVID-19. ![]() 300 Standard Chartered – Annual Report 2021 Financal statements Independent auditor’s report Risk Our response to the risk Credit Impairment continued Modelled output and adjustments – We performed a risk assessment on models involved in the ECL calculation to select a sample of modelsto test. We engaged our modelling specialsts to evaluate a sample of ECL models by assessing the reasonablenessof underpinnng assumptions, inputs and formulae used. Thisincluded a combinatonof assessing the appropriateness ofmodel design, formulae andalgorithms, alternativemodelling techniquesand recalculating the Probabilty of Default, Loss Given Default and Exposure at Default parameters. Together with our modellingspecialsts, we also assessed material post-model adjustments whichwere applied as a response to risks not fully captured by the models, includng the completeness andappropriateness ofthese adjustments, for which we considered the applied judgments and methodology, and governancethereon. In response to the new models implemented this year to address known weaknesses in previous models, we performed substantivetesting procedures, includngcode reviewand implementaton testing. To evaluate data quality, we agreed a sample of ECL calculation data points tosource 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 completenessand appropriatenessof the macroeconomic variables used as inputs to these models. Additonally, we involved 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 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. 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 proceduresincluded 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viduallyassessed provisons. We also engaged our valuation specialsts to test the value of the collateralusedin management’scalculations. Our sample was based onquantitatve thresholds andqualitatve factors includng exposure to 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 underCOVID-19. Our conclusions 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; • the level of uncertainty in the China Commercial Real Estate sector and the associated management overlay includng the key assumptions used; • 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. ![]() 301 Standard Chartered – Annual Report 2021 Financal statements Risk Our response to the risk User Access Management – Privleged Access Management Refer to the Audit Committee Report (page 118) IT General Controls (ITGCs) support the continuous operation of the automated and other IT dependent controls withn the business processesrelated to financal reporting. EffectiveIT general controls are needed to ensure that IT applicatons process businessdata as expected andthat 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 beyondthose necessary toperformtheir assignedduties may result in breaches in segregation of duties, includng inapproprate manual interventon, unauthorisedchanges 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 compensatingcontrols and performed additonal business substantiveprocedures. Our conclusions • 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 explainedthe additonalprocedures performed, includng IT substantive testing, testingof IT and businesscompensating controls, andwhere 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alstatements, related to userprivleged access management, to an appropriatelevel. ![]() 302 Standard Chartered – Annual Report 2021 Financal statements Independent auditor’s report Risk Our response to the risk Impairment assessment of non-financal assets Refer to the Audit Committee Report (pages 117 and 118); a) Impairment of aircraft: Accounting polices (page 381); and Note 18 ofthe financal statements b) Impairment of Goodwill: Accounting polices (page 378); and Note 17of the financal statements and c) Impairment ofinvestments in subsidary undertakings: Accounting polices (page 407); andNote 32 ofthe 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. Impairment of aircraft The Group owns a portfolio of aircraft with a carrying value of $3,092 millon (2020: $3,897 millon), which are leased to airlnes. The aircraft are measured at cost less accumulated depreciaton and imparment. As at 31 December 2021, the Group has reported a $64 millon imparment charge in respect of aircraft. Each aircraft was tested for imparment. Impairment of aircraft is determined by comparing the carrying value to the higher of the current market value, provided by independent appraisers, and the value in use (VIU). The judgemental assumptions in the VIU calculation include the discountrate and residual values. Goodwill and investments in subsidary undertakings The Group performed an imparment test on goodwill amounting to $2,595 millon (2020: $2,617 millon) and, in the Company financal statements, investments in subsidary undertakings amounting to $60,429 millon (2020: $57,407 millon). Impairment of goodwill and investments in subsidary undertakings isdetermined by comparing thecarryingvalue to recoverable amount. Where the recoverable amount is based on VIU, this is modelled by reference to future cashflow forecasts (profit forecast includng a regulatory capital haircut adjustment),discount rates andmacroeconomic assumptions such aslong-term growthrates. Consequently, there is a risk that if the judgements and assumptions underpinnng the imparmentassessments are inapproprate, thenthegoodwill andinvestments in subsidaries balancesmay be misstated. The level of risk remains consistent with the prior year. We obtainedan understanding ofmanagement’s processes for assessing imparment and evaluated the design of controls. We took afully substantive approach. Impairment of aircraft We assessed the appropriateness of the Group’s VIU methodology for testing the imparment of the aircraft portfolio. We tested the mathematical accuracy of the VIU model and engaged our valuation specialsts to support the audit team in calculating an independent range for assumptions in the VIU calculations, such asdiscountrates, re-leaseassumptions and residualvalues. Where current market values and residual values were used to support the carrying value, we agreed a sample to independent appraisal reports. We evaluated management’s sensitvity analysis in relation to assumptions in VIU calculations and performed stress testing for reasonably possible changes to the discount rate and market values. Impairment of goodwill and investments in subsidary undertakings We assessed the appropriateness ofthe Group’s methodology for testing the imparment of goodwill and investments in subsidary undertakings for compliance withtheaccounting standards. For goodwill, we assessed the appropriateness of the cash- generating units identfiedby 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 adjustment 1 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 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 maybe distrbuted. Our conclusions Impairment of aircraft We concluded that management’s methodology, judgement and assumptions related to the imparment assessment of aircraft were reasonable and in accordance with IAS and EU IFRS. We highlghted the following matters to the Audit Committee: • Current market values and residual values were appropriate based on independently sourced market data; and • The discount rate was withn our independent expectation of a reasonable range, with due regard to the risks facing the aviaton industry and the characteristcs of the Group’s portfolio of aircraft. We concluded that the valuation of the aircraft portfolio was not materially misstated. Impairment ofgoodwill andinvestments in subsidary undertakings 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 IAS and EU IFRS. We concluded that thedisclosures were appropriate. ![]() 303 Standard Chartered – Annual Report 2021 Financal statements Risk Our response to the risk Basis of accounting and imparment assessment of China Bohai Bank (Interest in Associate) Refer to the Audit Committee Report (page 118); Accounting polices(page 407); andNote 32 ofthe financal statements Interest in Associate – China Bohai Bank $1,917 millon (2020: $2,025millon) Other imparment – China Bohai Bank – $300 millon (2020: nil). We focused on judgements andestimates, includng the appropriateness of the equity accounting treatment under IAS 28 and the assessment of imparment. Basis of accounting The Group holds a 16.26% stake in China Bohai Bank and equity accounts forthe investment as anassociate, onthe grounds that theGrouphas assessed that itexercises signficant influence over China Bohai Bank. IAS 28 states that if the entity holds, directly or indrectly, less than 20% of the voting power of the investee, it is presumed that theentity does not havesignficant influence, unless such influence can be clearly demonstrated. There is a risk that the equity accounting treatment may not be appropriate, if the Group cannot demonstrate that it exerts signficant influence over China Bohai Bank. Impairment testing At 31 December 2021, the China Bohai Bank’s market capitalsation was at a signficant discount compared to the carrying value of the investment, which represents an indcator of imparment. Impairment of the investment in China Bohai Bank is determined by comparing the carrying value to the VIU. Where the recoverable amount is based on VIU, this is modelled by reference to future cashflow forecasts (profit 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rmentassessments are inapproprate, then the investment in China Bohai Bank may be misstated. The risk has increased in current year in the context of economic developments in China as well as Bohai’s financal performance in 2021. Basis of accounting We evaluated the facts and circumstances that the Group presented to demonstrate its abilty to exert signficant influence over the management, and financal and operating polices of China BohaiBank, through Board representation, membership of BoardCommitteesand the sharing of industry and technical advice. Impairment testing We assessed the appropriateness of the Group’s VIU methodology for testing the imparment of the investment in China Bohai Bank for compliance with the accounting standards. We tested the mathematical accuracy of the VIU model and engaged our valuation specialsts to support the audit team in calculating an independent range for the assumptions underlying the VIU calculations, such as the discount rate and long-term growth rate. We performed audit procedures to assess the reasonableness of the Group’s forecast of the future cashflows relating to Bohai, byreviewng management’s assessment, benchmarking the forecasts to broker reports published for comparable companies and challenging management with regard to the relevance and reliablity of historcal data when preparing their assessment. We assessed the appropriateness ofdisclosures intheannual report in relation to theimpact of reasonably possible changes in key assumptions on the carrying values of the investment in Bohai. Our conclusions We concluded that the Group continues to maintan signficant influence over China Bohai Bank as at 31 December 2021. We concluded that the Interest in Associate – China Bohai Bank balance as at 31 December 2021 was not materially misstated. We concluded that the disclosures in the annual report appropriately reflect the sensitvity of the carrying value to reasonably possible changes inkeyassumptions. ![]() 304 Standard Chartered – Annual Report 2021 Financal statements Independent auditor’s report Risk Our response to the risk Valuation of financal instruments held at fair value with higher risk characteristcs Refer to the Audit Committee Report (page 118); Accounting polices(page 339); andNote 13 ofthe financalstatements. At 31 December 2021, the Group reported financal assets measured at fair value of $303,678 millon, and financal liablites at fair value of $138,596 millon, of which financal assets of $4,116 millon and financal liablites of $1,653 mill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 CreditValuationAdjustment andDebit 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 unobservablepric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 our valuation specialsts to assist the audit team in performing the following procedures: • Testcomplex 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 andthe adequacyof assumptions andinputs used by the Group; • Test valuations of other financal instruments with higher estimaton uncertainty, suchasunlisted 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 ourindependentvaluation and management’s valuation were outside our thresholds, we performed additonal testing to assess the impact on the valuation of financal instruments. Our conclusions 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 valuationswere appropriate based on the output ofour 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. The KAMs remain consistent from prior year. 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 ofan omissonor misstatement that, indvidually orin the aggregate, couldreasonably 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 $195 millon (2020: $144 millon), which is 5% (2020: 5%) of adjusted PBT. This reflects actual PBT adjusted for non-recurring item relating to restructuring, regulatory fine andnetgain 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. • Statutory profit before tax – $3,347m Starting basis • Restructuring – $507m • Regulatory fine– $62m • Net gain on businesses disposed/held for sale – ($20m) Adjustments • Totals $3,896m Adjusted PBT • Materialty of $195m (5% of Adjusted PBT) Materialty ![]() 305 Standard Chartered – Annual Report 2021 Financal statements We determined materialty for the Company to be $176 millon (2020: $130 millon) which is 0.33% (2020: 0.25%) of the equity of the Company. We believe that equity provides us with the most appropriate measure for the users of the Company’s financal statements, given that the Company is primarly a holding company. Performancematerial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 andundetected misstatements exceeds materialty. On the basis of our risk assessments, together with our assessment oftheGroup’s overall controlenvironment, our judgement was that performance materialty was 50% (2020: 50%) of our planning materialty, namely $98 millon (2020: $72 millon). We have set performance materialty at this percentage based ona variety ofriskassessment factors such as the expectation of misstatements, internal control environment consideratons andother factors such as the global complexity ofthe Group. Audit work at component locations for the purpose of obtainng auditcoverage over signficant financal statement accounts is undertakenbased ona percentage oftotal performance materialty. The performance materialty set for each component is based on the relative size 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 $29m (2020: $7m to $22m). Reporting threshold An amount below whichidentfied misstatements are consideredas being clearly trival. We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of $10 millon (2020: $7 millon), 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 of other relevant qualitatve consideratons in forming our opinon. Other informaton The other informaton comprises the informaton included in the annual report set out on pages 1 to 293, includng the Strategic report (page 2 to 87), the Directors’ report (page 88 to 140) and the informaton not marked as ‘audited’ in the Directors’ remuneration report (page 141 to 190) and the Risk and capital review section (page 194 to 293), and the Supplementary informaton (page 440 to 468), other than the financal statements and our auditor’s report thereon. The directors areresponsiblefor 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 apparentmaterial 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, weare 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, the part of the directors’ remuneration report to be audited has beenproperly prepared inaccordance with 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 the directors’ report have been prepared inaccordance 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 and the part of the Directors’ remuneration report to be audited are not in agreement with the accounting records and returns; or • certain disclosuresof 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. Corporate Governance Statement We have reviewed the directors’ statement in relation to going concern, longer-term viablity and that part of the Corporate Governance Statement relating to the Group and Company’s compliance with the provisons of the UK Corporate Governance Code specifed for our review by the Listng Rules. Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance Statement is materially consistent with the financal statements or our knowledge obtained during the audit: • Directors’ statement with regards to the appropriateness of adopting the goingconcern basis of accounting andany material uncertaintes identfied; • Directors’ explanationasto its assessment of the Company’s prospects, the period this assessment covers and why the period is appropriate; ![]() 306 Standard Chartered – Annual Report 2021 Financal statements Independent auditor’s report • Director’s statement on whether it has a reasonable expectation that the Group will be able to continue in operation and meets its liablites; • Directors’ statement onfair, balanced and understandable; • Board’s confirmaton that it has carried out a robust assessment of the emerging and princpal risks; • The section of the annual report that describes the review of effectiveness of risk management and internal control systems; and; • The section describng the work of the Audit Committee. Responsiblites of directors As explained more fully in the Statement of Directors’ Responsiblites set out on page 191, the directors are responsible for the preparation of thefinancalstatements 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 accountingunless thedirectorseither 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vesare 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 ouropin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ngfraud, 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 ofnot detecting amaterial 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 arecapable of detecting irregularties, includngfraud isdetailed 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. • We obtained an understanding of thelegaland 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 and the UK Corporate Governance Code, theFinancal Conduct Authority (FCA) Listng Rules, the Main Board Listng Rules of the Hong Kong Stock Exchange), regulations andsupervisory requirements of the Prudential Regulation Authority (PRA), FRC, FCA and other overseas regulatory requirements, includngbut not limted to regulations in its major markets such as Hong Kong, India, Singapore, theUnited States ofAmerica, and the relevant tax complianceregulations 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 toregulatory capital and liqudity, conduct, financal crimeincludng anti-moneylaundering, sanctions and market abuse recognisng the financal and regulated nature of theGroup’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 correspondences in the year and engaging with internal and external legal counsels. We also engaged EY financal crime and forensics specialsts to perform procedures on areas relating toanti-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 being identfied as a key audit matter. • We assessed thesusceptiblity ofthe Group’s financal statements to material misstatement, includng howfraud might occur by considerng the controls that the Group has established to address risks identfied by the entity, orthat otherwise seek to prevent, deter or detect fraud. Our procedures to address the risks identfiedalso included incorporation ofunpredictablity into the nature, timng and/or extent of our testing, challenging assumptions and judgements made by management in theirsignficant accountingestimates and journalentry testing. • Based on this understanding, we designed our audit procedures to identfy non-compliance with such lawsand regulations. Our procedures involved inquries ofthe 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 key regulatory correspondence from the relevant regulatory authorites as well as review of board and committee minutes. ![]() 307 Standard Chartered – Annual Report 2021 Financal statements • For instancesof actual or suspected non-compliance with laws and regulations, which have a material impact on the financalstatements, these were communicated by management to the Groupaudit engagement teamand 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 testingand 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, investmentsand other activties. The Groupoperates 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 auditof the financal statements is located on the FRC’s website at https://www.frc.org.uk/auditorsresponsbilties. This descripton forms part of ourauditor’s report. Other matters we arerequired to address • Following the recommendation from the Audit Committee, we were re-appointed by the Company at the Annual General Meeting on 12 May 2021 to audit the financal statements for the year ending 31December 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 withtheadditonalreport 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 CanningJones(Senior statutory auditor) for and on behalf of Ernst & Young LLP, Statutory Auditor London 17 February 2022 ![]() 308 Standard Chartered – Annual Report 2021 Financal statements Financal statements Notes 2021 $millon 2020 $millon Interestincome 10,246 12,292 Interest expense (3,448) (5,440) Net interestincome 3 6,798 6,852 Fees andcommisson income 4,458 3,865 Fees and commisson expense (736) (705) Net fee and commisson income 4 3,722 3,160 Net tradingincome 5 3,431 3,672 Other operatingincome 6 750 1,070 Operating income 14,701 14,754 Staff costs (7,668) (6,886) Premises costs (387) (412) General adminstrativeexpenses (1,688) (1,831) Depreciatonand amortisaton (1,181) (1,251) Operating expenses 7 (10,924) (10,380) Operating profit before imparmentlosses and taxation 3,777 4,374 Credit imparment 8 (254) (2,325) Goodwill, property, plant and equipmentand other imparment 9 (372) (587) Profit from associates and jont ventures 32 196 151 Profit beforetaxation 3,347 1,613 Taxation 10 (1,034) (862) Profit for the year 2,313 751 Profit attributable to: Non-controlling interests 29 (2) 27 Parentcompany shareholders 2,315 724 Profit for the year 2,313 751 cents cents Earnings per share: Basic earnings per ordinary share 12 61.3 10.4 Diluted earningsper ordinary share 12 60.4 10.3 The notes on pages 316 to 437 form an integral part of these financal statements. #### Consolidated income statement For the year ended 31 December 2021 ![]() 309 Standard Chartered – Annual Report 2021 Financal statements Notes 2021 $millon 2020 $millon Profit for the year 2,313 751 Other comprehensive (loss)/income: Items that will not be reclassifed to income statement: 309 (9) Own credit gains/(losses) on financal liablites designated at fair value through profit or loss 43 (55) Equity instruments atfair value throughother comprehensive income 169 62 Actuarialgains on retirementbenefit obligatons 30 179 1 Taxation relating to components of other comprehensive income 10 (82) (17) Items that may be reclassifed subsequently to income statement: (1,081) 922 Exchange differences ontranslation of foreign operations: Net (losses)/gains taken to equity (791) 657 Net gains/(losses) onnet investment hedges 118 (287) Reclassifed to income statement on sale of jont venture – 246 Share ofother comprehensiveincome/(loss) from associatesand jont ventures 10 (37) Debt instrumentsat fair valuethroughothercomprehensive income: Net valuation (losses)/gains taken to equity (386) 815 Reclassifed to income statement (157) (431) Net impact of expected credit losses 31 21 Cash flow hedges: Net losses taken to equity (1) (25) Reclassifed to income statement 14 21 17 Taxation relating to components of other comprehensive income 10 74 (54) Other comprehensive (loss)/income fortheyear, net of taxation (772) 913 Totalcomprehensive incomefor the year 1,541 1,664 Totalcomprehensive incomeattributable to: Non-controlling interests 29 (17) 15 Parentcompany shareholders 1,558 1,649 Totalcomprehensive incomefor the year 1,541 1,664 Consolidatedstatement of #### comprehensive income For the year ended 31 December 2021 ![]() 310 Standard Chartered – Annual Report 2021 Financal statements Financal statements Notes 2021 $millon 2020 $millon Assets Cash and balances at central banks 13,35 72,663 66,712 Financal assets held at fair value through profit or loss 13 129,121 106,787 Derivatve financal instruments 13,14 52,445 69,467 Loans and advances to banks 13,15 44,383 44,347 Loans and advances to customers 13,15 298,468 281,699 Investment securites 13 163,437 153,315 Other assets 20 49,932 48,688 Current tax assets 10 766 808 Prepaymentsand accruedincome 2,176 2,122 Interests inassociates andjont ventures 32 2,147 2,162 Goodwill and intangble assets 17 5,471 5,063 Property, plantand equipment 18 5,616 6,515 Deferred tax assets 10 859 919 Assets classifed as held for sale 21 334 446 Totalassets 827,818 789,050 Liablites Deposits by banks 13 30,041 30,255 Customer accounts 13 474,570 439,339 Repurchase agreements and other simlarsecuredborrowing 13 3,260 1,903 Financal liablites held at fair value through profit or loss 13 85,197 68,373 Derivatve financal instruments 13,14 53,399 71,533 Debt securites in issue 13,22 61,293 55,550 Other liablites 23 44,314 47,904 Current tax liablites 10 348 660 Accruals and deferred income 4,651 4,546 Subordinatedliablites andother borrowed funds 13,27 16,646 16,654 Deferred tax liablites 10 800 695 Provisons for liablites and charges 24 453 466 Retirementbenefit obligatons 30 210 443 Total liablites 775,182 738,321 Equity Share capital and share premium account 28 7,022 7,058 Other reserves 11,805 12,688 Retainedearnings 27,184 26,140 Total parent company shareholders’ equity 46,011 45,886 Other equityinstruments 28 6,254 4,518 Total equity excluding non-controlling interests 52,265 50,404 Non-controlling interests 29 371 325 Total equity 52,636 50,729 Total equity and liablites 827,818 789,050 The notes on pages 316 to 437 form an integral part of these financal statements. These financal statements were approved by the Board of Directors and authorised for issue on 17 February 2022 and signed on its behalf by: José ViñalsBill WintersAndy Halford Group ChairmanGroup Chief ExecutiveGroup Chief Financal Officer #### Consolidated balance sheet As at 31 December 2021 ![]() 311 Standard Chartered – Annual Report 2021 Financal statements #### Consolidated statement of changes in equity For the year ended 31 December 2021 Ordinary share capital and share premium account $millon Preference share capital and share premium account $millon Capital and merger reserves 1 $millon Own credit adjus- ment reserve $millon Fair value through other compre- hensive income reserve – debt $millon Fair value through other compre- hensive income reserve – equity $millon Cash flow hedge reserve $millon Trans- lation reserve $millon Retained earnings $millon Parent company share- holders’ equity $millon Other equity instru- ments $millon Non- controlling interests $millon Total $millon As at 1 January 2020 5,5841,49417,1872197150(59)(5,792)26,07244,8355,51331350,661 Profit for the year ––––––––724724–27751 Other comprehensive (loss)/income –––(54)332(2)763111 2 925–(12)913 Distrbutions –––––––––––(20)(20) Other equity instruments issued, net of expenses ––––––––––992–992 Redemption ofotherequity instruments ––––––––(13)(13)(1,987)–(2,000) Treasuryshares purchased ––––––––(98)(98)––(98) Treasuryshares issued ––––––––88––8 Share optionexpenses ––––––––133133––133 Divdends on preferenceshares and AT1securites ––––––––(395)(395)––(395) Share buy-back 3 (20)–20–––––(242)(242)––(242) Other movements –––––––69(60) 4 9–17 5 26 As at 31 December 2020 5,5641,49417,207(52)529148(52)(5,092)26,14045,8864,51832550,729 Profit/(loss) for the year ––––––––2,3152,315–(2)2,313 Other comprehensive income/(loss) –––37(426)10118(662)175 2 (757)–(15)(772) Distrbutions –––––––––––(31)(31) Other equity instruments issued, net of expenses ––––––––––2,728–2,728 Redemption ofotherequity instruments ––––––––(51)(51)(992)–(1,043) Treasuryshares purchased ––––––––(242)(242)––(242) Treasuryshares issued ––––––––77––7 Share optionexpenses ––––––––147147––147 Divdends onordinaryshares –––––– ––(374)(374)––(374) Divdends on preferenceshares and AT1securites ––––––––(410)(410)––(410) Share buy-back 6, 7 (39)–39–––––(506)(506)––(506) Other movements 3––––––10(17) 8 (4)–94 9 90 As at 31 December 2021 5,5281,49417,246(15)103249(34)(5,744)27,18446,0116,25437152,636 1Includes capital reserve of $5 millon, capital redemption reserve of $130 millon and merger reserve of $17,111 millon 2Comprises actuarial gain, net of taxation on Group defined benefit scheme 3On 28 February 2020, the Group announced the buy-back programme for a share buy-back of its ordinary shares of $0.50 each. Nominal value of share purchases was $20 millon, and the total consideraton paid was $242 millon. The total number of shares purchased was 40,029,585 representing 1.25 per cent of the ordinary shares in issue. The nominal value of the shares was transferred from the share capital to the capital redemption reserve account. On 1 April 2020, the Group announced that, inresponse to a requestfromthePrudential Regulation Authority and asa consequence of theunprecedented challenges facingthe world due to the COVID-19 pandemic, its Board had decided after careful consideraton to withdraw the recommendation to pay a final divdend for 2019 of 20 cents per ordinary share, and to suspend the buy-back programme 4Includes $69 millon related to prior period adjustments to reclass FX movements from translation reserve to retained earnings ($45 millon related to FX movements of the hedging instruments for net investment hedges and $24 millon related to FX movements for monetary items, which were considered structural positons) 5Movement related to non-controlling interest from Mox Bank Limted 6On 25 February 2021, the Group announced the buy-back programme for a share buy-back of its ordinary shares of $0.50 each. Nominal value of share purchases was $19 millon, and the total consideraton paid was $255 millon (includng $2 millon of fees and stamp duty). The total number of shares purchased was 37,148,399 representing 1.18 per cent of the ordinary shares in issue. The nominal value of the shares was transferred from the share capital to the capital redemption reserve account 7On 3 August 2021, the Group announced the buy-back programme for a share buy-back of its ordinary shares of $0.50 each. Nominal value of share purchases was $20 millon, and the total consideraton paid was $251 millon (includng $1 millon of fees and stamp duty). The total number of shares purchased was 39,914,763 representing 1.28 per cent of the ordinary shares in issue. The nominal value of the shares was transferred from the share capital to the capital redemption reserve account 8Movement related to Translation adjustment and AT1 securites charges 9Movements related to non-controlling interest from Mox Bank Limted ($21 millon), Trust Bank Singapore Limted ($70 millon) and Zodia Markets Holdings Limted ($3millon) Note 28 includes a descripton of each reserve. The notes on pages 316 to 437 form an integral part of these financal statements. ![]() 312 Standard Chartered – Annual Report 2021 Financal statements Financal statements Notes GroupCompany 2021 $millon 2020 $millon 2021 $millon 2020 $millon Cash flows from operating activties: Profit before taxation 3,347 1,613 2,090 666 Adjustments fornon-cash itemsand other adjustments includedwithn incomestatement 34 2,104 4,342 (1,201) 19 Change in operating assets 34 (37,904) (38,064) (5,366) (8,451) Change in operating liablites 34 45,952 54,437 3,127 6,415 Contributons todefined benefitschemes 30 (120) (123) – – UK and overseas taxes paid 10 (1,161) (971) – 3 Net cash from/(usedin) operating activties 12,218 21,234 (1,350) (1,348) Cash flows from investng activties: Internallygenerated capitalsed software 17 (989) – – Purchase of property, plant and equipment 18 (352) (1,270) – – Disposal of property,plant and equipment 18 816 178 – – Disposal of held for sale property, plant and equipment 21 149 – – – Acquistion of investment in subsidaries, associates, and jont ventures, net of cash acquired 32 (35) (52) – – Divdends receivedfromsubsidaries, associatesand jont ventures 32 38 – 2,244 1,110 Disposal of jont ventures, net of cash acquired 21 – 1,066 – – Purchaseof investment securites (299,468) (285,026) – – Disposal and maturity of investment securites 290,846 280,626 1,650 2,590 Net cash (used in)/from investng activties (8,995) (4,478) 3,894 3,700 Cash flows from financng activties: Exercise of share options 7 8 7 8 Purchase of own shares (242) (98) (242) (98) Cancellationof shares includng sharebuy-back (506) (242) (506) (242) Premises and equipment lease liablity princpal payment (278) (319) – – Issue of Additonal Tier 1 Capital, net of expenses 28 2,728 992 2,728 990 Redemptionof Additonal Tier 1 Capital 28 (1,043) (2,000) (1,043) (2,000) Gross proceeds from issue of subordinated liablites 34 1,137 2,473 1,137 2,473 Interest paid on subordinated liablites 34 (580) (601) (580) (537) Repaymentof subordinated liablites 34 (546) (2,446) (546) (1,402) Proceeds from issueof senior debts 34 10,944 9,953 2,250 2,193 Repayment of seniordebts 34 (9,945) (4,305) (5,408) (2,106) Interest paid on senior debts 34 (690) (627) (504) (575) Net cash inflow from non-controlling interest 94 – – – Divdends paidto non-controlling interests, preference shareholders and AT1 securites (441) (415) (410) (395) Divdends paid toordinary shareholders (374) – (374) – Net cash from/(used in) financng activties 265 2,373 (3,491) (1,691) Net increase/(decrease) in cash and cash equivalents 3,488 19,129 (947) 661 Cash and cash equivalents at beginnng of the year 97,874 77,454 12,283 11,622 Effect of exchange rate movements on cash and cash equivalents (1,757) 1,291 – – Cash and cash equivalents at end of the year 1 35 99,605 97,874 11,336 12,283 1Comprises cash and balances at central banks $72,663millon (31 December 2020: $66,712millon), Treasury bills and other eligble bills $9,132millon (31 December 2020: $10,499 millon), loans and advances to banks $24,788millon (31 December 2020: $25,758 millon), trading securites $1,174millon (31 December 2020: $2,239 millon) less restricted balances $8,152millon (31 December 2020: $7,341 millon) Interest received was $10,167millon (31 December 2020: $12,619 millon), interest paid was $3,591millon (31 December 2020: $5,809millon). #### Cash flow statement For the year ended 31 December 2021 ![]() 313 Standard Chartered – Annual Report 2021 Financal statements #### Company balance sheet For the year ended 31 December 2021 Notes 2021 $millon 2020 $millon Non-current assets Investments in subsidary undertakings 32 60,429 57,407 Current assets Derivatve financal instruments 39 320 971 Financal assets held at fair value through profit or loss 39 15,647 12,783 Investment securites 39 9,424 11,146 Amounts owed bysubsidary undertakings 39 11,336 12,283 Taxation – 9 Totalcurrent assets 36,727 37,192 Current liablites Derivatve financal instruments 39 339 360 Amounts owed to subsidary undertakings – 212 Financal liablites held at fair value through profit or loss 39 11,804 6,552 Other creditors 462 465 Total current liablites 12,605 7,589 Net current assets 24,122 29,603 Total assets less current liablites 84,551 87,010 Non-current liablites Debt securites in issue 39 16,809 20,701 Subordinatedliablites andother borrowed funds 39 13,830 14,783 Total non-current liablites 30,639 35,484 Total assets less liablites 53,912 51,526 Equity Share capital and share premium account 28 7,022 7,058 Other reserves 17,220 17,178 Retainedearnings 23,418 22,774 Total shareholders’ equity 47,660 47,010 Other equityinstruments 28 6,252 4,516 Total equity 53,912 51,526 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 $2,081 millon (31 December 2020: $659 millon). Please see Note 39 Standard Chartered PLC (Company) for details of theGroup reorganisaton. The notes on pages 316 to 437 form an integral part of these financal statements. These financal statements were approved by the Board of Directors and authorised for issue on 17 February 2022 and signed on its behalf by: JoséViñalsBillWintersAndyHalford Group ChairmanGroup Chief ExecutiveGroup Chief Financal Officer ![]() 314 Standard Chartered – Annual Report 2021 Financal statements Financal statements Share capital and share premium account $millon Capital and merger reserve¹ $millon Own credit adjustment reserve $millon Cash flow hedge reserve $millon Retained earnings $millon Other equity instruments $millon Total $millon As at 1 January 2020 7,07817,187(10)–22,7225,51352,490 Profit for the year ––––659–659 Other comprehensive loss ––(8)(11)––(19) Other equity instruments issued, net of expenses –––––990990 Treasury shares purchased ––––(98)–(98) Treasury shares issued ––––8–8 Share optionexpense ––––133–133 Divdends on preferenceshare and AT1 securites ––––(395)–(395) Redemption ofother equity instruments –(13)(1,987)(2,000) Share buy-back 2 (20)20––(242)(242) As at 31 December 2020 7,05817,207(18)(11)22,7744,51651,526 Profit for the year 3 ––––2,081–2,081 Other comprehensive income/(loss) ––4(1)––3 Other equity instruments issued, net of expenses –––––2,7282,728 Treasury shares purchased ––––(242)–(242) Treasury shares issued ––––7–7 Share optionexpense ––––147–147 Divdends onordinary shares ––––(374)–(374) Divdends on preferenceshare and AT1 securites ––––(410)–(410) Redemption ofother equity instruments –(51)(992)(1,043) Share buy-back 4,5 (39)39––(506)(506) Other movements 6 3–––(8)(5) As at 31 December 2021 7,02217,246(14)(12)23,4186,25253,912 1Includes capital reserve of $5 millon, capital redemption reserve of $130 millon and merger reserve of $17,111 millon 2On 28 February 2020, the Group announced the buy-back programme for a share buy-back of its ordinary shares of $0.50 each. Nominal value of share purchases was $20 millon, and the total consideraton paid was $242 millon. The total number of shares purchased was 40,029,585 representing 1.25 per cent of the ordinary shares in issue. The nominal value of the shares was transferred from the share capital to the capital redemption reserve account. On 1 April 2020, the Group announced that, inresponse to a requestfromthePrudential Regulation Authority and asa consequence of theunprecedented challenges facingthe world due to the COVID-19 pandemic, its Board had decided after careful consideraton to withdraw the recommendation to pay a final divdend for 2019 of 20 cents per ordinary share, and to suspend the buy-back programme 3Includes divdend received of $1,511 millon from Standard Chartered Holdings Limted 4On 25 February 2021, the Group announced the buy-back programme for a share buy-back of its ordinary shares of $0.50 each. Nominal value of share purchases was $19 millon, and the total consideraton paid was $255 millon (includng $2 millon of fees and stamp duty). The total number of shares purchased was 37,148,399 representing 1.18 per cent of the ordinary shares in issue. The nominal value of the shares was transferred from the share capital to the capital redemption reserve account 5On 3 August 2021, the Group announced the buy-back programme for a share buy-back of its ordinary shares of $0.50 each. Nominal value of share purchases was $20 millon, and the total consideraton paid was $251 millon (includng $1 millon of fees and stamp duty). The total number of shares purchased was 39,914,763 representing 1.28 per cent of the ordinary shares in issue. The nominal value of the shares was transferred from the share capital to the capital redemption reserve account 6Movement mainly related to AT1 securites charges Note 28 includes a descripton of each reserve. The notes on pages 316 to 437 form an integral part of these financal statements. #### Company statement of changes in equity For the year ended 31 December 2021 ![]() 315 Standard Chartered – Annual Report 2021 Financal statements #### Contents – Notes to the financal statements Section Note Page Basis of preparation 1 Accounting polices 316 Performance/return 2 Segmental informaton 318 3 Net interestincome 324 4 Net fees andcommisson 324 5 Net tradingincome 326 6 Other operatingincome 327 7 Operating expenses 327 8 Credit imparment 328 9 Goodwill,property, plant and equipmentand other imparment 332 10 Taxation 333 11 Divdends 337 12 Earnings per ordinary share 338 Assets and liablites held at fair value 13 Financal instruments 339 14 Derivatve financal instruments 365 Financalinstruments heldat amortised cost 15 Loans and advances to banks and customers 375 16 Reverse repurchase and repurchase agreements includng other simlar lending and borrowing 376 Other assets and investments 17 Goodwill andintangble assets 378 18 Property, plantand equipment 381 19 Leased assets 384 20 Other assets 385 21 Assets held for sale and associated liablites 386 Funding,accruals, provisons,contingent liablites and legal proceedings 22 Debt securites in issue 387 23 Other liablites 388 24 Provisons for liablites and charges 388 25 Contingent liablites andcommitments 389 26 Legaland regulatory matters 390 Capital instruments, equity and reserves 27 Subordinated liablitesand other borrowedfunds 391 28 Share capital, other equity instruments and reserves 392 29 Non-controlling interests 397 Employee benefits 30 Retirementbenefit obligatons 398 31 Share-based payments 403 Scope of consolidaton 32 Investments insubsidaryundertakings, jont ventures and associates 407 33 Structured entites 412 Cash flowstatement 34 Cash flow statement 413 35 Cash and cash equivalents 415 Other disclosure matters 36 Relatedparty transactions 416 37 Post balance sheet events 416 38 Auditor’sremuneration 417 39 Standard Chartered PLC (Company) 417 40 Related undertakingsof the Group 421 ![]() 316 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 1. Accounting polices Statement of compliance The Group financal statements consolidate Standard Chartered PLC (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al statements have been prepared in accordancewithUK-adopted internatonal accounting standardsand InternationalFinancal Reporting Standards (IFRS) as adopted by the European Union (EU IFRS). The Company financal statements havebeen preparedin accordancewithUK-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. There are no signficant differences between UK-adopted internatonal accounting standards and EU IFRS. 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 the Credit Risk section (page 200) to the end of Other princpal risks in the same section (page 257). b) Capital review: Tables marked as ‘audited’ from the start of ‘CRD Capital base’ to the end of ‘Movement in total capital’, excluding ‘Total risk-weighted assets’ (pages 289 to 290). 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-basedpayments, fair value throughother 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 presented in United States dollars ($), being the presentation currency of the Group and functional currency of the Company, and all values are rounded to the nearest millon dollars, except when otherwise indcated. The Group has assessed the impact of climate risk on the Group’s financal report. As set out on page 67 of the Task Force forClimate related Financal Disclosures and pages 278 and 279 of the Princpal Risks and Uncertaintes section of the Annual Report, the Group has determined climate risk to be a Primary Integrated Risk Type. 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tyof our mortgage lending and we have applied scenario analysis against the pathways of different temperature additonsand 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 committed to transitoning away from certain high carbon sectors (i.e. coal), offset by transiton finance opportunites. This isshorter term than many of the climate scenario outlooks but seeks to capture the nearer term performance as required by recoverabilty models. We have further particpated in the first Climate Biennal Exploratory Scenario (CBES) to explorekey risks from climate change, being transiton risk of the economy as it moves away from carbon and the physical risks associated with higher global temperatures. Focussed on credit risk in the loans and advances portfolio to corporate and insttutional clients as well as personal customers over a thirty year time horizon. Estimates included the impact of transiton risk on the Group’s lending portfolios with impacts moving from temporarily lower growth up to recession and permanently lower growth. 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 zerojourney. #### Notes to the financal statements ![]() 317 Standard Chartered – Annual Report 2021 Financal statements 1. Accounting polices continued 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 (Note 10) • Financal instruments measured at fair value (Note 13) • Goodwillimparment (Note 17) • Recoverableamounts for aircraft operatinglease assets (Note 18) • Provisons for liablites and charges (Note 24) • Investments in subsidary undertakings, jont ventures and associates – China Bohai associate accounting and imparment analysis (Note32) IFRSand Hong Kong accounting requirements As required by the Hong Kong Listng Rules, an explanation of the differences in accounting practices between UK- adopted IFRS and Hong Kong Financal Reporting Standards is required to be disclosed. There would be no signficant differences had these accounts been prepared in accordance with Hong Kong Financal Reporting Standards. Comparatives Certain comparatives have been restated in line with current year disclosures. Details of these changes are set out in the relevant sections and notes below: • Note 2 Segmental informaton • Note 4 Net fees and commisson • Note 13 Financal instruments • Note 17 Goodwill and intangble assets • Risk review: various credit risk tables for change in segment policy • Risk review: interest rate risk in the banking book • Risk review: tables marked as ‘audited’ disaggregating Credit Riskinformaton byclient segment havebeen restated following the Group’s change in organisatonal structure that came into effect on 1 January 2021 • Risk review: market risk changes New accounting standards adopted by the Group Amendments to IFRS16 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; • Anyreductionin leasepayments affects only payments orignally due up to and includng 30 June 2022 (this includes thecase where the change results in reduced lease payments beforethis date and increased lease payments after this date); and • There isno substantivechange to other terms and conditons ofthe 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 InsuranceContracts and toestablish a comprehensive standard forinceptors ofinsurance polices. The effective date is 1 January 2023. The Group is assessing the likely implementaton impact ofadopting the standards on its financalstatements. 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. ![]() 318 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 1. Accounting polices continued Going concern These financal statements were approved by the Board 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 ofCOVID-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 compliancematters, and the updatedannual budget • Consideraton of stress testing performed, includng both the Bank of England annual stress test and a Group Recovery and Resolution Plan (RRP) as submitted to the PRA. Both these submissons include the applicaton of stressed scenariosincludng; COVID-19 additonalwaves with the accompanying economic shocks,credit impact and short term liqudity shocks. Under the tests and through the range of scenarios, the results of these exercises and the RRP demonstrate that the Group has sufficent capital and liqudity to continue as a going concern and meetminmumregulatory capital and liqudity requirements • 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dityAdequacy 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 theyare satisfed that the Group hasadequate resources to continue in business for a period of 12 months from 17 February 2022. For this reason, the Group continues to adopt the goingconcern basis of accounting forpreparing the financalstatements. 2. Segmental informaton Segments andregions The Group’s segmental reporting is in accordance with IFRS 8 Operating Segments andis reported consistently with the internal performance framework and as presented to the Group’s Management Team. Following the Group’s change in organisatonal structure, effective 1 January 2021, the compositon of the reportable segments has been amended to reflect this new structure. As such, there are two new reportable business segments: • Corporate & Institutonal Banking and Commercial Banking have been combined to form Corporate, Commercial & Institutonal Banking, serving larger companies and insttutions. • Retail and Private banking have been combined to form Consumer, Private & Business Banking serving indvidual and business banking clients. From a regional perspective, Greater China & North Asia and ASEAN & South Asia have been combined to form a single Asia region. The three geographic regions are now: 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 activties, certain strategic investments and the UK bank levy. The changes above require comparative periods to be restated. The following should alsobe noted: • Transactions and funding between the segments are carried out on an arm’s-length basis • Corporate Centre costsrepresent stewardship and central managementservicesroles and activties that arenot directlyattributable tobusiness or country operations • Treasurymarkets, 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 ![]() 319 Standard Chartered – Annual Report 2021 Financal statements 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 ismanaged, 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 aManagement View unless otherwise stated. Restructuring items excludedfrom underlyingresults The Group’s statutory performance is adjusted for profits or losses of a capital nature, amounts consequent to investment transactions driven bystrategicintent, 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 underlying performance period-by period. Restructuring charges of $507 millon for 2021 reflects, the impact ofactions to transform the organisatonto improve productivty,primarlyredundancy relatedcharges, the majorty of which, includng an early retirement programme in Korea, were booked in 2021. Other restructuring items include a $62 millonregulatory financal penalty and a $20 millon fair-value gain relating to a SCVentures investment. 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 gain on businesses disposed/ held for sale $millon Goodwill imparment $millon Statutory $millon Operating income 14,713 – (32) 20 – 14,701 Operating expenses (10,375) (62) (487) –– (10,924) Operating profit/(loss) before imparmentlosses and taxation 4,338 (62) (519) 20 – 3,777 Credit imparment (263) –9–– (254) Other imparment (355) – (17) –– (372) Profit from associates and jont ventures 176 – 20 –– 196 Profit/(loss)beforetaxation 3,896 (62) (507) 20 – 3,347 2020 Underlying $millon Regulatory Fine $millon Restructuring $millon Net loss on businesses disposed/ held forsale $millon Goodwill imparment $millon Statutory $millon Operating income 14,765 – 27 (38) – 14,754 Operating expenses (10,142) 14 (252) –– (10,380) Operating profit/(loss) before imparmentlosses and taxation 4,623 14 (225) (38) – 4,374 Credit imparment (2,294) – (31) –– (2,325) Other imparment 15 – (113) – (489) (587) Profit from associates and jont ventures 164 – (13) –– 151 Profit/(loss) before taxation 2,508 14 (382) (38) (489) 1,613 ![]() 320 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 2. Segmental informaton continued Underlying performance by client segment 2021 Corporate, Commercial & Institutonal Banking $millon Consumer Private & Business Banking $millon Central & other items (segment) $millon Total $millon Operating income 8,407 5,733 573 14,713 External 7,952 5,373 1,388 14,713 Inter-segment 455 360 (815) – Operating expenses (5,278) (4,377) (720) (10,375) Operating profit/(loss) before imparmentlosses andtaxation 3,129 1,356 (147) 4,338 Credit imparment 44 (285) (22) (263) Other imparment (49) – (306) (355) Profit from associates and jont ventures –– 176176 Underlying profit/(loss)before taxation 3,124 1,071 (299) 3,896 Restructuring (114)(235) (158)(507) Goodwill imparment –––– Other items –– (42)(42) Statutory profit/(loss)beforetaxation 3,010 836 (499) 3,347 Total assets 405,839 139,992 281,987 827,818 Of which: loans and advances to customers 208,729 136,565 24,409 369,703 loans and advances to customers 139,335 136,498 22,635 298,468 loans held at fair value through profit or loss (FVTPL) 2 69,394 67 1,774 71,235 Total liablites 481,397 182,941 110,844 775,182 Of which: customer accounts 3 351,696 178,777 11,982 542,455 2020 (Restated) 1 Corporate, Commercial & Institutonal Banking 1 $millon Consumer Private & Business Banking 1 $millon Central & other items (segment) $millon Total $millon Operating income 8,485 5,691 589 14,765 External 8,304 4,795 1,666 14,765 Inter-segment 181 896 (1,077) – Operating expenses (5,003) (4,230) (909) (10,142) Operating profit/(loss) before imparmentlosses andtaxation 3,482 1,461 (320) 4,623 Credit imparment (1,529) (741) (24)(2,294) Other imparment 41 (10) (16) 15 Profit from associates and jont ventures –– 164164 Underlying profit/(loss)before taxation 1,994 710 (196) 2,508 Restructuring (221) (61) (100) (382) Goodwill imparment –– (489)(489) Other items –– (24)(24) Statutory profit/(loss)beforetaxation 1,773 649 (809) 1,613 Total assets 388,303 131,783 268,964 789,050 Of which: loans and advances to customers 187,971 129,23019,075 336,276 loans and advances to customers 133,541 129,09519,063 281,699 loans held at fair value through profit or loss (FVTPL) 2 54,430 135 12 54,577 Total liablites 481,042 177,709 79,570 738,321 Of which: customer accounts 3 310,779 173,506 7,869 492,154 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 2Loans and advances includes reverse repurchase agreements and other simlar secured lending of $61,282 millon (31 December 2020: $45,200 millon) held at fair value through profit or loss 3Customer accounts include repurchase agreements and other simlar secured borrowing of $58,594 millon (31 December 2020: $43,918 millon) ![]() 321 Standard Chartered – Annual Report 2021 Financal statements 2. Segmental informaton continued Operating income by clientsegment 2021 Corporate, Commercial & Institutonal Banking $millon Consumer Private & Business Banking $millon Central & other items (segment) $millon Total $millon Underlying operating income 8,407 5,733 573 14,713 Restructuring 9– (41) (32) Other items –– 2020 Statutory operating income 8,416 5,733 552 14,701 2020 (Restated) 1 Corporate, Commercial & Institutonal Banking 1 $millon Consumer Private & Business Banking 1 $millon Central & other items (segment) $millon Total $millon Underlying operating income 8,485 5,691 589 14,765 Restructuring 40– (13) 27 Other items –– (38)(38) Statutory operating income 8,525 5,691 538 14,754 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 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 income 10,448 2,446 2,003 (184) 14,713 Operating expenses (6,773) (1,623) (1,485) (494) (10,375) Operating profit/(loss) before imparmentlosses and taxation 3,675 823 518 (678) 4,338 Credit imparment (434) 34 144 (7) (263) Other imparment (300) (1) (18) (36) (355) Profit from associates and jont ventures 175 ––1 176 Underlying profit/(loss)before taxation 3,116 856 644 (720) 3,896 Restructuring (286) (25) (69) (127) (507) Goodwill imparment ––––– Other items ––– (42)(42) Statutory profit/(loss)beforetaxation 2,830 831 575 (889) 3,347 Total assets 483,950 57,405277,008 9,455 827,818 Of which: loans and advances to customers 265,744 27,600 76,359 – 369,703 loans and advances to customers 243,861 25,177 29,430 –298,468 loans held at fair value through profit or loss (FVTPL) 2 21,883 2,423 46,929 – 71,235 Total liablites 434,200 41,260 233,915 65,807 775,182 Of which: customer accounts 3 355,792 34,701 151,962 – 542,455 ![]() 322 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 2. Segmental informaton continued Underlying performance by region continued 2020 (Restated) 1 Asia 1 $millon Africa & Middle East $millon Europe & Americas $millon Central & other items $millon Total $millon Operating income 10,382 2,364 1,922 97 14,765 Operating expenses (6,357) (1,683) (1,383) (719) (10,142) Operating profit/(loss) before imparmentlosses and taxation 4,025 681 539 (622) 4,623 Credit imparment (1,484) (654) (161) 5 (2,294) Other imparment 110 (14) 8 (89) 15 Profit from associates and jont ventures 163 ––1 164 Underlying profit/(loss)before taxation 2,814 13 386 (705) 2,508 Restructuring (134) (88) (45) (115) (382) Goodwill imparment ––– (489)(489) Other items (43) –– 19 (24) Statutory profit/(loss)beforetaxation 2,637 (75) 341 (1,290) 1,613 Total assets 467,212 58,069 253,438 10,331 789,050 Of which: loans and advances to customers 239,09229,413 67,771 – 336,276 loans and advances to customers 226,157 28,214 27,328 – 281,699 loans held at fair value through profit or loss (FVTPL) 2 12,935 1,199 40,443 – 54,577 Total liablites 421,711 39,980 211,840 64,790 738,321 Of which: customer accounts 3 334,623 32,106 125,425 – 492,154 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 beenrestated 2Loans and advances includes reverse repurchase agreements and other simlar secured lending of $61,282 millon (31 December 2020: $45,200 millon) held at fair value through profit or loss 3Customer accounts include repurchase agreements and other simlar secured borrowing of $58,594 millon (31 December 2020: $43,918 millon) 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 10,448 2,446 2,003 (184) 14,713 Restructuring 30 3 (30) (35) (32) Other items ––– 2020 Statutory operating income 10,478 2,449 1,973 (199) 14,701 2020 (Restated) 1 Asia 1 $millon Africa & Middle East $millon Europe & Americas $millon Central & other items $millon Total $millon Underlying operating income 10,382 2,364 1,922 97 14,765 Restructuring 78 (2) – (49) 27 Other items (43) ––5 (38) Statutory operating income 10,417 2,362 1,922 53 14,754 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 beenrestated ![]() 323 Standard Chartered – Annual Report 2021 Financal statements 2. Segmental informaton continued Additonalsegmentalinformaton (statutory) 2021 Corporate, Commercial & Institutonal Banking $millon Consumer Private & Business Banking $millon Central & other items (segment) $millon Total $millon Net interest income 3,267 3,214 317 6,798 Net fees andcommisson income 1,784 2,003 (65) 3,722 Net trading and other income 3,365 516 300 4,181 Operating income 8,416 5,733 552 14,701 2020 (Restated) 1 Corporate, Commercial & Institutonal Banking 1 $millon Consumer Private & Business Banking 1 $millon Central & other items (segment) $millon Total $millon Net interest income 3,411 3,458 (17) 6,852 Net fees andcommisson income 1,477 1,716 (33) 3,160 Net trading and other income 3,637 517 588 4,742 Operating income 8,525 5,691 538 14,754 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 2021 Asia $millon Africa & Middle East $millon Europe & Americas $millon Central & other items $millon Total $millon Net interest income 5,069 1,190 49049 6,798 Net fees andcommisson income 2,764 614 547 (203) 3,722 Net trading and other income 2,645645 936 (45) 4,181 Operating income 10,478 2,449 1,973 (199) 14,701 2020 (Restated) 1 Asia 1 $millon Africa & Middle East $millon Europe & Americas $millon Central & other items $millon Total $millon Net interest income 4,993 1,223 316 320 6,852 Net fees andcommisson income 2,344 531 519 (234) 3,160 Net trading and other income 3,080 608 1,087 (33) 4,742 Operating income 10,417 2,362 1,922 53 14,754 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 beenrestated 2021 Hong Kong $millon Korea $millon China $millon Singapore $millon India $millon Indonesia $millon UAE $millon UK $millon US $millon Net interest income 1,422 724 589 742 706 90 229 220 198 Net fees andcommisson income 902 213 192 664 240 54 101 21 414 Net trading and other income 1,148 174 306 192 336 69 216 624 206 Operating income 3,472 1,111 1,087 1,5981,282 213 546 865 818 2020 Hong Kong $millon Korea $millon China $millon Singapore $millon India $millon Indonesia $millon UAE $millon UK $millon US $millon Net interest income 1,557 650 545 676 664 86 281 62 170 Net fees andcommisson income 760 175 163 515 202 66 113 61 371 Net trading and other income 1,235 236 175 367 379 156 173 824242 Operating income 3,552 1,061 883 1,558 1,245 308 567 947 783 ![]() 324 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 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al asset. 2021 $millon 2020 $millon Balances atcentral banks 92 113 Loans and advances to banks 490 801 Loans and advances to customers 7,347 8,473 Debt securites 1,787 2,325 Other eligble bills 303 495 Accrued on impared assets (discount unwind) 227 1 85 Interestincome 10,246 12,292 Of which: financal instruments held at fair value through other comprehensive income 1,541 2,134 Deposits by banks 136 237 Customer accounts 2,196 3,671 Debt securites in issue 566 836 Subordinatedliablites andother borrowed funds 497 637 Interest expense on IFRS 16 lease liablites 53 59 Interestexpense 3,448 5,440 Net interestincome 6,798 6,852 1 Includes a $171 millon adjustment in relation to interest earned on impared assets as required by IFRS9 Financal Instruments Recogniton and Measurement 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. ![]() 325 Standard Chartered – Annual Report 2021 Financal statements 4. Net fees and commisson continued The Group applies the following practical expedients: • informaton onamounts 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 onbancassurance agreementsis amortised straight-line over the contractualterm. 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 is earned. RetailProducts 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. 2021 $millon 2020 $millon Fees andcommissons income 4,458 3,865 Of which: Financal instruments that are not fair valued through profit or loss 1,282 1,122 Trust and other fiducary activties 703 254 Fees and commissons expense (736) (705) Of which: Financal instruments that are not fair valued through profit or loss (234) (219) Trust and other fiducary activties (49) (11) Net fees and commisson 3,722 3,160 ![]() 326 StandardChartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 4. Net fees and commisson continued 2021 Corporate, Commercial & Institutonal Banking $millon Consumer Private & Business Banking $millon Central & other Items (Segment) $millon Total $millon Transaction Banking 1,097 39 – 1,136 Trade 590 27 – 617 Cash Management 507 12 – 519 Financal Markets 549 –– 549 Lending & Portfolio Management 143 1– 144 Princpal Finance (5) –– (5) Wealth Management – 1,556 – 1,556 Retail Products – 406 – 406 Treasury –– (47)(47) Others –1 (18) (17) Net fees and commisson 1,784 2,003 (65) 3,722 2020 (Restated) 1 Corporate, Commercial & Institutonal Banking 1 $millon Consumer Private & Business Banking 1 $millon Central & other Items (Segment) $millon Total $millon Transaction Banking 973 32 – 1,005 Trade 531 22 – 553 Cash Management 442 10 – 452 Financal Markets 432 –– 432 Lending & Portfolio Management 70 1– 71 Princpal Finance 1––1 Wealth Management 1 1,350 – 1,351 Retail Products – 333 – 333 Treasury –– (25)(25) Others –– (8)(8) Net fees and commisson 1,477 1,716 (33) 3,160 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 12 months ended 31 December 2021, $84 millon of fee income was released from deferred income (31 December 2020: $84 millon). 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 tradingincome 3,431 3,672 Signficant items withn net trading income include: Gains on instruments held for trading¹ 3,381 3,254 Gains on financal assets mandatorily at fair value through profit or loss 181 607 Losses on financal assets designated at fair value through profit or loss (8) (4) Losses on financal liablites designated at fair value through profit or loss (133) (247) 1Includes $339 millon gain (31 December 2020: $395 millon loss) from the translation of foreign currency monetary assets and liablites ![]() 327 Standard Chartered – Annual Report 2021 Financal statements 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 operatingincome includes: Rental income fromoperating lease assets 463 495 Gains less losses on disposal of fair value through other comprehensive income debt instruments 157 431 Gains less losses on amortised cost financal assets 22 40 Net gain/(loss) onsale of businesses 20 (38) Divdend income 14 27 Gain on sale of aircrafts 23 11 Other 51 104 Other operating income 750 1,070 7. Operating expenses 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 141 to 170). 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 30. Share-basedcompensation:the Group operatesequity-settled and cash-settledshare-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 31. 2021 $millon 2020 $millon Staff costs: Wages andsalaries 5,834 5,362 Social security costs 209 168 Other pension costs (Note 30) 377 358 Share-based paymentcosts(Note 31) 167 132 Other staff costs 1,081 866 7,668 6,886 Other staff costs include redundancy expenses of $328 millon (31 December 2020: $179 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: 2021 2020 1 Business Supportservices Total Business Support services Total At 31December 30,614 51,343 81,957 34,905 48,752 83,657 Average for the year 31,468 51,268 82,736 36,435 48,305 84,740 The Company employed Nil staff at 31 December 2021 (31 December 2020: Nil) and it incurred costs of $1 millon (31 December 2020: $87 millon). Details of directors’ pay, benefits, pensions and benefits and interests in shares are disclosed in the Directors’ remuneration report (page 141). Transactions with directors, officers and other related parties are disclosed in Note 36. ![]() 328 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 7. Operating expenses continued 2021 $millon 2020 $millon Premises andequipmentexpenses: 387 412 General adminstrativeexpenses: UK bank levy 100 331 Regulatory fine 62 (14) Other general adminstrative expenses 1,526 1,514 1,688 1,831 Depreciatonand amortisaton: Property, plantand equipment: Premises 370 373 Equipment 129 129 Operatinglease assets 213 229 712 731 Intangibles: Software 461 515 Acquired on business combinatons 8 5 1,181 1,251 Totaloperating expenses 10,924 10,380 Operating expenses include research expenditure of $945 millon (31 December 2020: $777 millon), which was recognized as an expense in the year. 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. 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 accounting estimates 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; • Evaluationof management overlays and post-modeladjustments; • 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 233). 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 235). Expected creditlosses Expected credit losses are determined for all financal debt instruments that are classifed at amortised cost or fair value through other comprehensive income,undrawncommitments 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. ![]() 329 Standard Chartered – Annual Report 2021 Financal statements 8. Credit imparment continued 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 valueof money, and considerngall 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 roll rates or loss rates. Forward-looking economic assumptions are incorporated into the PD, LGD and EAD where relevant and where they influence credit risk, such as GDP growth rates, interest rates, house price 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 bothinternally 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, multipleforward-lookingeconomicscenarios are incorporated intothe range 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 likelyforecastof macroeconomic 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. 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 interestrate, the current effective interestrate determined under the contract. Instruments Locationof expectedcredit 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 guarantees Provis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-monthbasis. ![]() 330 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 8. Credit imparment continued 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 change between the two exceeds predetermined thresholds. To the extent that the differences between the measures of default outlined exceed the defined thresholds, the instrument is considered to have experienced a signficant increase in credit risk. Qualitatvefactors assessedinclude those linked tocurrent credit risk management processes, such as lending placedon non-purely precautionary early alert (and subject tocloser 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 resultin deterioraton of repayment prospects and the likelhood of being downgraded.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 operatingresults, liqudity strainand overdue balances among otherfactors. 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 borrowerconcession/s that lenders would not otherwise consider. This wouldinclude forbearance actions(page 331); • Pendingor actual bankruptcy orotherfinancal reorganisaton to avoid ordelay discharge ofthe borrower’sobligat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tionof default as set outin the UK’s onshored capital requirements regulations (Art 178). ![]() 331 Standard Chartered – Annual Report 2021 Financal statements 8. Credit imparment continued Expertcredit judgement For Corporate & Institutonal, Commercial and Private Banking, borrowers are graded by credit risk management on a credit grading (CG) scale from CG1 to CG14. Once a borrower starts to 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 realisablevalue of collateral, the Group’s legal positon relativeto other claimants and any renegotiaton/ forbearance/ modifcation options. The futurecash flow calculationinvolves 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 consideredcredit-impared,the account may bealso 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 appropriatemodelor 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. 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, tenorextensions, interestonly payments, lowerinterest rates, forgiveness of princpal, interestor fees, or relaxation of loancovenants. 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. ![]() 332 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 8. Credit imparment continued 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ons on purchased ororignated credit-imparedinstruments (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). 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 probation period 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 258 2,191 Net credit imparment on debt securites 26 33 Net credit imparment relating to financal guarantees and loan commitments (30) 103 Net credit imparment relating to other financal assets – (2) Credit imparment 1 254 2,325 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 17) – 489 Impairment of property, plant and equipment (Note 18) 106 132 Impairment of other intangble assets (Note 17) 4 17 Other 262 1 (51)² Property, plantand equipment and other imparment 372 98 Goodwill, property, plant andequipmentand other imparment 372 587 1Other Includes Impairment of investment in China Bohai $300 millon 2Includes a reversal of $165 millon as a result of recovery on a disputed derivatve receivable, following a favourable court ruling ![]() 333 Standard Chartered – Annual Report 2021 Financal statements 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al statements. Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted as at the balance sheet date, and that are expected to apply when the related deferred tax asset is realised or the deferred income tax 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 by component of deferred taxation. Current and deferred tax relating to items which are charged or credited directly to equity, is credited or charged directly to equity and is subsequently recognised in the income statement together with the current or deferred gain or loss. Signficant accounting estimates 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 applicablelawsand regulations relevant to the utilsation of future taxable profits havebeen 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 – – Adjustments in respect of prior years (includng double tax relief) 9 (41) Foreign tax: Current tax charge on income for the year 896 1,061 Adjustments in respect of prior years (26) (352) 879 668 Deferred tax: Orignation/reversalof temporary differences 218 (193) Adjustments in respect of prior years (63) 387 155 194 Tax on profits on ordinary activties 1,034 862 Effective tax rate 30.9% 53.4% The tax charge for the year of $1,034 millon (31 December 2020: $862 millon) on a profit before tax of $3,347 millon (31 December 2020: $1,613 millon) reflects the impact of countries with tax rates higher or lower than the UK, the most signficant of which isIndia, non-deductible expenses andnon-creditable withholdng taxes. The 2020 chargeincluded 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. Foreign tax includes current tax of $78 millon (31 December 2020: $167 millon) on the profits assessable in Hong Kong. Deferred tax includes orignation or reversal of temporary differences of $39 millon (31 December 2020: $(30) millon) provided at a rate of 16.5 per cent (31 December 2020: 16.5 per cent) on the profits assessable in Hong Kong. ![]() 334 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 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: 2021 2020 $millon % $millon % Profit on ordinary activties before tax 3,347 1,613 Tax at 19 per cent (2020: 19 per cent) 636 19.0 306 19.0 Lower tax rates on overseas earnings (93)(2.8) (36) (2.2) Higher tax rates on overseas earnings 366 10.9 305 18.9 Tax at domestic rates applicable where profits earned 909 27.1 575 35.7 Non-creditable withholdngtaxes 120 3.6 127 7.9 Tax exempt income 1 (85) (2.5) (127) (7.9) Share ofassociates and jont ventures (33) (1.0) (26)(1.6) Non-deductible expenses 1 217 6.5 164 10.2 Regulatory fine 12 0.4 –– Bank levy 19 0.6 63 3.9 Non-taxable losses on investments –– 13 0.8 Payments on financal instruments in reserves (62) (1.9) (59) (3.7) Goodwill imparment –– 93 5.8 Deferred tax not recognised 54 1.6 49 3.0 Deferred tax assets written-off 1– 15 0.9 Deferred tax rate changes –– (51) (3.2) Adjustments to tax charge in respect of prior years (80) (2.4) (6) (0.4) Other items 1 (38) (1.1) 32 2.0 Tax on profit on ordinary activties 1,034 30.9 862 53.4 1The 2020 comparatives have been reclassifed as follows to align with presentation in the current period: tax exempt income by $6 millon from $(133) millon to $(127) millon, non-deductible expenses by $102 millon from $266 millon to $164 millon and other items by $96 millon from $(64) millon to $32 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 and tax rates and resolution of uncertain 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 Deferredtax $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 – (82)(82) – (17)(17) Own credit adjustment – (6)(6) –11 Equity instruments at fair value through other comprehensive income – (59)(59) – (27)(27) Retirementbenefit obligatons – (17)(17) –99 Itemsthat may bereclassed subsequently to income statement – 7474 (1) (53) (54) Debt instruments at fair value through other comprehensive income – 7676 (1) (68)(69) Cash flow hedges – (2)(2) – 1515 Total tax credit/(charge)recognised in equity – (8)(8) (1) (70) (71) ![]() 335 Standard Chartered – Annual Report 2021 Financal statements 10. Taxation continued Current tax: The following are the movements in current tax during the year: Current tax comprises: 2021 $millon 2020 $millon Current tax assets 808 539 Current tax liablites (660) (703) Net current tax opening balance 148 (164) Movements in income statement (879) (668) Movements in othercomprehensive income – (1) Taxespaid 1,161 971 Other movements (12) 10 Net current tax balance as at 31 December 418 148 Current tax assets 766 808 Current tax liablites (348) (660) Total 418 148 Deferred tax: The following are the major deferred tax liablites and assets recognised by the Group and movements thereon during the year: 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: Acceleratedtaxdepreciaton (493) 4 (26) – (515) Impairment provisons on loans and advances 419 12 (80) – 351 Tax losses carried forward 282 (3) (16) – 263 Fair value through other comprehensiveincome (146) 5 (2) 17 (126) Cash flow hedges 2–– (2) – Own credit adjustment 3–– (6) (3) Retirementbenefit obligatons 36 13 (5)(17) 27 Share-based payments 23 –9– 32 Other temporary differences 98 (33) (35) – 30 Net deferred taxassets 224 (2) (155) (8) 59 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: Acceleratedtaxdepreciaton (526) – 33 – (493) Impairment provisons on loans and advances 957 (14)(524) – 419 Tax losses carried forward 263 (5) 24 – 282 Fair value through other comprehensiveincome (49) – (2) (95) (146) Cash flow hedges (13) –– 15 2 Own credit adjustment 2––13 Retirementbenefit obligatons 31 (1) (3) 936 Share-based payments 16 (3) 10 – 23 Other temporary differences (187) 14 268 3 98 Net deferred taxassets 494 (9) (194) (67) 224 ![]() 336 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 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: Acceleratedtaxdepreciaton (515) 18(533) (493) (30) (463) Impairment provisons on loans and advances 351 389 (38) 419 403 16 Tax losses carried forward 263 172 91 282 171 111 Fair value through other comprehensive income (126) (22) (104) (146) (61) (85) Cash flow hedges – (3) 3 26 (4) Own credit adjustment (3) (1) (2) 321 Retirementbenefit obligatons 27 16 11 36 25 11 Share-based payments 32 – 32 23 8 15 Other temporary differences 30 290 (260) 98 395(297) 59859 (800) 224 919 (695) At 31 December 2021, the Group has net deferred tax assets of $59 millon (31 December 2020: $224 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, $263 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. • $104 millon of the deferred tax assets relating to losses has arisen in Ireland, where there is no expiry date for unused tax losses. These losses relate to aircraft leasing and are expected to be fully utilsed over the useful economical life of the assets being up to 18 years. • $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 $47 millon relating to losses have arisen in other jursdictons and are expected to be recovered in less than 10 years. Unrecognised deferred tax 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 earningsfromoverseas subsidaries andassociates (426) (397) Taxlosses 2,104 1,612 Held over gains on incorporation of overseas branches (422) (336) Other temporary differences 208 221 The aggregate temporary differences relating to unrecognised deferred tax arisng on unremitted earnings from overseas subsidaries and associates at the balance sheet date was $(5,544) millon (31 December 2020: $(5,183) millon), the gross value of the unrecognised tax losses (includng capital losses) was $8,292 millon (31 December 2020: $7,213 millon), gross value of held over gains on incorporation of overseas branches $(1,476) millon (31 December 2020: $(1,489) millon), and other temporary differences $790 millon (31 December 2020: $946 millon). ![]() 337 Standard Chartered – Annual Report 2021 Financal statements 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 by the shareholders. The Board considers a number of factors prior to divdend declaration which includes 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 2020 final divdend declared and paid during the year 9 282 2021 interm divdend declared and paid during the year 3 92 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 by the shareholders. Accordingly, the final ordinary equity share divdends set out above relate to the respectiveprior years. On 31 March 2020, the Group announced that in response to a request from the Prudential Regulation Authority and as a consequence of the unprecedented challenges facing the world due to the COVID-19 pandemic, its Board had decided after careful consideraton to withdraw the recommendation to pay a final divdend for 2019 of 20 cents per ordinary share. 2021 recommended final ordinary equity share divdend The 2021 ordinary equity share divdend recommended by the Board is 9 cents per share. The financal statements for the year ended 31 December 2021 do not reflect this divdend as this will be accounted for in shareholders’ equity as an appropriaton of retained profits in the year ending 31 December 2022. The divdend will be paid in either pounds sterling, Hong Kong dollars or US dollars on 12 May 2022 to shareholders on the UK register of members at the close of business in the UK on 25 February 2022. Preferenceshares and Additonal Tier 1securit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 53 53 6.409 per cent preference shares of $5 each 13 20 66 73 Additonal Tier 1 securites: fixed rate resetting perpetual subordinated contingent convertible securites 344 322 410 395 ![]() 338 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 12. Earnings per ordinary share Accounting policy Basic earnings per ordinary share is calculated by divding the profit attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding, excluding own shares held. Diluted earnings per ordinary share is calculated by divding the basic earnings, which require no adjustment for the effects of dilutve potential ordinary shares, by the weighted average number of ordinary shares that would have been outstanding assuming the conversion of all dilutve potential ordinary shares, excluding own sharesheld. The Group also measures earnings per share on an underlying basis. This differs from earnings defined in IAS 33 Earnings per share. Underlying earnings is profit/(loss) attributable to ordinary shareholders adjusted for profits or losses of a capital nature; amounts consequent to investmenttransactions driven bystrategicintent; 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 year. The table below provides the basis of underlying earnings. 2021 $millon 2020 $millon Profit for the period attributable to equity holders 2,313 751 Non-controlling interest 2 (27) Divdend payable on preference shares and AT1 classifed as equity (410) (395) Profit for the period attributable to ordinary shareholders 1,905 329 Items normalised: Regulatory fine 62 (14) Restructuring 507 382 Goodwill imparment (Note 9) – 489 Net (gain)/loss on sale of Businesses (Note 6) (20) 38 Tax on normalised items 1 (87) (83) Underlying profit attributable to equity holders 2,367 1,141 Basic – Weighted average number of shares (millons) 3,108 3,160 Diluted – Weightedaverage number ofshares(millons) 3,154 3,199 Basic earnings per ordinary share (cents) 61.3 10.4 Diluted earnings per ordinary share (cents) 60.4 10.3 Underlying basic earnings perordinary share (cents) 76.2 36.1 Underlying dilutedearnings per ordinary share(cents) 75.0 35.7 1No tax is included in respect of the imparment of goodwill as no tax relief is available ![]() 339 Standard Chartered – Annual Report 2021 Financal statements 13. Financal instruments Classifcation andmeasurement 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 (FVTPL). 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 at amortised cost and fair value through other comprehensive income Debt instruments held at amortised cost or held at FVOCI have contractual terms that give rise to cashflows 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 cashflows have SPPI characteristcs, the Group considers the contractual terms of the instrument. This includes assessingwhether the financal assetcontainsa contractualterm that could change the timng or amount of contractual cashflows 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 cashflows • Leverage characteristcs which increase the variablity of contractual cashflows • Prepayment and extension terms • Terms that limt the Group’s claim to cashflows from specifed assets (e.g. non-recourse asset arrangements) • Features that modify consideraton of the time value of money – for example, periodcal reset of interest rates Whether financal assets are held at amortised cost 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 cashflows. 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, where applicable, withn business lines depending on the way the business is managed and informaton is provided to management. Factors consideredinclude: • 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 cashflows 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 The Group’s business model assessment is as follows: Business modelBusinessobjectve Characteristcs Businesses Products Hold to collect Intent is to orignate financal assetsand hold them to maturity, collectingthe contractual cashflows over the term of the instrument • Providngfinancng and orignating assets to earn interest incomeas primary income stream • Performing Credit Risk managementactivties • Costs include fundingcosts, 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 bothhold 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 ofduration of assets and liablites • Income streams come from interest income, fair value changes, andimparment losses • Treasury Markets •Derivatves • Debt securites Fair value through profit or loss All otherbusiness objectves,includng trading and managing financal assets on a fair value basis • Assets heldfor trading • Assets that are orignated, purchased, and sold for profit- taking orunderwrit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 • All otherbusiness lines •Derivatves • Trading portfolios • Financal Markets reverse repos • Financal Markets (FM Bond and Loan Syndicaton) ![]() 340 Standard Chartered –Annual Report 2021 Financal statements Notes to thefinancalstatements 13. Financal instruments continued 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 cashflows (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 cashflows and selling financal assets (Hold to collect and sell) are classifed as held at FVOCI. Both hold to collect business and hold to collect and sell business models involve holding financal assets to collect the contractual cashflows. 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. Cashflows 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alassets are requiredto 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 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. 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 one or 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 contingent consideratonin a 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. ![]() 341 Standard Chartered – Annual Report 2021 Financal statements 13. Financal instruments continued Financal guarantee contracts and loancommitments 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. 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, or the transaction matures oris 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 the 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 andaccumulated in a separatecomponent of equity. On derecogniton,thecumulative 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alassets 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 cashflow hedging relationshp. ![]() 342 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 13. Financal instruments continued 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 infair 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alinstruments Financal assets are derecognised when the rights to receive cashflows 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. Financal liablites are derecognised when they are extingushed. A financalliab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 cashflows and the orignal cashflows is more than 10 per cent; 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, cashflows 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-Impaired 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 cashflows 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 imparment’ (see Credit Impairment policy). Modifcation gains and losses arisng for non-credit reasons are recognised either as part of Credit imparment 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nincome. 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 cashflows 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 Interbank Offered Rate (IBOR) benchmark rate to the alternative risk- free rate (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. ![]() 343 StandardChartered – Annual Report 2021 Financal statements 13. Financal instruments continued 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 fromamortised cost Where financal assets held at amortised cost are reclassifed to financal assets held at fair value through profit or 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 air 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 air valuethrough other comprehensive income Where financal assets held at air 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. 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 or loss are reclassifed to financal assets held at air 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. ![]() 344 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 13. Financal instruments continued The Group’s classifcation of its financal assets and liablites is summarised in the following tables. Assets Notes Assets at fair value 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 Assets held at amortised cost $millon Total $millon Cash and balances at central banks –––––– 72,66372,663 Financal assets held at fair value through profit or loss Loans and advances to banks¹ 1,491 – 2,356 –– 3,847 – 3,847 Loans and advances to customers¹ 5,813 – 4,140 –– 9,953 – 9,953 Reverse repurchase agreements and other simlarsecuredlending 16 –– 80,009 –– 80,009 – 80,009 Debt securites, alternative tier oneand other eligble bills 28,801 – 463 161 – 29,425 – 29,425 Equityshares 5,653 – 208 –– 5,861 – 5,861 Other assets –– 26 –– 26 – 26 41,758 – 87,202 161 – 129,121 – 129,121 Derivatve financal instruments 14 51,002 1,443––– 52,445 – 52,445 Loans and advances to banks¹ 15 –––––– 44,38344,383 of which – reverse repurchase agreements and other simlar secured lending 16 –––––– 1,0791,079 Loans and advances to customers¹ 15 ––––––298,468298,468 of which – reverse repurchase agreements and other simlar secured lending 16 –––––– 7,3317,331 Investmentsecurites Debt securites, alternative tier oneand other eligble bills –––– 121,375121,375 41,325 162,700 Equityshares –––– 737737 – 737 –––– 122,112122,112 41,325 163,437 Other assets 20 –––––– 40,06840,068 Assets held for sale 21 ––– 43 – 43 52 95 Total at 31 December 2021 92,760 1,443 87,202 204122,112 303,721 496,959 800,680 1Further analysed in Risk review and Capital review (pages 200 to 293) ![]() 345 Standard Chartered – Annual Report 2021 Financal statements 13. Financal instruments continued Assets Notes Assets at fair value 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 throughother comprehensive income $millon Total financal assets at fair value $millon Assets held at amortised cost $millon Total $millon Cash and balances at central banks –––––– 66,71266,712 Financal assets held at fair value through profit or loss Loans and advances to banks¹ 1,552 – 2,325 –– 3,877 – 3,877 Loans and advances to customers¹ 4,169 – 5,129 79 – 9,377 – 9,377 Reverse repurchase agreements and other simlarsecuredlending 16 ––63,405––63,405–63,405 Debt securites, alternative tier oneand other eligble bills 24,919 – 425 256 – 25,600 – 25,600 Equityshares 4,223 – 305 –– 4,528 – 4,528 Other assets –––––––– 34,863 – 71,589 335 – 106,787 – 106,787 Derivatve financal instruments 14 67,826 1,641 ––– 69,467 – 69,467 Loans and advances to banks¹ 15 –––––– 44,34744,347 of which – reverse repurchase agreements and other simlar secured lending 16 –––––– 1,2471,247 Loans and advances to customers¹ 15 –––––– 281,699281,699 of which – reverse repurchase agreements and other simlar secured lending 16 –––––– 2,9192,919 Investmentsecurites Debt securites, alternative tier oneand other eligble bills –––– 133,381133,381 19,480 152,861 Equityshares –––– 454454 – 454 –––– 133,835133,835 19,480 153,315 Other assets 20 –––––– 40,97840,978 Assets held for sale 21 –––5–583 88 Total at 31 December 2020 102,689 1,641 71,589 340 133,835 310,094 453,299 763,393 1Further analysed in Risk review and Capital review (pages 200 to 293) ![]() 346 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 13. Financal instruments continued Liablites Notes 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 –– 1,3521,352 – 1,352 Customer accounts 198 – 9,0939,291 – 9,291 Repurchase agreements and other simlar securedborrowing 16 –– 62,38862,388 – 62,388 Debt securites in issue 22 –– 5,5975,597 – 5,597 Short positons 6,562 –– 6,562 – 6,562 Other liablites 6–17–7 6,766 –78,431 85,197 – 85,197 Derivatve financal instruments 14 52,706 693 –53,399–53,399 Deposits by banks –––– 30,04130,041 Customer accounts –––– 474,570474,570 Repurchase agreements and other simlar securedborrowing 16 –––– 3,2603,260 Debt securites in issue 22 –––– 61,29361,293 Other liablites 23 ––––43,43243,432 Subordinatedliablites andother borrowed funds 27 –––– 16,64616,646 Total at 31 December 2021 59,472 693 78,431 138,596 629,242 767,838 Liablites Notes 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 –– 1,2491,249 – 1,249 Customer accounts –– 8,8978,897 – 8,897 Repurchase agreements and other simlar securedborrowing 16 –– 48,66248,662 – 48,662 Debt securites in issue 22 –– 5,8115,811 – 5,811 Short positons 3,754 –– 3,754 – 3,754 Other liablites –––––– 3,754 – 64,619 68,373 – 68,373 Derivatve financal instruments 14 69,790 1,743 – 71,533 – 71,533 Deposits by banks –––– 30,25530,255 Customer accounts –––– 439,339439,339 Repurchase agreements and other simlar securedborrowing 16 –––– 1,9031,903 Debt securites in issue 22 –––– 55,55055,550 Other liablites 23 –––– 47,22847,228 Subordinatedliablites andother borrowed funds 27 –––– 16,65416,654 Total at 31 December 2020 73,544 1,743 64,619 139,906590,929 730,835 ![]() 347 Standard Chartered – Annual Report 2021 Financal statements 13. Financal instruments continued Interestrate benchmark reform In 2017, the Financal Conduct Authority (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, while ensuring key risks and issues are identfied and effectively managed. The Programme is governed by a princpal Programme Steering Committee that oversees 16 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onalgovernance is supported by regular updates provided toseniorriskcommittees, 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. Progressduring 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. 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. At end of 2021, all negotiatons for drawn non-USD LIBOR exposures were concluded, and all but four loans had their documentation completed (it is expected the documentation will be finshed 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. Frontlineand client engagement, includng internal and client communicatons, frontline trainng, and client webinars, werea 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. 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 tobea signficant area ofnon-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gationof conduct risks arisng inrespectof the transiton arefundamental tothe successfultransit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. ![]() 348 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 13. Financal instruments continued • 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 Prudential Regulation Authority 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 forcontractual changes due toIBOR reform, fair valuemeasurementand hedge accounting. We continue to monitor andcontribute to industry developments on tax andaccounting changes. At 31 December 2021, the Group had the following notional princpal exposures to interest rate benchmarks that are expected to be subject to interest rate benchmark reform. The Group has 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 also excluded $2.7 billon of exposures that transitoned under fallback clauses immedately after 31 December 2021. IBOR exposures bybenchmark 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 TotalIBOR $millon Assets Loans and advances to banks 552 –––– 552 Loans and advances to customers 27,843 123¹ 1,479 15 58 29,518 Debt securites, Additonal Tier 1 and other eligble bills 2,735 237¹ 17 –– 2,989 31,130 360 1,496 15 58 33,059 Liablites Deposits by banks 815 –––– 815 Customer accounts 3,575 –136– 3,612 Repurchase agreements and other securedborrowing 671 –––– 671 Debt securites in issue 326 –––– 326 Subordinatedliablites andother borrowed funds 160 –––– 160 5,547 –136– 5,584 Derivatves –Foreign exchangecontracts Currency swaps and options 158,184– 3,877 1,725 – 163,786 Derivatves –Interestrate contracts Swaps 686,403 – 10,091 51,395 – 747,889 Forward rate agreements and options 28,406– 74 124 – 28,604 Exchange traded futures andoptions 24,236 –––– 24,236 Equity and stockindex options 74 –––– 74 Credit derivatvecontracts 5,515 – 72 277 – 5,864 TotalIBOR derivatve exposure 902,818 – 14,114 53,521–970,453 TotalIBOR exposure 939,495 360 15,611 53,572 58 1,009,096 Loan commitments off balance sheet 4,161 285 179 – 966 5,591 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 ![]() 349 Standard Chartered – Annual Report 2021 Financal statements 13. Financal instruments continued IBOR exposures bybenchmark 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 TotalIBOR $millon Assets Loans and advances to banks 1,072 55 ––– 1,127 Loans and advances to customers 34,143 2,861 2,011 33 905 39,953 Debt securites, Additonal Tier 1 and other eligble bills 3,984 1,409365 – 170 5,928 39,199 4,325 2,376 33 1,075 47,008 Liablites Deposits by banks 399 –––– 399 Customer accounts 4,23919 2 42 189 4,491 Repurchase agreements and other securedborrowing 1,195 –––– 1,195 Debt securites in issue 2,159 –––– 2,159 Subordinatedliablites andother borrowed funds 160 15 ––– 175 8,152 34 2 42 189 8,419 Derivatves –Foreign exchangecontracts Currency swaps and options 202,08634,205 5,125 1,998 21,658 265,072 Derivatves –Interestrate contracts Swaps 839,653 104,763 72,849 27,013 43,653 1,087,931 Forward rate agreements and options 21,634 523 76 55 2,527 24,815 Exchange traded futures andoptions 63,239 1,445 ––– 64,684 Equity and stockindex options 75 2––– 77 Credit derivatvecontracts 4,466 –– 134 – 4,600 TotalIBOR derivatve exposure 1,131,153 140,938 78,050 29,200 67,8381,447,179 TotalIBOR exposure 1,178,504 145,297 80,428 29,27569,102 1,502,606 Loan commitments off balance sheet 7,176 763 206 1 1,496 9,642 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 arrangementsfor derivatves andglobal master repurchase agreements for repurchaseand reverse repurchase transactions. These agreements generally allow thatall outstandingtransactions witha particular counterparty can be offset, but only in the event of default or other predetermined events. In additon,the Groupalso receivesand pledges readily realisable collateral for derivatve transactions tocover 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. 2021 Gross amounts of recognised financal instruments $millon Impact of offset in the balancesheet $millon Net amounts of financal instruments presentedin the balancesheet $millon Related amount notoffset in the balance sheet Net amount $millon Financal instruments $millon Financal collateral $millon Assets Derivatve financal instruments 79,043 (26,598) 52,445 (39,502) (8,092) 4,851 Reverse repurchaseagreements and other simlarsecured lending 95,845 (7,426) 88,419–(88,419)– At 31 December 2021 174,888(34,024) 140,864 (39,502) (96,511) 4,851 Liablites Derivatve financal instruments 79,997 (26,598) 53,399 (39,502)(9,217) 4,680 Repurchase agreements and other simlar secured borrowing 73,074 (7,426) 65,648 – (65,648) – At 31 December 2021 153,071 (34,024) 119,047(39,502) (74,865) 4,680 ![]() 350 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 13. Financal instruments continued 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 instruments 111,979 (42,512) 69,467 (47,097) (10,136) 12,234 Reverse repurchaseagreements and other simlarsecured lending 75,490 (7,919)67,571 – (67,571) – At 31 December 2020 187,469 (50,431)137,038 (47,097)(77,707) 12,234 Liablites Derivatve financal instruments 114,045 (42,512) 71,533 (47,097) (11,757) 12,679 Repurchase agreements and other simlar secured borrowing 58,484 (7,919) 50,565 – (50,565) – At 31 December 2020 172,529 (50,431)122,098 (47,097) (62,322) 12,679 Related amounts not offset in the balance sheet comprise: • 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 instrumentsand excludes the effect of over-collateralisaton • Financal instruments where a legal opinon evidencng enforceabilty of the right of offset may not have been sought, or may have been unableto 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 Financal liablites designated at fair value through profit or loss 2021 $millon 2020 $millon Carrying balance aggregate fair value 78,431 64,619 Amount contractually obliged to repay at maturity 78,691 64,405 Difference between aggregate fair value and contractually obliged to repay at maturity (260) 214 Cumulative change in fair value accredited to Credit Risk difference 3 (43) The net fair value loss on financal liablites designated at fair value through profit or loss was $133 millon for the year (31 December 2020: net loss of $247 millon). Further details of the Group’s own credit adjustment (OCA) valuation technique is described later in this Note. Valuationof 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 cashflow 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 ValuationMethodology function is responsiblefor independent price verifcation, oversightof fair valueand appropriate 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 are validated independent of the business area responsible for the product. The Valuation Methodology function has oversight of the fair value adjustments to ensure that 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 (PV) 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 PV and fair value processes which are formally documented on a semi-annual basis, detailng the suitablity of the market data used for price testing. PV uses independently sourced data that is deemed most representative of the market the instruments trade in. To determine the quality of the marketdata inputs, factors such as independence,relevance, reliablity, availablityof 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. ![]() 351 Standard Chartered – Annual Report 2021 Financal statements 13. Financal instruments continued 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 351). • 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 353). • 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. Valuation techniques Refer to the fair value hierarchy explanation – Level 1, 2 and 3 (page 353) • Financalinstruments heldat fair value – Debt securites – asset-backed securit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 cashflow models with input parameter assumptions, which includeprepayment 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 proxiesfrom comparable issuers orassets – 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 foreignexchange basketoptions, 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cal analysis 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 wherethemultiples for thecomparable companies cannotbesourced from reliable external sources, alternative valuation techniques (for example, discountedcashflow 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 cashflow 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 cashflows or are managed on a fair value basis. These loans are generally bilateral in nature and, where available, their valuation is based on observable clean sales transactions prices ormarket observable spreads. Ifobservable creditspreads 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 ![]() 352 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 13. Financal instruments continued – Other debtsecurites: These debt securitesinclude convertiblebonds, corporate bonds, credit andstructured notes. Where quoted prices are available throughpricng vendors, brokers orobservable trading activtiesfromliqu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. • Financalinstruments heldat 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 cashflow 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. The estimated fair value of fixed interest-bearing deposits and other borrowings without quoted market prices is based on discounted cashflows 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, bondspreadsfrom the same orclosely relatedissuer) 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 cashflows – 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 cashflows 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 cashflows 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 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 103 (2) 101 79 24 103 Credit valuation adjustment 189 (24) 165 136 53 189 Debit valuation adjustment (55) (15) (70) (43) (12) (55) Model valuation adjustment 5–5 7 (2) 5 Funding valuation adjustment 5 (5) – 26 (21) 5 Other fair value adjustments 32(12) 20 45 (13) 32 Total 279 (58) 221 250 29 279 Income deferrals Day 1 and other deferrals 138 9 147 103 35 138 Total 138 9 147 103 35 138 Note: Bracket represents an asset and credit to the income statement ![]() 353 Standard Chartered –Annual Report 2021 Financal statements 13. Financal instruments continued • Bid-offer valuationadjustment: 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 calculate the bid-offer adjustment for a derivatve portfolio involves netting 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 theGroup’s negative expected exposure against the counterparty.The Group’s probabilty of defaultand loss expected in the event of default is derived based on bond and credit default swap (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 valuation adjustment: Valuation models may havepricngdefic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 • Funding valuation adjustment (FVA): The Group makes FVA adjustment 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ng partially collateralised) derivatves incorporates the estimated present value of the market funding cost or benefit associated with funding these transactions • Other fair value adjustments: The Group calculates the fair value on the interest rate callable products by 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 valueat the measurementdate 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 OCA component 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 $3 millon (31 December 2020: $43 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 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 ![]() 354 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 13. Financal instruments continued The following tables show the classifcation of financal instruments held at fair value into the valuation hierarchy: 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 –3,8389 3,847 Loans and advances to customers – 8,596 1,357 9,953 Reverse repurchaseagreements and othersimlar secured lending –78,4431,566 80,009 Debt securites and other eligble bills 12,057 17,019 349 29,425 Of which: Issued by central banks & governments 10,731 7,201 – 17,932 Issued bycorporates other thanfinancal insttutions 1 1 3,750 111 3,862 Issued byfinancal insttutions 1 1,325 6,068 238 7,631 Equityshares 5,637 38 186 5,861 Derivatve financal instruments 1,066 51,289 90 52,445 Of which: Foreign exchange 161 41,577 10 41,748 Interestrate 9 6,314 53 6,376 Credit – 2,265 24 2,289 Equity and stockindex options –1333136 Commodity 896 1,000 – 1,896 Investmentsecurites Debt securites and other eligble bills 51,298 70,037 40 121,375 Of which: Issued by central banks & governments 39,590 24,651 40 64,281 Issued bycorporates other thanfinancal insttutions 1 – 1,963 – 1,963 Issued byfinancal insttutions 1 11,708 43,423– 55,131 Equityshares 227 17 493 737 Other assets –– 2626 Total financal instruments at 31 December 2021² 70,285 229,277 4,116 303,678 Liablites Financal instruments held at fair value through profit or loss Deposits by banks – 1,069 283 1,352 Customer accounts – 8,837 454 9,291 Repurchase agreements and other simlarsecuredborrowing – 62,388 – 62,388 Debt securites in issue – 4,776 8215,597 Short positons 4,187 2,375 – 6,562 Derivatve financal instruments 949 52,356 94 53,399 Of which: Foreign exchange 169 41,555 3 41,727 Interestrate 76,448 16 6,471 Credit – 3,084 41 3,125 Equity and stockindex options – 126 34 160 Commodity 773 1,143 – 1,916 Other liablites –617 Total financal instruments at 31 December 2021² 5,136 131,807 1,653 138,596 1Includes covered bonds of $7,326 millon, securites issued by Multilateral Development Banks/International Organisatons of $12,109 millon and State-owned agencies anddevelopment banks of$19,959 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 21 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. ![]() 355 Standard Chartered – Annual Report 2021 Financal statements 13. 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 – 3,677 200 3,877 Loans and advances to customers – 8,659 718 9,377 Reverse repurchaseagreements and othersimlar secured lending – 62,341 1,064 63,405 Debt securites and other eligble bills 9,453 15,889 258 25,600 Of which: Issued by central banks & governments 1 8,630 7,900 – 16,530 Issued bycorporates other thanfinancal insttutions 1,2 209 2,781 154 3,144 Issued byfinancal insttutions 1,2 614 5,208 104 5,926 Equityshares 3,657 592 279 4,528 Derivatve financal instruments 473 68,986 8 69,467 Of which: Foreign exchange 111 54,533 3 54,647 Interestrate 36 11,788 2 11,826 Credit – 1,700 2 1,702 Equity and stockindex options – 109 1 110 Commodity 326 856 – 1,182 Investmentsecurites Debt securites and other eligble bills 68,280 65,061 40 133,381 Of which: Issued by central banks & governments 1 55,020 23,456 40 78,516 Issued bycorporates other thanfinancal insttutions 1,2 1,822 3,378 – 5,200 Issued byfinancal insttutions 1,2 11,438 38,227 – 49,665 Equityshares 68 5 381 454 Other assets –––– Total financal instruments at 31 December 2020³ 81,931 225,210 2,948 310,089 Liablites Financal instruments held at fair value through profit or loss Deposits by banks – 1,103 146 1,249 Customer accounts – 8,876 21 8,897 Repurchase agreements and other simlarsecuredborrowing – 48,662 – 48,662 Debt securites in issue – 5,651 160 5,811 Short positons 2,573 1,181 – 3,754 Derivatve financal instruments 413 71,001 119 71,533 Of which: Foreign exchange 115 56,968 2 57,085 Interestrate 11 10,387 26 10,424 Credit – 2,904 86 2,990 Equity and stockindex options – 255 5 260 Commodity 287487 – 774 Other liablites –––– Total financal instruments at 31 December 2020³ 2,986 136,474 446 139,906 1Represented to reflect correct classifcation of counterparty types. There has been no change to the levelling approach or between FVTPL and Investment securitescategories due tothe restatement 2Includes covered bonds of$7,216 millon,securitesissuedby MultilateralDevelopment Banks/InternationalOrganisatonsof $11,454 millon (represented from $10,870 millon), and State-owned agencies and development banks of $13,950 millon (represented from $15,606 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 21 together with their fair value hierarchy ![]() 356 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 13. Financal instruments continued Fair value hierarchy – financal instruments measured at amortised cost The following table shows the carrying amounts and incorporates the Group’s estimate of fair values of those financal assets 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. Carryingvalue $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 banks¹ 72,663 – 72,663 – 72,663 Loans and advances to banks 44,383 – 44,383 – 44,383 of which – reverse repurchase agreements and other simlarsecuredlending 1,079 – 1,079 – 1,079 Loans and advances to customers 298,468– 42,136 256,289 298,425 of which – reverse repurchase agreements and other simlarsecuredlending 7,331 – 3,764 3,567 7,331 Investment securites² 41,325 – 41,864 – 41,864 Other assets¹ 40,068 – 40,067 1 40,068 Assets held for sale 52 –– 5252 At 31 December 2021 496,959 – 241,113 256,342 497,455 Liablites Deposits by banks 30,041 – 30,041 – 30,041 Customer accounts 474,570 – 474,645 – 474,645 Repurchase agreements and other simlarsecured borrowing 3,260 – 3,260 – 3,260 Debt securites in issue 61,293 26,073 35,503 – 61,576 Subordinatedliablites andother borrowed funds 16,646 16,811 519 – 17,330 Other liablites¹ 43,432–43,431143,432 At 31 December 2021 629,242 42,884 587,399 1 630,284 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 banks¹ 66,712 – 66,712 – 66,712 Loans and advances to banks 44,347 – 44,275 4 44,279 of which – reverse repurchase agreements and other simlarsecuredlending 1,247 – 1,265 – 1,265 Loans and advances to customers 281,699 – 29,145 251,991 281,136 of which – reverse repurchase agreements and other simlarsecuredlending 2,919 – 2,922 – 2,922 Investment securites² 19,480 – 20,349 7 20,356 Other assets¹ 40,978 – 40,978 – 40,978 Assets held for sale 83– 25 58 83 At 31 December 2020 453,299 – 201,484 252,060 453,544 Liablites Deposits by banks 30,255 – 30,288 – 30,288 Customer accounts 439,339 – 439,407 – 439,407 Repurchase agreements and other simlarsecured borrowing 1,903 – 1,903 – 1,903 Debt securites in issue 55,550 25,638 30,441 – 56,079 Subordinatedliablites andother borrowed funds 16,654 16,993 607 – 17,600 Other liablites¹ 47,228 – 47,228 – 47,228 At 31 December 2020 590,929 42,631 549,874 – 592,505 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 $17,153 millon at 31 December 2021 and $ 7,371 millon at 31 December 2020 ![]() 357 Standard Chartered – Annual Report 2021 Financal statements 13. Financal instruments continued Loans and advances to customers by client segment 1 2021 CarryingvalueFair 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 2,659 136,742 139,401 2,750 136,463 139,213 Consumer, Private & Business Banking 779 135,739 136,518 780 135,870 136,650 Central & other items – 22,54922,549 – 22,56222,562 At 31 December 2021 3,438 295,030 298,4683,530 294,895 298,425 2020 Carrying valueFair value Stage 3 $millon Stage 1and stage 2 $millon Total $millon Stage 3 $millon Stage 1and stage 2 $millon Total $millon Corporate, Commercial & Institutonal Banking² 3,042 130,415 133,457 3,109 129,961 133,070 Consumer, Private & Business Banking² 831 128,262 129,093 838 128,079 128,917 Central & other items – 19,14919,149 – 19,14919,149 At 31 December 2020 3,873 277,826 281,699 3,947 277,189 281,136 1Loans and advances include reverse repurchase agreementsand other simlar secured lending: carrying value $7,331 millon and fairvalue $7,331 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. Further, certain clients have been moved between the two new client segments. Prior period has been restated ![]() 358 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 13. Financal instruments continued Fairvalueof financal instruments Level 3 summary and signficant unobservableinputs 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: Instrument Value as at 31 December2021 Princpal valuation technique Signficantunobservable inputs Range 1 Weighted average 2 Assets $millon Liablites $millon Loans and advances to banks 9– Discounted cashflows Recovery rates 87.3%–100% 93.6% Loans and advances to customers 1,357 – Discounted cashflows Price/yield 0.2% – 11.8% 3.1% Recovery rates10.6% – 100% 87.8% Reverse repurchase agreements and other simlar secured lending 1,566– Discounted cashflows Repo curve 0.3%–3.0% 2.4% Debt securites, alternative tier one andother eligblesecurites 349 – Discounted cashflows Price/yield 5.1% – 12.4% 7.5% Recovery rates 0.01% – 1.0% 0.2% Government bonds and Treasury bills 40 – Discountedcashflows Price/yield 2.7% – 5.5% 3.7% Asset-backed securites –– Discounted cashflows Price/yield N/AN/A Equity shares(includes private equity investments) 679 – Comparable pricng/ yield EV/EBITDA multiples 6.1x–15.3x 8.6x EV/Revenuemultiples 10.1x10.1x P/E multiples 12.6x–25.3x 14.9x P/B multiples 0.4x–3.3x 1.4x P/S multiples 1.8x–2.6x 1.8x Liqudity discount 7.9%–29.2% 16.5% Discountedcashflows Discount rates 6.0%–17.4% 8.6% Option pricng model EV/Revenue multiples 4.0x–85.5x 12.1x Volatilty 55.0%–65.0% 60.3% Other assets 26 – NAV N/AN/AN/A Derivatve financal instruments of which: Foreign exchange 10 3 Option pricng modelForeignexchange option impled volatilty 3.1%– 6.1% 5.1% Discountedcashflows Foreignexchange curves (16.4)% – 57.3% 9.0% Interestrate 53 16 Discounted cashflows Interest rate curves (16.4)%-18.8% 5.0% Option pricng modelBond option impled volatilty N/AN/A Credit 24 41 Discounted cashflows Credit spreads 0.1%–11.5% 1.0% Price/yield 5.9%–7.3% 6.6% Equityand stock index 3 34 Internal pricng model Equitycorrelation 8.0% – 96.0% 70.0% Equity-FX correlation (70.0)%-85.0% (33.0)% Deposits by banks – 283 Discounted cashflows Credit spreads 0.4% – 3.0% 1.4% Price/yield 6.8%–8.3% 7.5% Customer accounts – 454 Discounted cashflows Credit spreads 1.0% – 2.0% 1.2% Interestrate curves 0.9%–5.6% 4.7% Price/yield 8.9%–12.1% 10.1% Debt securites in issue – 821 Discountedcashflows Credit spreads 0.9%–2.2% 1.0% Interestrate curves 0.9% – 5.6% 4.9% Internal pricng model Equity correlation 8.0% – 96.0% 70.0% Equity-FX correlation (70.0)%-85.0% (33.0)% Other liablites –1 Comparable pricng/ yield EV/EBITDA multiples 3.07x–9.95x 6.84x Total 4,116 1,653 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 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 ![]() 359 Standard Chartered – Annual Report 2021 Financal statements 13. Financal instruments continued Level 3 summary and signficant unobservableinputs continued Instrument Value as at 31 December 2020 Princpal valuation technique Signficant unobservable inputs Range 1 Weighted average 2 Assets $millon Liablites $millon Loans and advances to banks 200 – Discounted cashflows Price/yield 12.7%–12.9% 12.8% Loans and advances to customers 718 – Discounted cashflows Price/yield 0.9% – 11.5% 4.6% Recovery rates34.2% – 100% 83.4% Reverse repurchase agreements and other simlar secured lending 1,064 – Discounted cashflows Repo curve 1.0%–3.2% 2.8% Debt securites, alternative tier one andother eligblesecurites 171 – Discounted cashflows Price/yield 4.7%–11.5% 10.5% Government bonds and Treasury bills 40– Discounted cashflows Price/yield 2.8% – 5.5% 3.6% Asset-backed securites 87 – Discounted cashflows Price/yield 8.3%–12.0% 11.7% Recovery rates 55.0%55.0% Equity shares(includes private equity investments) 660 – Comparable pricng/ yield EV/EBITDA multiples 3.3x – 14.2x 8.7x P/E multiples N/AN/A P/B multiples 0.5x – 2.0x 0.7x P/S multiples N/AN/A Liqudity discount 20.0%20.0% Discountedcashflows Discount rates 6.0% – 15.0% 9.1% Other assets –– Derivatve financal instruments of which: Foreign exchange 32 Option pricng modelForeignexchange option impled volatilty N/AN/A Discountedcashflows Foreignexchange curves 2.7%–5.6% 4.1% Interestrate 2 26 Discounted cashflows Interest rate curves (5.2)%-18.6% 10.0% Option pricng modelBond option impled volatilty 20.0%–30.0% 24.2% Credit 2 86 Discounted cashflows Creditspreads 2.0%2.0% Equityand stock index 15 Internal pricng model Equitycorrelation 20.0%– 90.0% 49.0% Equity-FX correlation (70.0)% – 80.0% (59.0)% Deposits by banks – 146 Discounted cashflows Credit spreads 1.0% – 1.4% 1.1% Bond option impled volatilty N/AN/A Customer accounts – 21 Discounted cashflows Credit spreads 1.0%1.0% Interestrate curves (0.4)% – 7.7% 3.9% Recovery rates 55.0%55.0% Debt securites in issue – 160 Discountedcashflows Credit spreads 0.1% – 11.5% 2.3% Internal pricng model Equity correlation 20.0% – 90.0% 49.0% Equity-FX correlation (70.0)% – 80.0% (59.0)% Other liablites –– Total 2,948 446 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 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 ![]() 360 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 13. Financal instruments continued Level 3 Summary and signficant unobservableinputs 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 cashflows in a discounted cashflow 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 thecorrelation between equity instrument and foreignexchange 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 multiple will result in a favourable movement in the fair value of the unlisted firm • EV/Revenue multiple is the ratio of Enterprise Value (EV) to Revenue. An increase in EV/Revenue multiple will result in a favourable movement in the fair value of the unlisted firm • Foreign exchange curves is the term structure for forward rates and swap rates between currency pairs over a specifed period • Net asset value (NAV) is the value of an entity’s assets after deducting any liablites • Interestrate 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 in unfavourable movement in the fair value of the unlisted firm • Price-Earnings (P/E) multiple is the ratio of the market value of the equity to the net income after tax. An increase in P/E multiple will result in a favourable movement in the fair value of the unlisted firm • Price-Book (P/B) multiple is the ratio of the market value of equity to the book value of equity. An increase in P/B multiple will result in a favourable movement in the fair value of the unlisted firm • Price-Sales (P/S) multiple is the ratio of the market value of equity to sales. An increase in P/S multiple will result in a favourable movement in the fair value of the unlisted firm • Recovery rates 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 ![]() 361 Standard Chartered – Annual Report 2021 Financal statements 13. 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. Assets 2021 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 Other assets $millon Debt securites, alternative tier one and other eligble bills $millon Equity shares $millon At 1 January 2021 200 718 1,064 258 279 –8 40 381 2,948 Total gains/(losses) recognised in income statement 1 (97) 2 (24) (30) – 34 –– (114) Net tradingincome 1 (97) 2 (23) (30) – 34 –– (113) Other operatingincome ––– (1) ––––– (1) Total gains recognised in other comprehensive income (OCI) –––––––3 61 64 Fair value through OCI reserve –––––––6 63 69 Exchange difference ––––––– (3) (2) (5) Purchases 9 1,281 4,973 387 7– 91 – 123 6,871 Issues Sales – (687) (4,392) (226) (55) – (32) – (9) (5,401) Settlements (201) (302) (81) (70) –– (5) (13) – (672) Transfers out 1 – (60) –– (15) – (11) – (63) (149) Transfers in 2 – 504 – 24 – 26 5 10 – 569 At 31 December 2021 9 1,357 1,566 349 186 26 90 40 493 4,116 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 –––8 (15) – 19 –– 12 1Transfers out include loans and advances, derivatve financal instruments and equity shares where the valuation parameters became observable during the period and were transferred to Level 1 and Level 2 2Transfers in primarly relate to loans and advances, debt securites, alternative tier one and other eligble bills, derivatve financal instruments and other assets where the valuation parameters become unobservable during theyear ![]() 362 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 13. Financal instruments continued The table below analyses movements in Level 3 financal assets carried at fair value. Level 3 movement tables – financal assets continued Assets 2020 Held at fair value through profit or loss Derivatve financal instruments $millon Investmentsecurit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blebills $millon Equity shares $millon Other assets $millon Debt securites, alternative tier one and other eligblebills $millon Equity shares $millon At 1 January 2020 365 443 – 200 228 – 17 38 257 1,548 Total gains/(losses) recognised in income statement 16 (15) 1 (20) (54) – (6) –– (78) Net tradingincome 16 (15) 1 (18) (54) – (6) –– (76) Other operatingincome ––– (2) ––––– (2) Total gains recognised in other comprehensive income (OCI) –––––––6 22 28 Fair value through OCI reserve –––––––7 19 26 Exchange difference ––––––– (1) 32 Purchases 321 540 1,165 203 7– 115 36 109 2,496 Issues Sales (164) (28) (102) (237)(37) – (70) – (4) (642) Settlements (416) (567) – (68) –– (7) –– (1,058) Transfers out 1 – (174) – (37) (1) – (41)(40) (3) (296) Transfers in 2 78 519 – 217 136 –––– 950 At 31 December 2020 200 718 1,064 258 279 –840 381 2,948 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 – (6) –4 (3) –––– (5) 1Transfers out include loans and advances, derivatve financal instruments, debt securites, alternative tier one and other eligble bills and equity shares 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 movedfrom held forsale 2Transfers in primarly relate to loans and advances, debt securites, alternative tier one and other eligble bills, and equity shares where the valuation parameters become unobservable during theyear ![]() 363 Standard Chartered – Annual Report 2021 Financal statements 13. Financal instruments continued Level 3 movement tables – financal liablites 2021 Deposits by banks $millon Customer accounts $millon Debt securites in issue $millon Derivatve financal instruments $millon Other Liablites $millon Total $millon At 1 January 2021 146 21 160 119 – 446 Total losses/(gains) recognised in income statement –net trading income 8 (5) (12) (23) – (32) Issues 269 803 1,615 166 – 2,853 Settlements (145)(365) (986) (181) – (1,677) Transfers out 1 –– (48) (6) – (54) Transfers in 2 5– 92 19 1 117 At 31 December 2021 283 454 821 94 1 1,653 Total unrealised (gains) 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 ––– (14) – (14) 2020 Deposits by banks $millon Customer Accounts $millon Debt securites in issue $millon Derivatve financal instruments $millon Other Liablites $millon Total $millon At 1 January 2020 56 40 410 57 –563 Total losses/(gains) recognised in income statement –net trading income 7 (1) (10) 12 –8 Issues 136 90 557 201 – 984 Settlements (53) (116) (575) (118) – (862) Transfers out 1 –– (223)(53) – (276) Transfers in 2 –81 20 – 29 At 31 December 2020 146 21 160 119 – 446 Total unrealised losses recognised in the income statement, withn net trading income, relating tochange in fair value of liablites held at 31 December 2020 –1–1–2 1Transfers out during the year primarly relate 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 relate to derivatve financal instruments, bank deposits and debt securites in issue where the valuation parameters become unobservable during theyear ![]() 364 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 13. Financal instruments continued 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 arange of reasonably possible alternativevaluations. 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. Held at fair value through profit or lossFair 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 1,366 1,398 1,328 ––– Reverse repurchaseagreements and other simlarsecured lending 1,566 1,579 1,550 ––– Asset-backed securites –––––– Debt securites, alternative tier one and other eligble bills 349 366 332 40 41 38 Equityshares 186 205 168 493 541 442 Other assets 26 29 24 ––– Derivatve financal instruments (4) 10 (16) ––– Customer accounts (454)(447)(461) ––– Deposits by banks (283) (278) (287) ––– Debt securites in issue (821) (764) (879) ––– Other liablites (1)(1)(1) ––– At 31 December 2021 1,930 2,097 1,758 533 582 480 Financal instruments held at fair value Loans and advances 918 947 867 ––– Reverse repurchaseagreements and other simlarsecured lending 1,0641,0891,040 ––– Asset-backed securites 87 94 80 ––– Debt securites, alternative tier one and other eligble bills 171 183 159 4040 39 Equityshares 279 307 251 381 418 345 Other assets –––––– Derivatve financal instruments (111) (98) (126) ––– Customer accounts (21) (18) (24) ––– Deposits by banks (146)(146)(146) ––– Debt securites in issue (160) (154) (167) ––– Other liablites –––––– At 31 December 2020 2,0812,204 1,934 421 458 384 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 instruments Fair valuechanges 31.12.21 $millon 31.12.20 $millon Held at fair value through profit or loss Possible increase 167 123 Possible decrease (172) (147) Fair value through other comprehensiveincome Possible increase 49 37 Possible decrease (53) (37) ![]() 365 Standard Chartered – Annual Report 2021 Financal statements 14. Derivatve financalinstruments 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 cashflow or net investment hedging has been achieved, in which case the effective portion of changes in fair value is recognised withn other comprehensive income). Fair values may be obtained from quoted market prices in active markets, recent market transactions, and valuation techniques, includng discounted cashflow 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 of a foreign operationinto a formal hedge accountingrelationsh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 • Cashflow hedge: to manage interest rate or foreign exchange risk of highlyprobable future cashflows 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 wellas its riskmanagement objectve and strategy for undertaking hedge transactions. Thisis 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 cashflows 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 cashflows that are expected to affect reported profit or loss. The Group assumes that any interest rate benchmarks on which hedged item cashflows 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 transactionis no longer deemed highly probable • The Group elects to discontnuehedge accounting voluntarily 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 Group will not de-designate the hedge relationshp. 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 withoutthe hedge being discontnuedwhere there is achange in 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 effectivenessto 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. ![]() 366 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 14. Derivatve financal instruments continued Fairvaluehedge 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 accountingadjustment attributable to the hedged risk is included in net trading incometo match the hedging derivatve. Cashflow hedge The effective portion of changes in the fair value of derivatves that are designated and qualify as cashflow hedging instruments are intially recognised in other comprehensive income, accumulating in the cashflow 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 cashflow hedge reserve is released to the income statement as and when the hedged 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 cashflow hedge reserve for designated cashflow hedges even though there is uncertainty arisng from these reforms with respect to the timng and amount of the cashflows of the hedged items. Should the Group consider the hedged future cashflows 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 investmenthedge Hedges of net investments are accounted for in a simlar manner to cashflow 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 thenotional princpal amounts and the positve and negative fair valuesof derivatvefinancal instruments. Notional princpal amounts are the amounts of princpal underlying the contract at the reporting date. 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 3,750,151 30,25630,068 3,018,866 37,505 39,181 Currency swaps and options 1,412,055 11,492 11,659 1,423,520 17,14217,904 5,162,206 41,748 41,727 4,442,386 54,647 57,085 Interest rate derivatve contracts: Swaps 3,609,625 31,490 31,078 3,165,532 52,755 50,982 Forward rate agreements and options 127,287 1,3281,859 606,357 1,350 1,770 Exchange traded futures andoptions 295,192 156 132 261,372 233 184 4,032,104 32,974 33,069 4,033,261 54,338 52,936 Credit derivatvecontracts 184,953 2,289 3,125 140,437 1,702 2,990 Equity and stockindex options 8,714 136 160 6,018 110 260 Commodityderivatve contracts 113,807 1,896 1,916 67,664 1,182 774 Gross total derivatves 9,501,78479,04379,997 8,689,766 111,979 114,045 Offset – (26,598)(26,598) – (42,512)(42,512) Net totalderivatves 9,501,784 52,445 53,399 8,689,76669,467 71,533 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. ![]() 367 Standard Chartered – Annual Report 2021 Financal statements 14. Derivatve financal instruments continued 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 may enter into economic hedges that do not qualify for IAS 39 hedge accounting treatment, includng derivatves 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 (page245). The Derivatves and Hedging sections of the Risk review and Capital review (page 226) explain the Group’s risk management of derivatve contracts and applicaton ofhedging. Derivatves held for hedging 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psat the reporting date. Included in the table above are derivatves held for hedging purposes as follows: 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 asfair value hedges: Interestrate swaps 78,666 957 338 70,846 1,500 712 Currency swaps 2,262 43 151 4,136 25 179 80,928 1,000 489 74,982 1,525 891 Derivatves designated ascashflow hedges: Interestrate swaps 10,381 60 74 9,347 83 129 Forward foreign exchange contracts 72 2– 164 21 – Currency swaps 12,214293 51 9,935 12 340 22,667 355 125 19,446 116 469 Derivatves designated asnet investmenthedges: Forward foreign exchange contracts 13,198 88 79 5,376 –383 Total derivatvesheld forhedging 116,793 1,443 693 99,804 1,641 1,743 Fairvaluehedges 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 interest and foreign currency rates. The Group uses interest rate swaps to exchange fixed rates for floating rates on funding to match floating rates received on assets, or exchange fixed rates on assets to match floating rates paid on funding. The Group further uses cross-currency swaps to match the currency of the issued debt or held asset with that of the entity’s functional currency. Hedge ineffectveness from fairvalue hedges is driven by cross currency basis risk. The amortisaton of fairvalue hedge adjustments for hedged items no longerdesignated is recognised in net trading income.In futureperiods, 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 interestand currencyrisk. ![]() 368 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 14. Derivatve financal instruments continued Fair value hedges continued Hedging instruments and ineffectveness Interestrate 1 2021 Notional $millon Carrying amount Change 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 Interestrate swaps – issued notes 35,310 575212 (891) (9) Interest rate swaps – loans and advances 2,079 19 1313 – Interestrate swaps – debt securites and other eligble bills 41,277 363 113 717 (1) Interestand currency risk 1 Cross-currency swaps –subordinated notes issued 1,469 – 150 (139) 6 Cross-currency swaps –debt securites andother eligble bills 793 43 1 50 – Total at 31 December 2021 80,928 1,000 489 (250) (4) Interestrate 1 2020 Notional $millon Carrying amountChange in fair value used to calculatehedge ineffectveness $millon Ineffectiveness recognised in profit or loss $millon Asset $millon Liablity $millon Interestrate swaps – issued notes 29,598 1,475 14 858 17 Interest rate swaps – loans and advances 2,535 2 38 (27) – Interestrate swaps – debt securites and other eligble bills 38,713 23 660 (934) 3 Interestand currencyrisk 1 Cross-currency swaps –subordinated notes issued 3,329 17 146 267 5 Cross-currency swaps –debt securites andother eligble bills 807 8 33 (70) (2) Total at 31 December 2020 74,982 1,525 891 94 23 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 inthe 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 – 35,206 – 31 1,029 862 Debt securites and other eligble bills 41,637 – (363) – (769) (19) Loans and advances to customers 2,072 – (7) – (14) (1) Total at 31 December 2021 43,709 35,206 (370) 31 246 842 2020 CarryingAmount Accumulatedamount of fair value hedge adjustments included in the carrying amount Change in fair value usedfor 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 – 33,737 – 1,096 (1,103) 856 Debt securites and other eligble bills 40,663– 577 – 1,005 (92) Loans and advances to customers 2,561 – 32 – 27 – Total at 31 December 2020 43,224 33,737 609 1,096 (71) 764 1This represents a credit/(debit) to the balance sheet value ![]() 369 Standard Chartered – Annual Report 2021 Financal statements 14. Derivatve financal instruments continued Income statement impact offair value hedges 2021 $millon Income/ (expense) 2020 $millon Income/ (expense) Change in fair value of hedging instruments (250) 94 Change in fair value of hedged risks attributable to hedged items 246 (71) Net ineffectveness (loss)/gainto net trading income (4) 23 Amortisaton gain/(loss) to netinterest income 31 (31) Cashflow hedges The Group has exposure to market movements in future interest cashflows on portfolios of customer accounts, debt securites and loans and advances to customers. The amounts and timng of future cashflows, 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 cashflows on assets and liablites that have floating rates of interest by exchanging the floating rates for fixed rates. It also uses foreign exchange contracts and currency swaps to manage the 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 cashflows arisng from changes in the designated benchmark interest rate. Hedging instruments andineffectveness 2021 Notional $millon Carrying amount Change in fair value used to calculate hedge ineffectveness $millon Gain recognised in OCI $millon Ineffectiveness gain/(loss) recognised in net trading income $millon Amount reclassifed from reservesto income $millon Asset $millon Liablity $millon Interestrate risk Interestrate swaps 10,381 60 74 7777 –– Currency risk Forward foreign exchange contract 72 2–22–– Cross-currency swaps 12,214293 51 297297 –– Total as at 31 December 2021 22,667 355 125 376376 –– 2020 Notional $millon Carrying amount Change in fair value used to calculate hedge ineffectveness $millon (Loss)/gain recognised in OCI $millon Ineffectiveness gain/(loss) recognised in net trading income $millon Amount reclassifed from reservesto income $millon Asset $millon Liablity $millon Interestrate risk Interestrate swaps 9,347 83 129 (45)(45) –– Currency risk Forward foreign exchange contract 164 21 – 1414 –– Cross-currency swaps 9,935 12 340 (261)(261) –– Total as at 31 December 2020 19,446 116 469 (292)(292) –– ![]() 370 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 14. Derivatve financal instruments continued Hedged items in cashflow hedges 2021 Change in fair value used for calculating hedge ineffectveness $millon Cashflow hedge reserve $millon Cumulative balance in the cash flowhedge reservefrom de-designated hedge relationshps $millon Customer accounts (95) (10) (4) Debt securites and other eligble bills (231) –– Loans and advances to customers 23 (8) 1 Forecast cashflowcurrency hedge ––– Intragroup lendingcurrency hedge (73) 1– Intragroup borrowing currency hedge ––– Total at 31 December 2021 (376) (17) (3) 2020 Change in fair value usedfor calculating hedge ineffectveness $millon Cashflow hedge reserve $millon Cumulative balance in the cash flow hedge reservefrom de-designated hedge relationshps $millon Customer accounts 105 (110) (8) Debt securites and other eligble bills 92 16 – Loans and advances to customers (45) 34 1 Forecast cashflowcurrency hedge (14) 21 – Intragroup lendingcurrency hedge 169 5– Intragroup borrowing currency hedge (15) 2– Total at 31 December 2020 292 (32) (7) Impact of cashflow hedges on profit and loss andother comprehensive income 2021 Income/ (expense) $millon 2020 Income/ (expense) $millon Cashflow hedge reserve balance as at 1 January (52) (59) Loss recognised in other comprehensive income on effective portion of changes in fair value of hedging instruments (1) (25) Gain reclassifed to income statement when hedged item affected net profit 21 17 Taxation (charge)/credit relating to cashflow hedges (2) 15 Cashflow hedge reserve balance at 31 December (34) (52) Net investmenthedges 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. ![]() 371 Standard Chartered – Annual Report 2021 Financal statements 14. Derivatve financal instruments continued Hedging instruments andineffectveness 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 13,198 88 79 116116 –– 2020 Notional $millon Carrying amount Change in fair value used to calculate hedge ineffectveness $millon Changesin 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 5,376 –383 (286)(286) –– 1These derivatve forward currency contracts have a maturity of less than one year. The hedges are rolled on a periodc basis Hedged items in net investment hedges 2021 Change inthe value used for calculating hedge ineffectveness $millon Translation reserve $millon Balances remainng in the translation reservefrom hedging relationshps for which hedge accounting is no longer applied $millon Net investments (116) 9– 2020 Changein the value usedfor calculating hedge ineffectveness $millon Translation reserve $millon Balances remainng in the translation reservefrom hedging relationshpsfor which hedge accounting isno longer applied $millon Net investments 286 (383) – Impact of netinvestmenthedges onother comprehensive income 2021 Income/ (expense) $millon 2020 Income/ (expense) $millon Gains/(losses)recognisedin other comprehensiveincome 118 (287) ![]() 372 StandardChartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 14. Derivatve financal instruments continued Maturity of hedging instruments Fairvalue hedges 2021 Less than one month More than one month and less than one year One to fiveyears More than five years Interestrate swap Notional $millon 3,186 7,175 49,386 18,919 Average fixed interest rate USD 2.00% 0.72% 1.05% 1.43% EUR – 0.12%(0.17)%(0.11)% Cross-currency swap Notional $millon 48 1,492 722 – Average fixed interest rate (to USD) EUR – 1.29% 0.54% – KRO – 0.09% –– Average exchange rate EUR/USD – 0.78 0.80 – KRO/USD – 1,134.50 –– Cashflow hedges Interestrate swap Notional $millon –4,443 4,750 1,188 Average fixed interest rate HKD – 0.57% 0.41% – USD – 0.08% 2.13% 1.29% Cross-currency swap Notional $millon 152 10,2601,802 – Average fixed interest rate HKD – 0.73% –– KRO – 1.09% –– JPY – (0.13)% –– TWD (0.33)%(0.33)% –– Average exchange rate HKD/USD – 7.78 –– KRO/USD – 1,158.03 –– JPY/USD – 109.05 –– TWD/USD 27.98 27.85 –– Forward foreignexchange contracts Notional $millon –– 72 – Average exchange rate CLO/USD –– 868.10 – Net investmenthedges Foreign exchange derivatves Notional $millon 5,234 7,964 –– Average exchange rate CNY¹/USD 6.57 ––– KRW¹/USD 1,144.04 1,185.10 –– TWD/USD 27.5527.34 –– HKD/USD – 7.05 –– 1Offshorecurrency ![]() 373 Standard Chartered – Annual Report 2021 Financal statements 14. Derivatve financal instruments continued Maturity of hedging instruments continued Fairvalue hedges 2020 Less than one month More than one month and lessthan one year One to five years More than five years Interestrate swap Notional $millon 2,334 13,908 40,768 13,836 Average fixed interest rate USD 1.44% 1.28% 1.47% 1.64% EUR –1.86% 1.49% 1.72% Cross-currency swap Notional $millon 837 1,384 1,915 – Average fixed interest rate (to USD) EUR 0.25% 1.63% 3.43% – JPY (0.12)% – (0.23)% – Average exchange rate EUR/USD 0.82 0.74 0.79 – JPY/USD 109.93 – 107.91 – Cashflow hedges Interestrate swap Notional $millon – 3,428 4,686 1,233 Average fixed interest rate HKD – 1.46% 0.62% – USD – 0.96% 1.80% 1.32% Cross-currency swap Notional $millon – 7,822 2,084 29 Average fixed interest rate HKD – 1.15% –– KRO – 0.79% –– TWD¹ – (0.63)% –– JPY – (0.21)% (0.16)% – Average exchange rate HKD/USD – 7.75 –– KRO/USD – 1,174.75 –– TWD¹/USD – 29.88 –– JPY/USD – 107.54107.12 – Forward foreignexchange contracts Notional $millon 27 137 –– Average exchange rate GBP/USD 0.840.84 –– Net investmenthedges Foreign exchange derivatves Notional $millon 5,376 ––– Average exchange rate CNY¹/USD 7.07 ––– KRW¹/USD 1,197.02 ––– TWD¹/USD 28.89––– 1Offshorecurrency ![]() 374 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 14. Derivatve financal instruments continued Interestrate 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 cashflows 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 hedgeassessment • Determinng whether a cash flow or forecast transaction for a cashflow hedge is highly probable. However, the Group otherwise assesses whether the cashflows are considered highly probable • Determinng when cumulative balances in the cashflow hedgereservefrom de-designated hedges should berecycled to the income statement 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 LIBORs, 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 werelinked to IBOR reference rates: Fair value hedges $millon Cashflow hedges $millon Total $millon Weighted average exposure Years Interestrate swaps USD LIBOR 46,615 2,636 49,251 3.6 GBP LIBOR 1,444 – 1,444 0.1 JPY LIBOR 637 – 637 0.2 SGD SOR –––– 48,696 2,636 51,332 3.5 Cross-currency swaps USD LIBOR vs fixed rate foreign currency 2,262 3,681 5,943 0.9 Total notional of hedging instruments in scope of IFRS amendments as at 31 December 2021 50,958 6,317 57,275 3.2 ![]() 375 Standard Chartered – Annual Report 2021 Financal statements 14. Derivatve financal instruments continued Fair value hedges $millon Cashflow hedges $millon Total $millon Weighted average exposure Years Interestrate swaps USD LIBOR 45,478 3,078 48,556 3.2 GBP LIBOR 1,988 89 2,077 10.9 JPY LIBOR 2,337 – 2,337 3.0 SGD SOR 483–4831.2 50,286 3,167 53,453 3.5 Cross-currency swaps USD LIBOR vs fixed rate foreign currency 4,136 – 4,136 1.3 Total notional of hedging instruments in scope of IFRS amendments as at 31 December 2020 54,422 3,167 57,589 3.4 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. Under this methodology, if an interest rate swap 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 order to continuethese hedgerelationshps. 15. Loans and advances to banks and customers Accounting policy Refer to Note 13 Financal instruments for the relevant accounting policy. 2021 $millon 2020 $millon Loans and advances to banks 44,410 44,364 Expected creditloss (27) (17) 44,383 44,347 Loans and advances to customers 304,122 288,312 Expected creditloss (5,654) (6,613) 298,468 281,699 Total loans and advances to banks and customers 342,851 326,046 The Group has outstanding residental mortgage loans to Korea residents of $21.7 billon (31 December 2020: $22.1 billon) and Hong Kong residents of $34.5 billon (31 December 2020: $32 billon). Analysis of loans and advances to customers by geographic region and client segment together with their related imparment provisons are set out withn the Risk review and Capital review (pages 210). ![]() 376 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 16. Reverse repurchase and repurchase agreements includng other simlar lending andborrowing 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 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 areconsidered encumbered as the Group cannotpledge these to obtainfunding. Reverse repurchase agreements andother simlar secured lending 2021 $millon 2020 $millon Banks 19,806 19,452 Customers 68,613 48,119 88,419 67,571 Of which: Fair value through profit or loss 80,009 63,405 Banks 18,727 18,205 Customers 61,282 45,200 Held at amortised cost 8,410 4,166 Banks 1,079 1,247 Customers 7,331 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) 118,636 99,676 Securites and collateral which can be repledged or sold (at fair value) 117,408 99,238 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 ![]() 377 Standard Chartered – Annual Report 2021 Financal statements 16. Reverse repurchase and repurchase agreements includng other simlar lending andborrowing continued Repurchase agreements and other simlar secured borrowing 2021 $millon 2020 $millon Banks 7,054 6,647 Customers 58,594 43,918 65,648 50,565 Of which: Fair value through profit or loss 62,388 48,662 Banks 5,107 6,107 Customers 57,281 42,555 Held at amortised cost 3,260 1,903 Banks 1,947 540 Customers 1,313 1,363 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-balancesheet Debt securites and other eligble bills 3,427 2,655 2,601 – 8,683 Off-balancesheet Repledged collateral received ––– 57,87957,879 At 31 December 2021 3,427 2,655 2,601 57,879 66,562 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 On-balancesheet Debt securites and other eligble bills 2,664 2,108 355 – 5,127 Off-balancesheet Repledged collateral received ––– 46,20946,209 At 31 December 2020 2,664 2,108 355 46,209 51,336 ![]() 378 StandardChartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 17. 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tionsof subsidaries is includedin intangble assets. Goodwillon acquistions of associatesis included inInvestments 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 380). 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 isalso appliedin determinaton of cash-generating units. Estimates include forecasts used for determinng cash flows for CGUs, the appropriate long-term growth rates to use and discount rateswhich factor in country risk-free rates and applicablerisk premiums. The Group undertakesan 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 asset’s 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 toreduce 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 generateprobablefuture economic benefits, these estimates include: costsavings,income increases, balance sheet improvements, improvedfunctionalty or improvedasset safeguarding. ![]() 379 Standard Chartered – Annual Report 2021 Financal statements 17. Goodwill and intangble assets continued 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 January 2,617 473 3,682 6,772 3,079 461 3,239 6,779 Exchange translation differences (22) (14) (73) (109) 27 16 60 103 Additons –– 989989 –– 790790 Disposals –––– –– (4)(4) Impairment –––– (489) –– (489) Amounts written off – (2) (134) (136) – (4)(403)(407) At 31December 2,595 457 4,464 7,516 2,617 473 3,682 6,772 Provisonfor amortisaton At 1 January – 451 1,258 1,709 – 431 1,058 1,489 Exchange translation differences – (22) (20) (42) – 15 21 36 Amortisaton –8 461 469 –5 515 520 Impairment charge ––44 –– 1717 Disposals –––– –– (4)(4) Amounts written off –– (95)(95) –– (349)(349) At 31December – 437 1,608 2,045 – 451 1,258 1,709 Net bookvalue 2,595 20 2,856 5,471 2,617 22 2,424 5,063 At 31 December 2021, accumulated goodwill imparment losses incurred from 1 January 2005 amounted to $3,317 millon (31 December 2020: $3,317 millon), of which $Nil was recognised in 2021 (31 December 2020: $489 millon). 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 $88 millon for the year when compared to the previous estimate. Goodwill Outcome ofimpa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 six indvidual country CGUs representing RetailBanking (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 ($478 millon), 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 cashflow projectons and an estimated terminal value based on a perpetuity value after year five. The cashflow projectons are based on forecasts approved by management up to 2026. The perpetuity terminal value amount is calculated using year five cashflows using long-term GDP growth rates. All cashflows are discounted using discount rates which reflect market rates appropriate to the CGU. The 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. ![]() 380 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 17. Goodwill and intangble assets continued Goodwill continued Cash-generating unit 1 2021 2020 Goodwill $millon Pre-Tax discount rates per cent Long-term forecast GDP growthrates per cent Goodwill $millon Pre-Tax discount rates per cent Long-term forecast GDP growth rates per cent Country CGUs Asia 1,073 1,079 Hong Kong 357 10.6 2.5 359 11.1 2.7 Taiwan 361 10.4 2.0 360 10.6 2.1 Singapore 341 11.6 2.4 346 12.03.0 Bangladesh 14 15.0 7.3 14 19.6 7.2 Africa & Middle East 92 97 Pakistan 43 22.2 6.0 48 20.2 5.0 Bahrain 49 13.1 3.0 49 14.2 2.8 Global CGUs 1,430 1,441 Global Private Banking 84 12.4 2.5 84 12.9 3.6 Corporate, Commercial & Institutonal Banking 1,346 12.5 3.0 1,357 13.4 3.0 2,595 2,617 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 cashflows as economic uncertainty caused by the COVID-19 pandemic has abated and the change in CGUs as described above. 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), Hsinchu (now amalgamated into Standard Chartered Bank (Taiwan) Limted), Pembroke, American Express Bank and ABSA’s custody business in Africa. Maintenance intangble assets represent the value in the difference between the contractual right under acquired leases to receiveaircraft in a specifed maintenance conditon at the end of the lease and the actual physical conditon of the aircraft at the date of acquistion. The acquired intangbles are amortised over periods from four years to a maximum of 16 years. The constituents are as follows: 2021 $millon 2020 $millon Acquiredintangbles comprise: Aircraft maintenance 5 6 Brand names 1 – Customer relationshps 3 7 Licences 11 9 Net bookvalue 20 22 ![]() 381 Standard Chartered – Annual Report 2021 Financal statements 18. 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 asset’s 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rment testing. 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ngs•up to 50 years • Leasehold improvements life of lease•up to 50 years • Equipment and motor vehicles•three to 15 years • Aircraft•up to 18 years • Ships•up to 15 years Where the Group is a lessee of a right-of-use asset, the leased assets are 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 19. All other repairs and maintenance are charged to the income statement during the financal period in which they are incurred. Signficant accountingestimates and judgements The carrying amount of the Group’s aircraft leasing portfolio is based on the applicaton of judgement and estimates to determine the most appropriate recoverable amount for each aircraft when assessing for imparment. Estimates involve the appropriate cash flows, discount rates and residual values used in determinng a value-in-use for aircraft, and judgement is required in determinng the appropriate observable third-party valuations to use for assessing current market value. ![]() 382 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 18. Property, plant and equipment continued 2021 Premises $millon Equipment $millon Operating lease assets $millon Leased premises assets $millon Leased equipment assets $millon Total $millon Cost or valuation At 1 January 2,048 874 5,233 1,577 31 9,763 Exchange translation differences (63) (13) – (38) (1) (115) Additons 1 107 135 110 373 4 729 Disposals and fully depreciated assets written off 2 (100) (95) (1,095)(58) (1) (1,349) Transfers to assets held for sale (12) –––– (12) As at 31 December 1,980 901 4,248 1,854 33 9,016 Depreciaton Accumulated at 1 January 770594 1,336536 12 3,248 Exchange translation differences (15) (14) – (15) – (44) Charge for the year 74 121 213 296 8 712 Impairment charge –– 64 42 – 106 Attributable toassets soldor written off 2 (31) (90) (458)(40) – (619) Transfers to assets held for sale (3) –––– (3) Accumulated at 31 December 795 611 1,155 819 20 3,400 Net book amountat 31 December 1,185 290 3,0921,036 13 5,616 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 $351 millon on page 312 2Disposals for property, plant and equipment during the year of $816 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 Operating lease assets $millon Leased premises assets $millon Leased equipment assets 3 $millon Total $millon Cost or valuation At 1 January 2,058 800 4,461 1,493 23 8,835 Exchange translation differences 406 (2) 11 4 59 Additons 36 121 952 155 6 1,270 Disposals and fully depreciated assets written off (83)(53)(178)(82) (2) (398) Transfers to assets held for sale (3) –––– (3) As at 31 December 2,048 874 5,233 1,577 31 9,763 Depreciaton Accumulated at 1 January 737 518 1,067 286 7 2,615 Exchange translation differences 13 6––– 19 Charge for the year 73 122 229 300 7 731 Impairment charge –– 132 –– 132 Attributable toassets sold,transferred or written off (52)(52)(92) (50) (2) (248) Transfers to assets held for sale (1) –––– (1) Accumulated at 31 December 770 594 1,336 536 12 3,248 Net book amount at 31 December 1,278 280 3,897 1,041 19 6,515 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 $1,270 millon on page312 2Disposals for property, plant and equipment during the year of $178 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 3Aircraft have been impared due to a decrease in the market values, particularly wide-body variants ![]() 383 Standard Chartered – Annual Report 2021 Financal statements 18. Property, plant and equipment continued Operating lease assets The operating lease assets subsection of property, plant and equipment is the Group’s aircraft operating leasing business, consistng of 97 commercial aircraft at year end, of which 94 are narrow-bodies and three are wide-bodies. The leases are classifed as operating leases as they do not transfer substantially all the risks and rewards incdental to the ownership of the assets to the lessee, and rental income from operating lease assets is disclosed in Note 6. At 31 December 2021, these assets had a net book value of $3,092 millon (31 December 2020: $3,897 millon). Under these leases the lessee is responsible for the maintenance and servicng of the aircraft during the lease term while the Group receives rental income and assumes the risks of the residual value of the aircraft at the end of the lease. Inital lease terms range in length up to 12 years, while the average remainng lease term at 31 December 2021 is approximately five years. By varying the lease terms, the effects of changes in cyclical market conditons at the time aircraft become eligble for re-lease are mitgated. The Group will look at entering into a lease extension with existng lessees well in advance of lease expiry in order to minmise the risk of aircraft downtime and aircraft transiton costs. Aircraft may also be sold from time to time to manage the compositon and averageage of the fleet. A series of stress sensitvites conducted on the narrow-body portfolio highlght the two biggest risks remain either an increase in the discount rate or a substantial number of airlne clients defaulting. A sensitvity test was performed on the narrow-body portfolio assuming a discount rate increase of 100 basis points, from a base range of 4.5%-5.5%, (31 December 2020: 4.5%-6%), which resulted in a possible increase in imparment of $26 millon. A further sensitvity test considered that the lessees with lower credit ratings defaulted on their current leases. This scenario would result in a possible increase in imparment of $75 millon. During 2020 the Group offered payment concessions to customers as a result of the COVID-19 pandemic, allowing them to defer lease payments for between three and nine months. For customers who have not defaulted on their obligatons, deferrals do not affect income recogniton provided the total lease rentals and lease expiry date are unchanged. For customers who have defaulted, any income not covered by collateral is provided against. The provison is reversed on receipt of the deferred payment. 2021 Minmum lease receivables under operating leases falling due: $millon 2020 Minmumlease receivables under operating leases falling due: $millon Withn one year 330 478 One to two years 285 436 Two to three years 251 374 Three to four years 197 328 Four to five years 153 251 After five years 411 697 1,627 2,564 ![]() 384 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 19. Leased assets 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 estimates were the determinaton of incremental borrowing rates in the respective economic environments. The Group uses third-party broker quotes to estimate its USD cost of senior unsecured borrowing, then uses cross-currency swap 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 income statement. The total cash outflow during the year for premises and equipment leases was $331 millon (2020: $352 millon). 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 (2020: $1 millon). The right-of-use asset balances and depreciaton charges are disclosed in Note 18. The lease liablity balances are disclosed in Note 23 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: 2021 One year or less $millon Between one year and two years $millon Between two years and fiveyears $millon More than fiveyears $millon Total $millon Other liablites – lease liablites 293 247 521 175 1,236 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es 368 280 559 188 1,395 ![]() 385 Standard Chartered – Annual Report 2021 Financal statements 20. Other assets Accounting policy Refer to Note 13 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. Other assets include: 2021 $millon 2020 $millon Financal assets held at amortised cost (Note 13): Hong Kong SAR Government certifcates of indebtedness (Note23)¹ 7,284 7,295 Cash collateral 9,217 11,757 Acceptances and endorsements 4,930 5,868 Unsettled tradesand other financal assets 18,637 16,058 40,068 40,978 Non-financal assets: Commoditesand emissons certifcates 2 9,265 7,239 Other assets 599 471 49,932 48,688 1The Hong Kong SAR Government certifcates of indebtedness are subordinated to the claims of other parties in respect of bank notes issued 2Commodit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 ![]() 386 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 21. 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 13 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 2022. Following a decison by the Board of Directors to exit the ship leasing business withn CCIB, the shippng portfolio is classifed as ‘Held for sale’. The financal assets reported below are classifed under Level 1 $ nil (31 December 2020: $nil), Level 2 $nil (31 December 2020: $25 millon ) and Level 3 $95 millon (31 December 2020: $63 millon). 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 Equityshares 23 – Financal assets held at amortised cost 52 83 Loans and advances to customers 52 83 Property, plantand equipment 239 358 Vessels 230 354 Others 9 4 334 446 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). ![]() 387 Standard Chartered – Annual Report 2021 Financal statements 22. Debt securites in issue Accounting policy Refer to Note 13 Financal instruments for the relevant accounting policy. 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 23,896 37,397 61,293 21,020 34,530 55,550 Debt securites in issue included withn: Financal liablites held at fair value through profit or loss (Note 13) – 5,5975,597 – 5,8115,811 Total debt securites in issue 23,896 42,994 66,890 21,020 40,341 61,361 In 2021, the Company issued a total of $6.8 billon senior notes for general business purposes of the Group as shown below: Securites $millon $500 millon fixed-rate senior notes due 2025 (callable 2024) 500 $500 millon floating rate senior notes due 2025 (callable 2024) 1 500 EUR 500 millon fixed-rate senior notes due 2029 (callable 2028) 569 $1,000 millon fixed-rate senior notes due 2025 (callable 2024) 1,000 $1,250 millon fixed-rate senior notes due 2032 (callable 2031) 1,250 $1,500 millon fixed-rate senior notes due 2025 (callable 2024) 1,500 $1,500 millon fixed-rate senior notes due 2027 (callable 2026) 1,500 Totalsenior notes issued 6,819 In 2020, the Company issued a total of $6.8 billon senior notes for general business purposes of the Group as shown below: Securites $millon $2,000 millon fixed-rate senior notes due 2026 (callable 2025) 2,000 $2,000 millon fixed-rate senior notes due 2031 (callable 2030) 2,000 $1,000 millon fixed-rate senior notes due 2023 (callable 2022) 1,000 EUR 750 millon fixed-rate senior notes due 2028 (callable 2027) 917 $500 millon floating rate senior notes due 2023 (callable 2022) 500 HKD 1,081 millon fixed-rate senior notes due 2023 (callable 2022) 139 $100 millon zero coupon callable bond due 2050 (callable 2025) 100 $80 millon zero coupon callable bond due 2050 (callable 2023) 80 JPY 5,500 millon fixed-rate senior notes due 2023 (callable 2022) 53 $50 millon zero coupon callable bond due 2050 (callable 2023) 50 Total senior notes issued 6,839 1These notes will be subject to remediaton under interest rate benchmark reform. Please refer to Note 13 for further informaton on this ![]() 388 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 23. Other liablites Accounting policy Refer to Note 13 Financal instruments for the relevant accounting policy for financal liablites, Note 19 Leased assets for the accounting policy for leases, and Note 31 Share-based payments for the accounting policy for cash-settled share- based payments. 2021 $millon 2020 $millon Financal liablites held at amortised cost (Note 13) Notes incirculaton 1 7,284 7,295 Acceptances and endorsements 4,930 5,868 Cash collateral 8,092 10,136 Property leases² 1,170 1,127 Equipmentleases² 17 20 Unsettled tradesand other financal liablites 21,940 22,782 43,433 47,228 Non-financal liablites Cash-settledshare-based payments 55 41 Other liablites 826 635 44,314 47,904 1Hong Kong currency notes in circulaton of $7,284 millon (31 December 2020: $7,295 millon) that are secured by the Government of Hong Kong SAR certifcates of indebtedness of the same amount included in ‘Other assets’ (Note 18) 2Other 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 19 24. 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 about uncertain future conditons or events. 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 outcomeof regulator reviews. 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 January 367 99466 317 132 449 Exchange translation differences 9 (1) 8 (50) (3)(53) Transfer –22 –99 Charge against profit (30) 54 24 103 22 125 Provisons utilsed – (47)(47) (3) (61)(64) At31 December 346 107 453 367 99466 Provison for credit commitment comprises those undrawn contractually committed facilties where there is doubt as to the borrower’s abilty to meet their repayment obligatons. Other provisonsconsist mainly of provisonsfor regulatory settlements and legal claims, the natureof which are described in Note 26. ![]() 389 Standard Chartered – Annual Report 2021 Financal statements 25. 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. ‘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 balance sheet date. The contract or underlying princpal amounts indcate the volume of business outstanding and do not represent amounts at risk. 2021 $millon 2020 $millon Financal guarantees and trade credits Financal guarantees, trade credits and irrevocable letters of credit 58,535 53,832 58,535 53,832 Commitments Undrawn formal standby facilties, credit lines and other commitments to lend One year and over 69,542 68,848 Less than one year 27,306 24,500 Unconditonallycancellable 61,675 60,055 158,523 153,403 Capital commitments Contracted capital expenditure approved by the directors but not provided for in these accounts 1 124 135 1Of which the Group has commitments totalling $96 millon to purchase aircraft for delivery in 2022 (31 December 2020: $110 millon). Pre-delivery payments of $26 millon (2020: $nil) have been made in respect of these commitments As set out in Note 26, 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. ![]() 390 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 26. 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ngfrom such legaland regulatorymatters. The Group receiveslegalclaims against it ina number of jursdictonsand is subject to regulatory andenforcement 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. Since October 2020, two lawsuits have been filed in the English High Court against Standard Chartered PLC on behalf of more than 300 shareholders in relationto alleged untrue and/or misleadng statements and/or omissons ininformaton published by Standard Chartered PLC in its rights issue prospectuses of 2008, 2010 and 2015 and/or public statements regarding the Group’s historc sanctions, money laundering and financal crime complianceissues. These lawsuits have been brought under sections 90 and 90A of the Financal Services and Markets Act 2000. Section 90 permits shareholders to pursue a claim if they acquire shares, and suffer loss, as a result of misleadng statements in, or omissons of necessary informaton from, a prospectus or listng particulars. Section 90A permits shareholders to pursue a claim if they acquire, hold or dispose of shares in reliance upon a knowinglyor recklessly made untrue or misleadngstatement in, or dishonest omisson of required informaton from published informaton, orif there has been a dishonest delayin publishng relevant informaton. These lawsuits areat an early procedural stage. As the Group has previously disclosed, 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 possible outcomes in this litgation. Based on the facts currently known, it is not possible for the Group to predict the outcome of these lawsuits. ![]() 391 Standard Chartered – Annual Report 2021 Financal statements 27. 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 13 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– issuedbysubsidary undertakings £200 millon 7.75 per cent subordinated notes (callable 2022)¹ 48 52 $700 millon 8.0 per cent subordinated notes due 2031 (callable 2026)¹ 418 454 466 506 Subordinated loan capital – issued by the Company 2 Primary capitalfloating rate notes: $400 millonfloating-rateundated subordinated notes 3 16 16 $300 millon floating-rate undated subordinated notes (Series 2) 3 69 69 $400 millonfloating-rateundated subordinated notes(Series 3) 3 50 50 $200 millon floating-rate undated subordinated notes (Series4) 3 26 26 £150 millon floating-rate undated subordinated notes – 16 £900 millon 5.125 per cent subordinated notes due 2034 848 930 $2 billon 5.7 per cent subordinated notes due 2044 2,361 2,370 $2 billon 3.95 per cent subordinated notes due 2023 2,027 2,066 $1 billon 5.7 per cent subordinated notes due 2022 1,000 1,001 $1 billon 5.2 per cent subordinated notes due 2024 1,049 1,141 $750 millon 5.3 per cent subordinated notes due 2043 788 785 €750 millon 3.625 per cent subordinated notes due 2022 868 955 €500 millon 3.125 per cent subordinated notes due 2024 585 646 SGD 700 millon 4.4 per cent subordinated notes due 2026 (callable 2021) – 530 $1.25 billon 4.3 per cent subordinated notes due 2027 1,250 1,310 $1 billon 3.516 per cent subordinated notes due 2030 (callable 2025) 1,012 997 $500 millon 4.886 per cent subordinated notes due 2033 (callable 2028) 543 499 £ 96.035 millon 7.375% non-cumulativeirredeemablepreference shares (reclassed as Debt) 129 134 £ 99.250 millon 8.25%non-cumulative irredeemable preference shares(reclassed as Debt) 134 138 € 1 billon 2.5 per cent subordinated debt 2030 1,123 1,217 $1.25 billon 3.265 per cent subordinated notes due 2036 1,188 1,252 €1 billon 1.200 per cent fixed rate reset dated subordinated notes due 2031 (callable 2026) 1,114 – 16,180 16,148 Total for Group 16,646 16,654 1Issued by Standard Chartered Bank 2In the balance sheet of the Company the amount recognised is $16,162 millon (2020: $16,069 millon), with the difference being the effect of hedge accounting achieved on a Group basis 3These notes will be subject to remediaton under interest rate benchmark reform. Please refer to Note 13 for further informaton on this ![]() 392 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 27. Subordinated liablites and other borrowed funds continued 2021 USD $millon GBP $millon EUR $millon Others $millon Total $millon Fixed-rate subordinated debt 11,636 1,160 3,689 – 16,485 Floating-rate subordinateddebt 161 ––– 161 Total 11,797 1,160 3,689 – 16,646 2020 USD $millon GBP $millon EUR $millon Others $millon Total $millon Fixed-rate subordinated debt 11,875 1,254 2,818 530 16,477 Floating-rate subordinateddebt 161 16 –– 177 Total 12,036 1,270 2,818 530 16,654 Redemptions and repurchases during the year On 26 January 2021, Standard Chartered PLC exercised its right to redeem SGD 700 millon 4.4 per cent subordinated notes 2026 (callable 2021). On 31 March 2021, Standard Chartered Bank exercised its right to redeem the remainng USD 16 millon £ 150 millon undated primary capital floating rate notes. Issuance duringtheyear On 23 March 2021, Standard Chartered PLC issued EUR 1 billon 1.2 per cent fixed rate reset dated subordinated notes due 2031 (callable 2026). 28. 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. Number of ordinary shares millons Ordinary share capital 1 millons Ordinary share premium millons Preference share premium 2 millons Totalshare capital and share premium millons Other equity instruments millons At 1 January 2020 3,196 1,598 3,986 1,494 7,078 5,513 Cancellationof shares includng share buy-back (40) (20) –– (20) – Additonal Tier 1 equity issuance ––––– 992 Additonal Tier1 equity redemption ––––– (1,987) At 31 December 2020 3,156 1,578 3,986 1,494 7,058 4,518 Cancellationof shares includng share buy-back (77) (39) –– (39) – Additonal Tier 1 equity issuance ––––– 2,728 Additonal Tier1 redemption ––––– (992) Other movements ––3–3– At 31 December 2021 3,079 1,539 3,989 1,494 7,022 6,254 1Issued and fully paid ordinary shares of 50 cents each 2Includespreference sharecapital of$75,000 ![]() 393 Standard Chartered – Annual Report 2021 Financal statements 28. Share capital, other equity instruments and reserves continued Share buy-back On 25 February 2021, the Group announced the buy-back programme for a share buy-back of its ordinary shares of $0.50 each. Nominal value of share purchases was $19 millon, and the total consideraton paid was $255 millon (includng $2 millon of fees and stamp duty). The total number of shares purchased was 37,148,399 representing 1.18 per cent of the ordinary shares in issue. The nominal value of the shares was transferred from the share capital to the capital redemption reserve account. The shares werepurchased by Standard Chartered PLC on various exchanges,not includng the Hong Kong StockExchange. On 3 August 2021, the Group announced the buy-back programme for a share buy-back of its ordinary shares of $0.50 each. Nominal value of share purchases was $20 millon, and the total consideraton paid was $251 millon (includng $1 millon of fees and stamp duty). The total number of shares purchased was 39,914,763 representing 1.28 per cent of the ordinary shares in issue. The nominal value of the shares was transferred from the share capital to the capital redemption reserve account. The shares werepurchased by Standard Chartered PLC on various exchanges,not includng the Hong Kong StockExchange. Number of ordinaryshares Highest price paid £ Lowest price paid £ Average price paid per share £ Aggregate price paid £ Aggregate price paid $ March 2021 37,148,399 5.09200 4.68000 4.92011 182,774,269 253,593,477 August2021 23,892,155 4.68200 4.40200 4.55018 108,732,693 149,886,418 September 2021 16,022,608 4.64600 4.36700 4.51573 72,387,340 100,113,434 Ordinary share capital In accordance with the Companies Act 2006 the Company does not have authorised share capital. The nominal value of each ordinary share is 50 cents. During the period nil shares were issued under employee share plans. Preference share capital At 31 December 2021, the Company had 15,000 $5 non-cumulative redeemable preference shares in issue, with a premium of $99,995 making a paid-up amount per preference share of $100,000. The preference shares are redeemable at the option of the Company and are classifed in equity. The available profits of the Company are distrbuted to the holders of the issued preference shares in priorty to payments made to holders of the ordinary shares and in priorty to, or pari passu with, any payments to the holders of any other class of shares in issue. On a windng up, the assets of the Company are applied to the holders of the preference shares in priorty to any payment to the ordinary shareholders and in priorty to, or pari passu with, the holders of any other shares in issue, for an amount equal to any divdends payable (on approval of the Board) and the nominal value of the shares together with any premium as determined by the Board. The redeemable preference shares are redeemable at the paid-up amount (which includes premium) at the option of the Company in accordance with the terms of the shares. The holders of the preference shares are not entitled to attend or vote at any general meeting, except where any relevant divdend due is not paid in full, or where a resolution is proposed varying the rights of the preference shares. Other equity instruments The tableprovides details of outstanding fixed rate resettingperpetualsubordinated contingent convertible AT1 securites issued by Standard Chartered PLC. All issuances are made for general business purposes and to increase the regulatory capital base of the Group. Issuance date Nominal value Proceedsnet of issue costs Interest rate 2 Couponpaymentdates 3 First reset dates 4 Conversion price per ordinary share 18 August 2016USD 999 millon 1 USD 990 millon 7.50% 2 April, 2 October each year2 April 2022 USD7.732 18 January 2017 USD 1,000 millonUSD 992 millon 7.75% 2 April, 2 October each year2 April 2023 USD7.732 3 July 2019SGD 750 millonUSD 552 millon 5.375% 3 April, 3 October each year3 October 2024 SGD10.909 26 June 2020 USD 1,000 millonUSD 992 millon 6% 26 January, 26 July each year26 January 2026 USD 5.331 14 January 2021USD 1,250 millonUSD 1,239 millon 4.75% 14 January, 14 July each year 14July 2031 USD 6.353 19 August 2021 USD 1,500 millonUSD 1,489 millon 4.30% 19 February, 19 August each year19 August 2028 USD 6.382 1During the period, the Group 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 inarrears 4Securites are resettable each date falling five years, or an integral multiple of five years, after the first reset date The AT1 issuances above are primarly purchased by insttutional investors. ![]() 394 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 28. Share capital, other equity instruments and reserves continued The princpal terms of the AT1 securites are described below: • The securites are perpetual and redeemable, at the option of Standard Chartered PLC in whole but not in part, on the first interest reset date and each date falling five years after the first reset date • The 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 StandardChartered PLC givngnotice to therelevant regulator and the regulator granting permiss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 Standard Chartered PLC, subject to certain additonal restrictons set out in the terms and conditons. Accordingly, Standard Chartered PLC may at any time elect to cancel any interest payment (or part thereof) which would otherwise be payable on any interest payment date. • The securites convert into ordinary shares of Standard Chartered PLC, at a predetermined price detailed in the table above, should the fully loaded Common Equity Tier 1 ratio of the Group fall below 7.0 per cent. Approximately 947 millon ordinary shares would be required to satisfy the conversion of all the securites mentioned above The securites rank behind the claims against Standard Chartered PLC of; (a) unsubordinated creditors; (b) which are expressed to be subordinated to the claims of unsubordinated creditors of Standard Chartered PLC but not further or otherwise; or (c) which are, or are expressed to be, junor to the claims of other creditors of Standard Chartered PLC, whether subordinated or unsubordinated, other than claims which rank, or are expressed to rank, pari passu with, or junor to, the claims of holders of the AT1 securites in a windng–up occurring prior to the conversion trigger. Reserves The constituents of the reserves are summarised as follows: • The capital reserve represents the exchange difference on 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 • The amounts in the ‘Capital and Merger Reserve’ represents, the premium arisng on shares issued using a cash box financng structure, which required the Company to create a merger reserve under section 612 of the Companies Act 2006. Shares were issued using this structure in 2005 and 2006 to assist in the funding of Korea ($1.9 billon) and Taiwan ($1.2 billon) acquistions, in 2008, 2010 and 2015 for the shares issued by way of a rights issue, primarly for capital maintenance requirements, and for the shares issued in 2009 by way of an accelerated book build, the proceeds of which were used in the ordinary course of business of the Group. The funding raised by the 2008, 2010 and 2015 rights issues and 2009 share issue was fully retained withn the Company. Of the 2015 funding, $1.5 billon was used to subscribe to additonal equity in Standard Chartered Bank, a wholly owned subsidary of the Company. Apart from the Korea, Taiwan and Standard Chartered Bank funding, the merger reserveis considered realised and distrbutable. • Own credit adjustment (OCA) 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, own shares held (Treasury shares) and share buy-backs A substantial part of the Group’s reserves is held in overseas subsidary undertakings and branches, princpally to support local operations or tocomply with localregulations. Themaintenance of localregulatory capital ratioscould 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 PLC (the Company) were $15.0 billon (31 December 2020: $14.3 billon). These comprised retained earnings and $12.6 billon of the merger reserve account. Distrbution of reserves is subject to maintaning minmum capital requirements. ![]() 395 Standard Chartered – Annual Report 2021 Financal statements 28. Share capital, other equity instruments and reserves continued Own shares Computershare Trustees (Jersey) Limted is the trustee of the 2004 Employee Benefit Trust (‘2004 Trust’) and Ocorian Trustees (Jersey) Limted (formerly known as Bedell Trustees Limted) is the trustee of the 1995 Employees’ Share Ownership Plan Trust (‘1995 Trust’). The 2004 Trust is used in conjuncton with the Group’s employee share schemes and the 1995 Trust is used for the delivery of other employee share-based payments (such as upfront shares and fixed pay allowances). Group companies fund these trusts from time to time to enable the trustees to acquire shares to satisfy these arrangements. Except as disclosed, neither the Company nor any of its subsidaries has bought, sold or redeemed any securites of the Company listed on The Stock Exchange of Hong Kong Limted during the period. Details of the shares purchased and held by the trusts are set out below. 1995Trust2004Trust 1 Total 2021 2020 2021 2020 2021 2020 Shares purchased duringthe period – 2,999,210 36,487,747 14,359,481 36,487,747 17,358,691 Market price of shares purchased ($millon) – 22 237 86 237 108 Shares transferredbetween trusts – (2,999,210) – 2,999,210 – – Shares held at the end of the period – – 22,461,243 6,119,666 22,461,243 6,119,666 Maximum number of sharesheld during the period 23,076,993 11,262,818 1Note that 35,768 shares were purchased by the trustee of the 2004 Trust using $0.2 millon particpant savings as part of Sharesave exercises Divdend waivers The trustees of the 2004 Trust, which holds ordinary shares in Standard Chartered PLC in connection with the operation of its employee share plans, have lodged standing instructons in relation to shares held by them that have not been allocated to employees, whereby any divdend is waived on the balance of ordinary shares and recalculated and paid at the rate of 0.01p per share. Changes in share capital and other equity instruments of Standard Chartered PLC subsidaries The table below details the transactions in equity instruments (includng convertible and hybrid instruments) of the Group’s subsidaries, includng issuances, conversions, redemptions, purchase or cancellation. This is requiredundertheHong Kong Listng requirements, appendix 16, paragraph 10. Name and registered address Country of incorporation Descriptonof shares Issued/(redeemed) capital Issued/(redeemed) Shares Proportion of shares held (%) The following companieshave the address of 1Basinghall Avenue, London, EC2V 5DD, United Kingdom SCMB Overseas Limted United Kingdom £0.10Ordinary shares £1,500,00015,000,000 100 Standard Chartered Bank United Kingdom $1.00 Ordinary shares $1,273,000,0001,273,000,000 100 StandardChartered Holdings Limted United Kingdom $2.00 Ordinary shares $1,273,000,000636,500,000 100 StandardChartered Overseas Holdings Limted United Kingdom £1.00 Ordinary shares £(4,369,087)(4,369,087) 100 StandardChartered UK HoldingsLimted United Kingdom £10.00Ordinary shares £167,240,340 16,724,034 100 The following companieshave the address of ThomasHouse,84 Eccleston Square, London, SW1V 1PX, United Kingdom Zodia Custody Limted United Kingdom $1.00 Ordinary share $14,886,43514,886,435 100 ZodiaHoldings Limted United Kingdom $1.00 Ordinary-A shares $33,906,99933,906,999 100 The following companieshave the address of Spaces,25 WiltonRoad, Victora,London, SW1V 1LW, United Kingdom ZodiaMarkets Holdings Limted United Kingdom $1.00 Ordinary shares $10,00010,000 75.01 ![]() 396 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements Name and registered address Country of incorporation Descriptonof shares Issued/(redeemed) capital Issued/(redeemed) Shares Proportion of shares held (%) The following companieshave the address of15/F, Two InternationalFinance Centre, No. 8 Finance Street, Central, Hong Kong Marina Angelite ShippngLimtedHong Kong $ Ordinary shares $2,558,9842,558,984 100 Marina Beryl ShippngLimtedHong Kong $ Ordinary shares $2,579,4312,579,431 100 Marina Emerald Shippng Limted Hong Kong $ Ordinary shares $2,006,2842,006,284 100 Marina IridotShippng LimtedHong Kong $ Ordinary shares $2,880,2582,880,258 100 Marina Mimosa Limted HongKong $ Ordinary shares $16,356,84816,356,848 100 Marina Sapphire Shippng Limted Hong Kong $ Ordinary shares $2,361,118 2,361,118 100 Marina Tourmaline Shippng Limted Hong Kong $ Ordinary shares $2,566,7702,566,770 100 The following companyhas the address of 32/F, Standard Chartered Bank Buildng, 4-4A Des Voeux Road, Central, Hong Kong Mox Bank Limted Hong Kong HKD Ordinary shares HKD46,920,00046,920,000 65.1 The following companyhas 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 TechnologyIndia PrivateLimted India INR10.00 A Equity shares INR232,039,64023,203,964 100 The following companyhas the address of StandardChartered@Chiromo, Number 48, Westlands Road, P. O. Box 30003 – 00100, Nairob, Kenya StandardChartered Bancassurance Intermediary Limted Kenya KES100.00 Ordinary shares KES4,000,000 40,000 100 The following companyhas the address of C/o IQ EQ Corporate Services (Mauritus) Ltd, 33 Edith Cavell Street, Port Louis, 11324, Mauritus FAILimted Mauritus $1.00 Ordinary shares $35,00035,000 76.6 The following companyhas the address of Standard Chartered Bank Nepal Limted, Madan Bhandari Marg, Ward No.34, Kathmandu Metropolitan City, KathmanduDistrct,Bagmati Zone, Kathmandu,Nepal StandardChartered Bank Nepal Limted Nepal NPR100.00 Ordinary shares NPR1,418,023,000 14,180,230 70.21 The following companieshave the address of 1Basinghall Avenue, London, EC2V 5DD, United Kingdom StandardChartered Holdings (Africa) B.V. Netherlands €4.50 Ordinary shares €1,800,000 400,000 100 StandardChartered Holdings (International) B.V. Netherlands €4.50 Ordinary shares €1,800,000 400,000 100 The following companyhas the address of 9 & 11, Lightfoot Boston Street, Freetown, Sierra Leone Standard Chartered Bank Sierra Leone Limted Sierra Leone SLL1.00 Ordinary shares SLL21,697,073,68021,697,073,680 80.7 The following companieshave the address of 8 Marina Boulevard, #27-01 Marina Bay Financal Centre Tower 1, 018981, Singapore Standard Chartered Bank (Singapore) Limted Singapore $ Ordinary-A shares $868,671,601868,671,601 100 Singapore $ Ordinary-B shares $559,193,805559,193,805 100 Singapore $ Ordinary-C shares $254,040,296 254,040,296 100 StandardChartered Holdings (Singapore) Private Limted Singapore $ Ordinary shares $868,671,601 868,671,601 100 28. Share capital, other equity instruments and reserves continued ![]() 397 Standard Chartered – Annual Report 2021 Financal statements Name and registered address Country of incorporation Descriptonof shares Issued/(redeemed) capital Issued/(redeemed) Shares Proportion of shares held (%) The following companieshave the address of 80Robinson Road,#02-00, 068898, Singapore Autumn LifePte. Ltd. 1 Singapore $ Ordinary-A shares $9,450,1849,450,184 100 Cardspal Pte. Ltd. 2 Singapore $ Ordinary-A shares $7,009,0007,009,000 100 Discovery Technology Services Pte. Ltd. Singapore $ Ordinary shares $9,416,0019,416,001 100 PegasusDealmakingPte.Ltd. Singapore $ Ordinary shares $1 1 100 Power2SME Pte. Ltd. Singapore $ Ordinary shares $59,906,501 59,906,501 100 SCV Master Holding Company Pte.Ltd. Singapore $ Ordinary shares $60,906,50160,906,501 100 SCV Research and Development Pte. Ltd. Singapore $ Ordinary shares $1 1 100 Solv-India Pte. Ltd. Singapore $ Ordinary shares $44,806,50144,806,501 100 The following companieshave the address of 140RobinsonRoad, #17-01, Crown At Robinson, Singapore, 068907, Singapore Trust Bank Singapore Limted Singapore SGD Ordinary shares SGD190,000,000190,000,000 60 The following companyhas the address of Room 1810-1815, Level 18, Buildng 72, Keangnam Hanoi Landmark Tower, Pham Hung Road, Cau Giay New Urban Area, Me Tri Ward, Nam Tu Liem Distrct, Hanoi10000, Vietnam Standard Chartered Bank (Vietnam) Limted Vietnam VND Charter Capital shares VND 2,739,600,000,0002,739,600,000,000 100 1Redenominaton of 4,500,000 shares from US$ Ordinary shares to US$ Ordinary-A shares 2Redenominaton of 1,620,000 shares from US$ Ordinary shares to US$ Ordinary-A shares Please see Note 22 Debt securites in issue for issuances and redemptions of senior notes. Please see Note 27 Subordinated liablites and other borrowed funds for issuance and redemptions of subordinated liablites and AT1 securites. Please see Note 40 Related undertakings of the Group for subsidaries liqudated, dissolved or sold during the year. 29. Non-controlling interests Accounting policy Non-controllinginterests aremeasured at the non-controlling interest’s proportionate share of the acquiree’sidentfiable net assets. $millon At 1 January 2020 313 Income in equity attributable tonon-controlling interests (12) Other profits attributable tonon-controlling interests 27 Comprehensive income for the year 15 Distrbutions (20) Other increases 1 17 At 31 December 2020 325 Income in equity attributable tonon-controlling interests (15) Other profits attributable tonon-controlling interests (2) Comprehensive income for the year (17) Distrbutions (31) Other increases 2 94 At 31 December 2021 371 1Movement related to non-controlling interests from Mox Bank Limted ($17 millon) 2Movements related to non-controlling interests from Mox Bank Limted ($21 millon), Trust Bank Singapore Limted ($70 millon), Zodia Markets Holdings Limted ($3millon) 28. Share capital, other equity instruments and reserves continued ![]() 398 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 30.Retirement benefit obligatons Accounting policy The Group operates pension and other post-retirement benefit plans around the world, which can be categorised into defined contributonplans and defined benefitplans. For defined contributon plans, the Group pays contributonsto publicly or privately adminstered pensionplans on a statutory orcontractual basis, and such amounts are charged to operating expenses. The 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onat the balance sheet date less thefair value ofplan 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 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 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 a combinaton of long-term forecasts and short-term inflaton data. Salary growth assumptions reflect the 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. Retirement benefitobligatons comprise: 2021 $millon 2020 $millon Defined benefitplans obligaton 192 434 Defined contributonplans obligaton 18 9 Net obligaton 210 443 Retirement benefitcharge comprises: 2021 $millon 2020 $millon Defined benefit plans 62 81 Defined contributonplans 1 315 277 Charge against profit (Note 7) 377 358 1The Group has during the year utilsed against defined contributon payments, $5m forfeited pension contributons in respect of employees who left before their interests vested fully. The residual balance of forfeited contributons is $17m The Group operates over 60 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 400 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 but good stock market performance has led to assets broadly holding level over the year resulting in a material fall in the pension defict reported. These movements are shown as actuarial gains in the tables 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. ![]() 399 Standard Chartered – Annual Report 2021 Financal statements 30.Retirement benefit obligatons continued UKFund The Standard Chartered Pension Fund (the ‘UK Fund’) is the Group’s largest pension plan, representing 58 per cent (31 December 2020: 63 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 UK 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 Scheme Actuary, T Kripps of Wills Towers Watson, using assumptions different from those on page 399, 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 each 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 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 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. Overseas plans The princpal overseas defined benefit arrangements operated by the Group are in Germany, Hong Kong, India, Jersey, Korea, Taiwan, United Arab Emirates (UAE) and the United States of America (US). Plans in Germany, Hong Kong, India, Korea, Taiwan and UAE remain open for accrual of future benefits. Keyassumptions The princpal financal assumptions used at 31 December 2021 were: Funded plans UK Fund Overseas Plans 1 2021 % 2020 % 2021 % 2020 % Discount rate 2.0 1.4 0.4 – 3.1 0.3 – 2.8 Price Inflation 2.6 2.2 1.0 – 3.1 1.0– 3.0 Salary increases n/a n/a 3.5 – 4.5 2.9 – 4.0 Pension increases 2.5 2.1 1.9 – 3.1 1.3 – 2.7 1The range of assumptions shown is for the funded defined benefit overseas plans in Germany, Hong Kong, Jersey, Korea, Taiwan, and the US. These comprise around 80 per cent of the total liablites of overseas funded plans. Unfunded plans US post-retirement medical Other 1 2021 % 2020 % 2021 % 2020 % Discount rate 3.1 2.8 2.2 – 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 reducingby 0.5% per annum to 5% in 2024 N/A N/A 1The range of assumptions shown is for the main unfunded defined benefit plans in Bahrain, India, Korea, Thailand, UAE and the UK. They comprise around 90 per cent of the total liablites of other unfunded plans The princpal non-financal assumptions are those made for UK life expectancy. The UK mortality tables are S3PMA for males and S3PFA for females, projected by year of birth with the CMI 2019 improvement model with a 1.25% annual trend and intial additon parameter of 0.25%. Scaling factors of92% for male pensioners, 92% for femalepensioners, 92% for male dependants and 82% for female dependants have been applied. The resulting assumptions for life expectancy for the UK Fund are that a male member currently aged 60 will live for 27 years (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 60thbirthdays. ![]() 400 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 30.Retirement benefit obligatons continued 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 $35 millon for the other plans (31 December 2020: $40 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 $20 millon for the other plans (31 December 2020: $25 millon) • If the rate salaries increase compared to inflaton increased by 25 basis points the liablity would increase by nil for the UK Fund (31 December 2020: nil) and approximately $15 millon for the other plans (31 December 2020: $15 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, 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. Profile ofplan obligatons Funded plansUnfunded plans UK Fund Overseas Post-retirement medical Other Duration of the defined benefit obligaton (in years) 15 11 9 11 (Duration of the defined benefit obligaton – 2020) 15 11 10 11 Benefits expected to be paid from plans Benefits expected to be paid during 2022 86 59 1 16 Benefits expected to be paid during 2023 88 82 1 14 Benefits expected to be paid during 2024 90 72 1 14 Benefits expected to be paid during 2025 93 70 1 14 Benefits expected to be paid during 2026 95 73 1 15 Benefits expected to be paid during 2027 to 2030 514 489 5 72 Fundvalues: The fair value of assets and present value of liablites of the defined benefit plans were: At 31December 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 145 306 N/AN/A 118 374 N/AN/A Government bonds 695 224 N/AN/A 844 189 N/AN/A Corporate bonds 610 164 N/AN/A 508 129 N/AN/A Absolute ReturnFund 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 11 N/AN/A 74 9 N/AN/A Derivatves 10 – N/AN/A 20 4 N/AN/A Cash and equivalents 108 260 N/AN/A 141 297 N/AN/A Others 1 94 67 N/AN/A 1021 N/AN/A Total fair value of assets 2 1,910 1,032 N/AN/A 1,934 1,023 N/AN/A Present value of liablites (1,822) (1,076)(13)(223) (1,982) (1,147) (16)(246) Net pension plansurplus/obligaton 88 (44) (13)(223) (48) (124) (16)(246) 1Unquoted asset 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 Group is a constituent of the relevant index ![]() 401 Standard Chartered – Annual Report 2021 Financal statements 30.Retirement benefit obligat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 – 55 –9 64 Past service cost and curtailments 2 – (1) – (4) (5) Settlement cost 2 – (3) – (1) (4) Interest income on pension plan assets (26) (27) –– (53) Interest on pension plan liablites 27 29 –4 60 Total charge to profit before deduction of tax 153–8 62 Net (gains)/losses on plan assets 3 (6)(65) –– (71) (Gains)/losses on liablites (87) (10) (2) (9) (108) Total (gains)/losses recognised directly in statement of comprehensiveincome before tax (93) (75) (2) (9) (179) Deferred taxation – 17 –– 17 Total (gains)/losses after tax (93)(58) (2) (9) (162) 1Includes adminstrative expenses paid out of plan assets of $ 1 millon (31 December 2020: $2 millon) 2Includes various small costs and gains from plan amendments and settlements in India, Kenya, South Korea 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 $92 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 – 50 –7 57 Past service cost and curtailments 2 ––– 1414 Settlement cost 2 ––––– Interest income on pension plan assets (32) (28) –– (60) Interest on pension plan liablites 35 29 15 70 Total charge to profit before deduction of tax 3 51 1 26 81 Net (gains)/losses on plan assets 3 (160) (81) –– (241) Losses/(Gains) on liablites 131 88 (1) 22 240 Total (gains)/losses recognised directly in statement of comprehensiveincome before tax (29) 7 (1) 22 (1) Deferred taxation – (9) –– (9) Total (gains)/lossesaftertax (29) (2) (1) 22 (10) 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 $109 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 (Defict)/surplus at January 2021 (48) (124) (16)(246) (434) Contributons 45 58 118 122 Current service cost 1 – (55) – (9) (64) Past service cost and curtailments –1–45 Settlement costs and transfers impact –3–14 Net interest on the net defined benefit asset/liablity (1) (2) – (4) (7) Actuarial gains/(losses) 93 75 29 179 Exchange rateadjustment (1) ––43 Surplus/(defict)at 31 December 2021² 88 (44) (13)(223) (192) 1Includes adminstrative expenses paid out of plan assets of $1 millon (31 December 2020: $2 millon) 2The defict total of $192 millon is made up of plans in defict of $355 millon (31 December 2020: $476 millon) net of plans in surplus with assets totalling $163 millon (31 December 2020: $42 millon) ![]() 402 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 30.Retirement benefit obligat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 (Defict)/surplus at January 2020 (117)(115) (16) (210) (458) Contributons 44 63– 16123 Current service cost 1 – (50) – (7) (57) Past service cost and curtailments ––– (14)(14) Settlement costs and transfers impact 2 – (5) –– (5) Net interest on the net defined benefit asset/liablity (3) (1)(1) (5) (10) Actuarial gains/(losses) 29 (7) 1 (22) 1 Exchange rateadjustment (1) (9) – (4) (14) (Defict)/surplus at31 December 2020³ (48) (124) (16)(246) (434) 1Includes adminstrative expenses paid out of plan assets of $2 millon (31 December 2019: $1 millon) 2Impact of transfers relates to a gratuity plan in India which was included withn IAS 19 disclosures for the first time this year. Previously, a separate provison for these liablites was included onthe balance sheet. 3The defict total of $434 millon is made up of plans in defict of $476 millon (31 December 2019: $486 millon) net of plans in surplus with assets totalling $42 millon (31 December 2019: $28 millon) The Group’s expected contributon to its defined benefit pension plans in 2022 is $ 116 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 2021 2,957 (3,391) (434) 2,610 (3,068) (458) Contributons 1 123 (1) 122 123 – 123 Current service cost 2 – (64)(64) – (57)(57) Past service cost and curtailments –55 – (14)(14) Settlement costs & impact oftransfers 3 10 (6) 4 19 (24) (5) Interest cost on pension plan liablites – (60)(60) – (70)(70) Interest income on pension plan assets 53–53 60 – 60 Benefits paid out 2 (220) 220 – (161)161 – Actuarial gains/(losses) 4 71 108 179 241 (240) 1 Exchange rateadjustment (52) 55 3 65 (79) (14) At 31 December 2021 2,942 (3,134) (192) 2,957 (3,391) (434) 1Includes employeecontributonsof $1 millon (31 December2020:nil) 2Includes adminstrative expenses paid out of plan assets of $1 millon (31 December 2020: $2 millon) 3Impact of transfers includes a defined contributon plan in Zambia which was recognized withn IAS 19 Disclosures for the first time this year due to the existence of an investment guarantee which constitutes 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 $108 millon gain (31 December 2020: $256 millon loss) from financal assumption changes, $3 millon gain (31 December 2020: $21 millon gain) from demographic assumption changes and $3 millon loss (31 December 2020: $5 millon loss) from experience ![]() 403 Standard Chartered – Annual Report 2021 Financal statements 31. Share-based payments Accounting policy The Group operates equity-settled and cash-settled share-based compensation plans. The fair value of the employee services (measured by the fair value of the awards granted) received in exchange for the grant of the shares and awards is recognised as an expense. For deferred share awards granted as part of an annual performance award, the expense is recognised over the period from the start of the performance period to the vesting date. For example, the expense for three-year awards granted in 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 theremainng vestingperiod. Forfeiturespriorto vestingattributableto factors other thanthe failureto 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 priorto vesting that areattributable tofactorsother thana failure to satisfy service conditons ormarket-based performanceconditons, the cumulative charge incurred up to the dateof 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. 2021¹ 2020¹ Cash $millon Equity $millon Total $millon Cash $millon Equity $millon Total $millon Deferred share awards 9 81 90 (1) 59 58 Other share awards 10 67 77 (1) 75 74 Total share-based payments 19 148 167 (2) 134 132 1No forfeiture assumed 2021 Standard Chartered Share Plan (the ‘2021 Plan’) and 2011 Standard Chartered Share Plan (the ‘2011 Plan’) The 2021 Plan was approved by shareholders in May 2021 and is the Group’s main share plan, replacing the 2011 Plan for new awards, June 2021. It may be used to deliver various types of share awards, previously granted under the 2011 Plan: • 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 lapsingif 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 • 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 buy- 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 2021 Plan and 2011 Plan, no grant price is payable to receive an award. The remainng life of the 2021 Plan during which new awards can be made is ten years. The 2011 Plan has expired and no further awards will be granted under this plan. ![]() 404 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 31. Share-based payments continued 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 (£) 4.9 5.2 Vesting period (years) 03–Jul 03–Jul 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 Valuation –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. Deferredshare awards Grant date 2021 21-Jun 15-Mar Share price at grant date (£) 4.69 4.9 Vesting period (years) Expected divdend yield (%) Fair value (£) Expected divdend yield (%) Fair value (£) 1-3 years N/A,3.4 4.69,4.24 N/A,3.4,3.4 4.90,4.58,4.43 1-5 years 3.4 4.17 3.4,3.4,3.4 4.43,4.36,4.29 3-7 years –– 3.4,3.4 4.15,4.01 Grant date 2020 22-Jun 30-Mar 09-Mar Share price at grant date (£) 4.27 4.67 5.2 Vesting period (years) Expected divdend yield (%) Fair value (£) Expected divdend yield (%) Fair value (£) Expected divdend yield (%) Fair value (£) 1-3 years NA 4.27 NA,4.2 4.67,4.13 NA,4.2,4.2 5.20,4.79,4.59 1-5 years – – 4.2 4.04 4.2,4.24.59,4.50 3-7 years –––– 4.2,4.24.23,4.06 ![]() 405 Standard Chartered – Annual Report 2021 Financal statements 31. Share-based payments continued Other restricted share awards Grant date 2021 30 September 21 June 15 March Share price at grant date (£) 4.37 4.69 4.90 Vesting period (years) Expected divdend yield (%) Fair value (£) Expected divdend yield (%) Fair value (£) Expected divdend yield (%) Fair value (£) 1 year 3.4 4.23 3.4 4.53 3.4 4.74 2 years 3.4 4.09 3.4 4.38 3.4 4.58 3 years 3.4 3.95 3.4 4.24 3.44.43 4 years 3.4 3.82 3.4 4.10 3.4 4.29 5 years 3.4 3.70 –––– Grant date 2020 26 November30 September 22 June 9 March Share price at grant date (£) 4.71 3.52 4.27 5.20 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 year 4.24.34,4.524.2 3.38 4.24.104.2 4.99 2 years 4.2 4.16,4.34 4.2 3.24 4.2 3.93 4.24.79 3 years 4.2 4.16 4.2 3.11 4.23.774.2 4.59 4 years 4.2 4.00 4.2 2.98 4.2 3.62 4.2 4.41 5 years – – – – 4.2 3.48 4.24.23 All Employee Sharesave Plans 2013 SharesavePlan 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 andregulatory restrictons. In these countries, where possible, theGroup 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 one year. 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: All Employee Sharesave Plan (Sharesave) 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. ![]() 406 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 31. Share-based payments continued Limts An award shall not be granted under the 2021 Plan in any calendar year if, at the time of its proposed grant, it would cause the number of Standard Chartered PLC ordinary shares allocated in the period of 10 calendar years ending with that calendar year under the 2021 Plan and under any other 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 2021 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 2021 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 2021 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 2021 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 2021 Plan in any 12-month period must not exceed such number as represents 1 per cent of the ordinary share capital of Standard Chartered PLC in issue at that time. The number of Standard Chartered PLC ordinary shares which may be issued pursuant to awards granted under the 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. Standard Chartered PLC has been granted a waiver from strict compliance with Rules 17.03(3), 17.03(9) and 17.03(18) of the Rules Governing the Listng of Securites on the Stock Exchange of Hong Kong. Details are set out in the market announcement made on 5 May 2021. Reconcilation of share award movements for the year to 31 December 2021: 2011 Plan 1 Sharesave Weighted average Sharesave exercise price (£) LTIP 1 Deferred / Restricted shares Outstanding at 1January 2021 22,918,242 39,543,548 16,591,704 4.31 Granted 2,3 4,038,071 17,113,973 4,274,039 – Lapsed –15,005,847 –1,018,379–3,964,053 5.16 Exercised –322,715 –15,920,488 –4,615 3.53 Outstanding at 31 December 2021 11,627,751 39,718,654 16,897,075 3.95 Totalnumber of securites availablefor issue under the plan 11,627,751 39,718,654 16,897,075 Percentage of the issued shares this represents as at 31 December 2021 0.40% 1.30% 0.50% 3.95 Exercisable as at 31 December 2021 3,952 1,701,506 2,571,103 4.96 Range of exercise prices (£) 3 –– 3.14 – 6.20 – Intrinsc value of vested but not exercised options ($ millon) 0.02 10.330.38 Weighted average contractual remainng life (years) 7.85 8.122.18 Weighted average share price for awards exercised during the period (£) 4.97 4.89 4.66 1Employees do not contribute towards the cost of these awards 216,704,511 (DRSA/RSA) granted on 15 March 2021, 94,954 (DRSA/RSA) granted as notional divdend on 01 March 2021, 4,023,843 (LTIP) granted on 15 March 2021, 10,954 (LTIP) granted as notional divdend on 01 March 2021, 197,111 (DRSA/RSA) granted on 21 June 2021. 34,606 (DRSA/RSA) granted as notional divdend on 13 August 2021, 3,274 (LTIP) granted as notional divdend on 13 August 2021, 82,791 (RSA) granted on 30 September 2021, 4,274,039 (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 SharesavePlan. 3For 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. ![]() 407 Standard Chartered – Annual Report 2021 Financal statements 31. Share-based payments continued Reconcilation of share award movements for the year to 31 December 2020: 2011 Plan 1 PSP 1 Sharesave Weighted average Sharesave exerciseprice (£) LTIP Deferred / Restricted shares Outstanding at 1January 2020 20,912,679 28,235,461 12,602,842 5.28 Granted 2,3 3,086,220 23,452,802 7,373,729– Lapsed (824,269) (657,697) (3,228,307) 5.37 Exercised (256,388) (11,487,018) (156,560) 5.30 Outstanding at 31 December 22,918,242 39,543,548 16,591,704 4.31 Totalnumber of securites availablefor issue under the plan 22,918,242 39,543,548 16,591,704 4.31 Percentage of the issued shares this represents as at 31December 0.7% 1.3% 0.5% Exercisable as at31 December 27,810 2,395,136 1,549,597 6.16 Range of exercise prices (£) 3 –– 3.14 – 6.20 – Intrinsc value of vested but not exercised options ($millon) 0.18 15.23 0.02 Weighted average contractual remainng life (years) 6.28 8.36 2.47 Weighted average share price for awards exercised during the period (£) 4.28 4.55 6.76 1.Employees do not contribute towards the cost of these awards 2.22,007,464 (DRSA/RSA) granted on 09 March 2020, 189,991 (DRSA/RSA) granted as notional divdend on 06 March 2020, 3,025,163 (LTIP) granted on 09 March 2020, 56,805 (LTIP) granted as notional divdend on 06 March 2020, 86,319 (DRSA/RSA) granted on 30 March 2020, 214,754 (DRSA/RSA) granted on 22 June 2020, 4,252 (LTIP) granted as notional divdend on 25 August 2020, 503,520 (DRSA/RSA) granted on 30 September 2020, 7, 373,729 (Sharesave) granted on 30 September 2020, 450,754 (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 £3.924. 32. 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. Associatesand 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. ![]() 408 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 32. 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 are at times determined by equity holdings, and the voting rights associated with those 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, and on a Company level investments in subsidaries 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 17 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 contingentor deferred consideraton ispayable, 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 measurement period adjustments are reported in income other than changes 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 insubsidary undertakings 2021 $millon 2020 $millon As at 1 January 57,407 58,037 Additons 1 4,023 1,370 Disposal 2 (1,001) (2,000) As at 31 December 60,429 57,407 1Includes internal Additonal Tier 1 issuances of $2.7 billon by Standard Chartered Bank and $1.3 billon by Standard Chartered Holdings Limted (31 December 2020: Includes internal Additonal Tier 1 issuances of $1 billon by Standard Chartered Bank (Hong Kong) Limted) 2Redemption of Additonal Tier1 capital of $1 billon by Standard Chartered Bank (31 December 2020: Redemption of Additonal Tier1 capital of $2 billon by Standard Chartered Bank) ![]() 409 Standard Chartered – Annual Report 2021 Financal statements 32. 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 (Hong Kong) Limted, and princpally engaged in the business of banking and provison of other financal services, were as follows: Countryand place of incorporationor registraton Main areas of operation Group interest in ordinary share capital % StandardChartered Bank, Englandand Wales United Kingdom, Middle East, South Asia, Asia Pacifc, Americas and, through Group companies, Africa 100 StandardChartered Bank (HongKong)Limted, Hong KongHong Kong 100 StandardChartered Bank (Singapore) Limted,Singapore Singapore 100 Standard Chartered Bank Korea Limted, Korea Korea 100 StandardChartered Bank (China) Limted,China 1 China 100 Standard Chartered Bank (Taiwan) Limted, Taiwan Taiwan 100 Standard Chartered Bank AG, Germany France, Germany, Sweden 100 StandardChartered Bank MalaysiaBerhad,Malaysia Malaysia 100 1Under PRC law, registered as Standard Chartered Bank (China) Limted Countryand place of incorporationor registraton Main areas of operation Group interest in ordinary share capital % StandardChartered Bank (Thai) Public Company Limted, ThailandThailand 99.87 Standard Chartered Bank (Pakistan) Limted, Pakistan Pakistan 98.99 StandardChartered Bank Botswana Limted, Botswana Botswana 75.83 Standard Chartered Bank Kenya Limted, Kenya Kenya 74.32 StandardChartered Bank Nepal Limted, Nepal Nepal 70.21 StandardChartered Bank Ghana PLC, Ghana Ghana 69.42 Mox Bank Limted, Hong Kong Hong Kong 65.10 A complete list of subsidary undertaking is included in Note 40. The Group does not have any material non-controlling interest except as listed above, which contribute $17 millon (31 December 2020: $26 millon) of the profit attributable to non-controlling interest and $298 millon (31 December 2020: $308 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 andliqudity requirements The Group’s subsidaries are required to maintanmin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 $73 billon (31 December 2020: $67 billon) of which $8 billon (31 December 2020: $7 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 normaldivdends. ![]() 410 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 32. 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. Encumbered assets are disclosed in Risk review and Capital review (page 251). Share of profit from investment in associates and jont ventures comprises: 2021 $millon 2020 $millon Loss from investment in jont ventures (2) (3) Profit from investment in associates 198 154 Total 196 151 Interests in associates and jontventures 2021 $millon 2020 $millon As at 1 January 2,162 1,908 Exchange translation difference 43 123 Additons 90 52 Share of profits 196 151 Divdend received (38) – Disposals (16) (35) Impairment (300) – Share ofFVOCI and Otherreserves 10 (37) As at 31 December 2,147 2,162 A complete list of the Group’s interest in associates is included in Note 40. The Group’s princpal associates are: Associate Nature of activties Main areas of operation Group interest in ordinary share capital % China Bohai Bank BankingChina 16.26 CurrencyFair Limted Banking Ireland 43.42 On the 10th September 2021, the Group, through its subsidary Standard Chartered UK Holdings Limted completed its investment inCurrencyFair Limted, an Irish foreign exchange payments platform. The Group purchased CurrencyFair through the contributon ofits existnginvestment inits jont venture, AssemblyPayments 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 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 was 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 associate 71 1The fair value of Assembly Payments was determined to be $60 millon, 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 $16 millon resulting in a profit on disposal of $20 millon The Group’s investment in China Bohai Bank is less than 20 per cent but it is considered to be an associate because of the signficant influence the Group is able to exercise over the management and financal and operating polices. This influence is through board representation and the provison of technical expertise to Bohai. The Group applies the equity method of accounting for investments in associates. The Group’s ownership percentage in China Bohai Bank is 16.26%. For the year ended 31 December 2021, the Group recognised Bohai’s results through 30 September 2021 (12 months of earnings, includng the fourth quarter of 2020). Bohai has a statutory year end of 31 December, but publishes their results after the Group. The Group will therefore continue on a three-month lag in recognisng its share of Bohai’s earnings going forward. If the Group did not have signficant influence in Bohai, the investment would be carried at fair value rather than the current carrying value. ![]() 411 Standard Chartered – Annual Report 2021 Financal statements 32. Investments in subsidary undertakings, jont ventures and associates continued Impairment testing At 31 December 2021, the carrying amount of Group’s investment in Bohai was greater than its fair value based on the Group’s shareholding and Bohai’s quoted share price. As a result, the Group assessed its investment in associate for imparment and concluded an imparment loss of $300 millon was required due to the shortfall between the value-in-use and the carrying amount. The decrease in recoverable amount of Bohai is primarly a result of lower forecast cashflows due to the latest published results being weaker than expected. Bohai 2021 $millon 2020 $millon VIU 1,917 2,943 Carrying amount preimparment¹ 2,217 2,025 Fair value 1,114 1,888 1The above represents the Group’s 16.26% share of net assets less other equity instruments the Group does not hold Basis of recoverable amount The imparment test was performed by comparing the recoverable amount of Bohai, determined by a VIU calculation, with its carrying amount. The VIU calculation uses the following primary inputs; • short to medium term projectons based onmanagement’s best estimates offuture profits available to ordinary shareholders. These projectons have been determined with reference to the latest published financal results and historcal performance; • a discount rate based upon a capital asset pricng model (CAPM) calculation for Bohai representing the risk-free rate and companyriskpremiums. Management comparesthis CAPM against externalsources and thecost-of-equity used for transactions in the China market; • a long term growth rate, for China, which is used to extrapolate in perpetuity those expected short to medium term earnings to derive a terminal value, and; • an estimaton of RWAs and RWA growth to determine a capital maintenance haircut to forecast profits. This haircut is taken in order for Bohai to meet its target regulatory capital requirements over the forecast period. This haircut takes into account movements in risk weighted assets and the total capital required, includng required retained earnings over time to meet the target capital ratios. The key assumptions used in the VIU calculation: 2021 % 2020 % Pre tax discount rate 14.83 12.75 Forecast profit long term growth rate 4.75 5.00 Long term RWA growth rate 4.75 5.00 Capital requirement adequacy ratio 7.50 7.50 Carrying amount Pre imparment $millons Base Case Sensitvites –2021 VIU $millon Headroom $millon Pre tax discount rate GDP GDP Discount rate Forecast profit RWA CombinedCombined RWA -10%RWA+10% +1% -1% +1% -1% +10% -10% +10% -10% CF -10% CF +10% Headroom $millon Headroom $millon Headroom $millon Headroom $millon Headroom $millon Headroom $millon Headroom $millon Headroom $millon Headroom $millon Headroom $millon 2,217 1,917 (300) 14.83%4.75% (50) (482) (531) 189 (609)(613) 12 (297) (304) To improve the headroom to zero would require, on the basis of changing indvidual assumptions, an increase in forecast profits by 9.71%, decrease in discount rate by 0.95%, increase in GDP growth rate by 1.16% or decrease in RWAs by 9.6%. The movement in RWAs is correlated to forecast profit growth. This can be seen above in the combined RWA and cashflow scenarios in the sensitvity table. The following table sets out the summarised financal statements of China Bohai Bank prior to the Group’s share of the associates being applied: 30 Sep 2021 $millon 30 Sep 2020 $millon Total assets 250,951 202,537 Total liablites 234,196 187,024 Other equityinstruments 3,120 3,053 Operating income 3,557 3,474 Net profit 946 950 Other comprehensive income 58 (121) ![]() 412 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 33. Structuredentit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 interestsin consolidated structured entites. 2021 $millon 2020 $millon Aircraft and ship leasing 3,450 4,388 Princpal and other structured finance 229 365 Total 3,679 4,753 Interestsin 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cinvestment 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 in unconsolidated structured entites, the maximum exposure to loss relating to 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 potential future losses. 2021 2020 Asset- backed securites $millon Structured finance $millon Princpal Finance funds $millon Other activties $millon Total $millon Asset- backed securites $millon Structured finance $millon Princpal Finance funds $millon Other activties $millon Total $millon Group’sinterest –assets Financal assets held at fair value through profit or loss 1,144 – 128 35 1,307 1,002 – 197 271 1,470 Loans and advances/ Investment securites at amortised cost 13,635 3,466–– 17,101 8,270 3,081 267 – 11,618 Investment securites (fair value through other comprehensive income) 2,221 ––– 2,221 2,912 ––– 2,912 Other assets –– 10 – 10 –– 34 – 34 Total assets 17,000 3,466 138 35 20,639 12,184 3,081 498 271 16,034 Off-balance sheet 42 1,135 102 – 1,279 69 914 67 – 1,050 Group’smaximumexposure to loss 17,042 4,601 24035 21,918 12,253 3,995 565 271 17,084 Total assets of structured entites 241,580 13,956 1,014 37256,587 198,622 10,410 2,424 276 211,732 ![]() 413 Standard Chartered – Annual Report 2021 Financal statements 33. Structuredentites continued The main types of activties for which the Group utilses unconsolidated structured entites cover synthetic credit default swaps for managed investment funds (includng specialsed Princpal Finance funds), portfolio management purposes, structured finance and asset-backed securites. These are detailed as follows: • Asset-backed securit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 sponsoredentites): Forthe purposes of portfolio management,the Group purchasedcredit 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 protection obtained from theregulatory-compliant securitsationonly 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 haveStandard Charteredbranding. • Structured finance: Structured finance comprises interests in transactions that the Group or, more usually, a customer has structured, using one or more structured entites, which provide benefical arrangements forcustomers. The Group’s exposure primarly represents the provison of funding to these structures as a financal intermedary, for which it receives a lender’s return. The transactions largely relate to real estate financng and the provison of aircraft leasing and ship finance. • 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 tosupport 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. 34. Cash flow statement Adjustment for non-cash items and other adjustments includedwithn income statement GroupCompany 2021 $millon 2020 $millon 2021 $millon 2020 $millon Amortisatonof discounts andpremiums of investmentsecurites 9 (588) – – Interest expense on subordinated liablites 497 637 551 606 Interest expense on senior debt securites in issue 528 639 522 559 Other non-cash items (113) (67) (30) (36) Pension costs for defined benefit schemes 62 81 – – Share-based paymentcosts 167 132 – – Impairment losses on loans and advances and other credit riskprovisons 254 2,325 – – Divdend income from subsidaries – – (2,244) (1,110) Other imparment 372 587 – – Gain on disposal of property, plant and equipment (93) (27) – – Gain on disposal of FVOCI and AMCST financal assets (179) (471) – – Depreciatonand amortisaton 1,181 1,251 – – Fair value changes taken to PL (48) – – – Foreign Currency revaluation (337) – – – Net gain on derecogniton of investment in associate – (6) – – Profit from associates and jont ventures (196) (151) – – Total 2,104 4,342 (1,201) 19 ![]() 414 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 34. Cash flow statement continued 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 16,527 (21,640) 630 (742) Increase in debt securites, treasury bills and equity shares held at fairvalue through profit or loss (7,707) (5,385) (2,864) (8,281) Increase in loans and advances to banks and customers (41,066) (5,361) – – Net (increase)/decrease inprepayments andaccrued income (84) 588 – – Net (increase)/decrease inother assets 5,574 (6,266) (3,131) 572 Total 37,904 (38,064) (5,365) (8,451) 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 (17,664) 22,399 – (378) Net increase in deposits from banks, customer accounts, debt securites in issue,Hong Kongnotes in circulaton and short positons 66,805 28,087 3,977 6,630 Increase/(decrease) in accrualsand deferred income 176 (845) (15) 67 Net (decrease)/ increase in other liablites (3,365) 4,796 (835) 96 Total 45,952 54,437 3,127 6,415 In 2020, $790 millon 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, $989 millon 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. Disclosures GroupCompany 2021 $millon 2020 $millon 2021 $millon 2020 $millon Subordinated debt (includng accruedinterest): Opening balance 16,892 16,445 16,301 14,737 Proceeds from the issue 1,137 2,473 1,137 2,473 Interest paid (580) (601) (576) (537) Repayment (546) (2,446) (546) (1,402) Foreign exchange movements (201) 170 (201) 166 Fairvalue changes (401) 255 (305) 243 Accrued Interest and Others 584 596 585 552 Closing balance 16,885 16,892 16,395 16,232 Senior debt (includng accrued interest): Opening balance 29,990 23,889 20,889 19,849 Proceeds from the issue 10,944 9,953 2,250 2,193 Interest paid (690) (627) (504) (575) Repayment (9,945) (4,305) (5,408) (2,106) Foreign exchange movements (678) 622 (366) 468 Fairvalue changes (402) 574 (372) 426 Accrued Interest and Others 685 (117) 492 634 Closing balance 29,904 29,989 16,981 20,889 ![]() 415 Standard Chartered – Annual Report 2021 Financal statements 35. 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 2021 $millon 2020 $millon Cash and balances at central banks 72,663 66,712 – – Less:restricted balances (8,152) (7,341) – – Treasury bills and other eligble bills 9,132 10,500 – – Loans and advances to banks 24,788 25,762 – – Trading securites 1,174 2,241 – – Amounts owed bysubsidary undertakings – – 11,336 12,283 Total 99,605 97,874 11,336 12,283 36. Related party transactions Directors and officers Details of directors’ remuneration and interests in shares are disclosed in the Directors’ remuneration report. IAS 24 Related party disclosures requires the following additonal informaton for key management compensation. Key management comprises non-executive directors, executivedirectors of Standard Chartered PLC, the Court directors of Standard Chartered Bank and the persons dischargng managerial responsiblites (PDMR) of Standard Chartered PLC. 2021 $millon 2020 $millon Salaries, allowances and benefits inkind 40 35 Share-based payments 28 26 Bonuses paid or receivable 4 1 Total 72 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 (Hong Kong Listng Rules) about loans to directors were as follows: 2021 2020 Number $millon Number $millon Directors 1 3– 3– 1Outstanding loan balances were below $50,000 The loan transactions provided to the directors of Standard Chartered PLC were a connected transaction under Chapter 14A of the Hong Kong 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. As at 31 December 2021, Standard Chartered Bank had in place a charge over $100 millon (31 December 2020: $89 millon) of cash assets in favour of the independent trustee of its employer financed retirement benefit scheme. Other than as disclosed in the Annual Report and Accounts, there were no other transactions, arrangements or agreements outstanding for any director, connected person or officer of the Company which have to be disclosed under the Act, the rules of the UK Listng Authority or the Hong Kong Listng Rules. ![]() 416 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 36. Related party transactions continued Company The Company has received $907 millon (31 December 2020: $904 millon) of net interest income from its subsidaries. The Company issues debt externally and lends proceeds to Group companies. The Company has an agreement with Standard Chartered Bank that in the event of Standard Chartered Bank defaulting on its debt coupon interest payments, where the terms of such debt requires it, the Company shall issue shares as settlement for non-payment of the coupon interest. 2021 2020 Standard CharteredBank $millon Standard CharteredBank (HongKong) Limted $millon Others 1 $millon Standard CharteredBank $millon Standard Chartered Bank (HongKong) Limted $millon Others 1 $millon Assets Due from subsidaries 10,814 82 279 11,706 45 356 Derivatve financal instruments 266 54 – 846 126 – Debt securites 19,047 4,852 1,173 18,092 4,686 1,151 Totalassets 30,127 4,988 1,452 30,644 4,857 1,507 Liablites Due to subsidaries ––– 212 –– Derivatve financal instruments 339 –– 347 – 13 Total liablites 339 –– 559 – 13 1Others include Standard Chartered Bank (Singapore) Limted, Standard Chartered HoldingsLimted and Standard CharteredI H Limted Associate 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 Totalassets – 5 Liablites Deposits 984 1,061 Derivatve liablites 1 5 Total liablites 985 1,066 Loancommitments and other guarantees¹ 80 55 1The maximum loan commitments and other guarantees during the period were $80 millon (31 December 2020: $55 millon) 37. Post balance sheet events On 12 January 2022, Standard Chartered PLC issued $1,250 millon 2.608 per cent senior debt due 2028 (callable 2027) and $750 millon 3.603 per cent subordinated debt security due 2033 (callable 2032). A share buy-back for up to a maximum consideraton of $750 millon has been declared by the directors after 31 December 2021. This will reduce the number of ordinary shares in issue by cancelling the repurchased shares. A final divdend for 2021 of 9 cents per ordinary share was declared by the directors after 31 December 2021. ![]() 417 Standard Chartered – Annual Report 2021 Financal statements 38. Auditor’sremuneration 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 and its associates (together Ernst & Young LLP), are set out below. All services are approved by the Group Audit Committee and are subject to controls to ensure the external auditor’s independence is unaffected by the provison of other services. 2021 $millon 2020 $millon Audit fees for the Group statutory audit 15.9 11.0 of which fees for the audit of Standard Chartered Bank Group 11.8 8.1 Fees payable to EY for other services provided to the SC PLC Group: Auditof Standard Chartered PLC subsidaries 10.8 9.9 Total audit fees 26.7 20.9 Audit-related assurance services 5.3 5.1 Other assurance services 3.2 2.1 Other non-audit services 0.1 0.1 Corporate financetransaction services 0.6 0.4 Total fees payable 35.9 28.6 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 Ernst & Young LLP for the statutory audit of the consolidated financal statements of the Group and the 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, reviews of intermfinancal informaton,reporting onregulatory returns,reporting to a regulatoron clientassets and extendedwork performed over financal informaton and controls authorised by those charged with governance • Other assurance servicesinclude agreed-upon-procedures in relation to statutory andregulatory 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 LLP ($0.2 millon). Such expenses did not exceed 1% of total fees charged above. 39. Standard CharteredPLC (Company) Group reorganisaton The Group has completed aGroupreorganisaton. Thepurpose of thereorganisatonwas toform a holdingcompanystructure (a “Singapore Hub”) under the existng Standard Chartered Bank Group. The Singapore Hub has been created with Standard Chartered Bank (Singapore) Limted (“SCB SL”) acquirng ownership of 100% of Standard Chartered Bank Malaysia Berhad (“SCB MY”), Standard Chartered Bank (Vietnam) Limted (“SCB VN”),and 99.871% of Standard Chartered Bank (Thai) Public Company Limted (“SCB TH”). On 1 September 2021, SCB SL purchased SCB MY from Standard Chartered Holdings (Asia Pacifc) B.V. (“SCHAP”). On 1 November 2021, SCB SL purchased SCB TH directly from the Company for the issuance of SCB SL share capital. On 1 December 2021, SCB SL purchased SCB VN directly from the Company for the issuance of SCB SL share capital. The above had no impact on the PLC Group. ![]() 418 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 39. Standard Chartered PLC (Company) continued Classifcation andmeasurement of financal instruments Financal assets 2021 2020 Derivatves held for hedging $millon Amortised cost $millon Non-trading mandatorily at fair value through profit or loss $millon Total $millon Derivatves held for hedging $millon Amortised cost $millon Non-trading mandatorily at fair value through profit or loss $millon Total $millon Derivatves 320 –– 320 971 –– 971 Investment securites – 9,424 15,647 1 25,071 – 11,146 12,783 1 23,929 Amounts owed bysubsidary undertakings –11,336–11,336 – 12,283 – 12,283 Total 320 20,760 15,647 36,727 971 23,429 12,783 37,183 1StandardCharteredBank, Standard Chartered Bank(Hong Kong) Limted, Standard Chartered Bank (China) Limted and Standard Chartered Bank (Singapore) Limted issuedLoss Absorbing Capacity (LAC)eligble debt securites Instruments classifed as amortised cost are recorded in Stage 1. Derivatves held for hedging are held at fair value and are classifed as Level 2 while the counterparty is Standard Chartered Bank and Standard Chartered Bank (Hong Kong)Limted. Debt securites comprise corporate securites issued by Standard Chartered Bank and have a fair value equal to carrying value of $9,424 millon (31 December 2020: $11,146 millon). In 2021 and 2020, amounts owed by subsidary undertakings have a fair value equal to carrying value. Financal liablites 2021 2020 Derivatves held for hedging $millon Amortised cost $millon Designated at fair value through profit or loss $millon Total $millon Derivatves held for hedging $millon Amortised cost $millon Designated at fair value through profit orloss $millon Total $millon Derivatves 339 –– 339 360 –– 360 Debt securites in issue – 16,809 9,472 26,281 – 20,701 5,266 25,967 Subordinatedliablites andother borrowed funds – 13,830 2,332 16,162 – 14,783 1,286 16,069 Amounts owed to subsidary undertakings –––– – 212 – 212 Total 339 30,639 11,804 42,782 360 35,696 6,552 42,608 Derivatves held for hedging are held at fair value and are classifed as Level 2 while the counterparty is Standard Chartered Bank. The fair value of debt securites in issue held at amortised cost is $17,171 millon (31 December 2020: $21,231 millon). The fair value of subordinated liablites and other borrowed funds held at amortised cost is $14,569 millon (31 December 2020: $15,798 millon). Derivatve financal instruments 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 8,362 54 51 3,300 126 125 Currency swaps 2,049 – 207 3,895 17 186 Interest rate derivatve contracts: Swaps 14,465 266 81 14,677 777 – Forward rate agreements and options ––– 394 51 49 Total 24,876 320 339 22,266 971 360 ![]() 419 Standard Chartered – Annual Report 2021 Financal statements 39. Standard Chartered PLC (Company) continued Credit risk Maximum exposure to credit risk 2021 $millon 2020 $millon Derivatve financal instruments 320 971 Debt securites 25,071 23,929 Amounts owed bysubsidary undertakings 11,336 12,283 Total 36,727 37,183 In 2021 and 2020, amounts owed by subsidary undertakings were neither past due nor impared; the Company had no indvidually impared loans. In 2021 and 2020, the Company had no impared debt securites. The debt securites held by the Company are issued by Standard Chartered Bank, Standard Chartered Bank (Hong Kong) Limted, Standard Chartered Bank (China) Limted and Standard Chartered Bank (Singapore) Limted, subsidary undertakings with credit ratings of A+/A/A1. There is no material expected credit loss on these instruments as they are Stage 1 assets, and of a high quality. Liqudity risk The following table analyses the residual contractual maturity of the assets and liablites of the Company on a discounted basis: 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 fiveyears and undated $millon Total $millon Assets Derivatve financal instruments 55 12–– 55 104 103 320 Investment securites –––– 960 4,444 2,947 16,720 25,071 Amount owedby subsidary undertakings 2,335 159 216 305853 2,349 2,132 2,987 11,336 Investments in subsidary undertakings ––––––– 60,42960,429 Totalassets 2,390 160 218 305 1,813 6,848 5,183 80,239 97,156 Liablites Derivatve financal instruments 47 ––4 95 – 117 76 339 Senior debt ––––– 4,542 11,873 9,866 26,281 Other liablites 169 126 83 15 10 –– 59 462 Subordinated liablites and other borrowed funds 1,007 47 15 240 883 2,409 2,470 9,091 16,162 Total liablites 1,223 173 98 259 988 6,951 14,460 19,092 43,244 Net liqudity gap 1,167 (13) 120 46 825 (103) (9,277) 61,147 53,912 ![]() 420 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 39. Standard Chartered PLC (Company) continued Liqudity risk 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 Morethan five years and undated $millon Total $millon Assets Derivatve financal instruments 136 ––– 21 3 326 485 971 Investment securites ––––– 4,247 4,770 14,91223,929 Amount owedby subsidary undertakings 574 600 1,355 975 – 2,370 3,300 3,109 12,283 Investments in subsidary undertakings ––––––– 57,40757,407 Other assets –––––––99 Totalassets 710600 1,355 975 21 6,620 8,396 75,922 94,599 Liablites Derivatve financal instruments 138 – 114 –– 10 50 48 360 Senior debt 1,000 – 1,230 436 – 2,760 9,950 10,591 25,967 Amount owedtosubsidary undertakings ––––––– 212212 Other liablites 179126 92 12 10 –– 46 465 Subordinated liablites and other borrowed funds ––––– 1,956 3,710 10,40316,069 Total liablites 1,317 126 1,436 448 10 4,72613,710 21,300 43,073 Net liqudity gap (607) 474 (81) 527 11 1,894 (5,314) 54,622 51,526 Financal liablites on an undiscounted basis 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 fiveyears and undated $millon Total $millon Derivatve financal instruments 47 ––4 95 – 117 76 339 Debt securites in issue 102 30 179 130 196 5,14413,122 11,019 29,922 Subordinated liablites and other borrowed funds 1,114 134 37 261 917 2,522 2,786 15,376 23,147 Other liablites ––––––– 5959 Total liablites 1,263 164216 395 1,208 7,666 16,025 26,530 53,467 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 Derivatve financal instruments 138 – 114 –– 10 50 48 360 Debt securites in issue 1,000 11 1,517 446 317 3,350 11,225 11,783 29,649 Subordinated liablites and other borrowed funds –– 239 – 359 2,567 5,069 14,700 22,934 Other liablites –––––––3636 Total liablites 1,138 11 1,870 446 676 5,927 16,344 26,567 52,979 ![]() 421 Standard Chartered – Annual Report 2021 Financal statements 40. Related undertakings ofthe 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. Standard Chartered Bank (HongKong) Limted, Standard CharteredFunding (Jersey)Limted, StanchartNominees Limted,Standard CharteredHoldings Limted andStandardChartered Nominees Limted are directly held subsidaries, all otherrelated 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 32 details undertakings that have a signficant contributon to the Group’s net profit or net assets. Subsidary Undertakings Name andregistered addressCountry ofincorporation Descripton of shares Proportion of shares held (%) The following companieshave the address of1 Basinghall Avenue, London, EC2V 5DD, United Kingdom FinVentures UK Limted United Kingdom $1.00 Ordinary shares 100 Pembroke Aircraft Leasing (UK) Limted United Kingdom £1.00 Ordinary shares 100 SC (Secretaries) Limted United Kingdom £1.00 Ordinary shares 100 SC Transport Leasing 1 LTD United Kingdom £1.00 Ordinary shares 100 SC Transport Leasing 2 Limted United Kingdom £1.00 Ordinary shares 100 SC Ventures Innovation Investment L.P. United Kingdom Limted Partnership interest 100 SCMB Overseas Limted United Kingdom £0.10 Ordinaryshares 100 Stanchart NomineesLimted UnitedKingdom £1.00 Ordinary shares 100 StandardChartered Africa Limted United Kingdom £1.00 Ordinary shares 100 Standard Chartered Bank United Kingdom $0.01Non-Cumulative Irredeemable Preference shares 100 $5.00 Non-Cumulative Redeemable Preference shares 100 $1.00 Ordinary shares 100 StandardChartered Foundation 1 United Kingdom Guarantor 100 StandardChartered Health Trustee(UK) Limted United Kingdom £1.00 Ordinary shares 100 StandardChartered Holdings Limted United Kingdom $2.00 Ordinary shares 100 StandardChartered I H Limted United Kingdom $1.00 Ordinary shares 100 Standard Chartered Leasing (UK) 2 Limted United Kingdom $1.00 Ordinary shares 100 Standard Chartered Leasing (UK) 3 Limted United Kingdom $1.00 Ordinary shares 100 StandardChartered Leasing (UK) Limted United Kingdom $1.00 Ordinary shares 100 StandardChartered NEA Limted United Kingdom $1.00 Ordinary shares 100 StandardChartered Nominees Limted United Kingdom £1.00 Ordinary shares 100 StandardChartered Nominees (Private Clients UK) Limted UnitedKingdom $1.00 Ordinary shares 100 StandardChartered Overseas Holdings Limted United Kingdom £1.00 Ordinary shares 100 StandardChartered Securites (Africa) HoldingsLimted United Kingdom $1.00 Ordinary shares 100 StandardChartered Trustees (UK)Limted United Kingdom £1.00 Ordinary shares 100 StandardChartered UK HoldingsLimted United Kingdom £10.00 Ordinary shares 100 The SC Transport Leasing Partnership 1 United Kingdom Limted Partnership interest 100 The SC Transport Leasing Partnership 2 United Kingdom Limted Partnership interest 100 The SC Transport Leasing Partnership 3 United Kingdom Limted Partnership interest 100 The SC Transport Leasing Partnership 4 UnitedKingdom Limted Partnership interest 100 The BW Leasing Partnership 1 LP 1 United Kingdom Limted Partnership interest 100 The BW Leasing Partnership 2 LP 1 United Kingdom Limted Partnership interest 100 The BW Leasing Partnership 3 LP 1 United Kingdom Limted Partnership interest 100 The BW Leasing Partnership 4 LP 1 United Kingdom Limted Partnership interest 100 The BW Leasing Partnership 5 LP 1 United Kingdom Limted Partnership interest 100 ![]() 422 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements Name andregistered addressCountry ofincorporation Descripton of shares Proportion of shares held (%) The following companies have the address of 2 More London Riversde,London SE1 2JT, UnitedKingdom Bricks (C&K) LP 1 United Kingdom Limted Partnership interest 100 Bricks (C) LP 1 United Kingdom Limted Partnership interest 100 Bricks (T) LP 1 United Kingdom Limted Partnership interest 100 Bricks (M) LP 1 United Kingdom Limted Partnership interest 100 The following companies have the address of 8th Floor, 20FarringdonStreet, London, EC4A 4AB,United Kingdom. SC Ventures G.P. Limted UnitedKingdom £1.00 Ordinary shares 100 Assembly Payments UK Ltd United Kingdom £1.00 Ordinary shares 100 The following companyhas the address of1 Bartholomew Lane, London, EC2N 2AX, United Kingdom Corrasi Covered Bonds LLP United Kingdom Membership Interest 50 The following companieshave the address ofThomas House, 84 EcclestonSquare, London, SW1V1PX, UnitedKingdom Zodia Custody Limted UnitedKingdom $1.00 Ordinary shares 100 ZodiaHoldings Limted United Kingdom $1.00 Ordinary shares 100 The following company has the address of TMF Group, 8th Floor, 20Farringdon Street, London,EC4A 4AB, United Kingdom Zodia Markets (UK) Limted UnitedKingdom $1.00 Ordinary shares 100 The following company has the address of Spaces, 25 Wilton Road, Victora, London, SW1V1LW, United Kingdom ZodiaMarkets Holdings Limted United Kingdom $1.00 Ordinary shares 75.01 The following companyhas the address ofRobert Denholm House, Bletchingly Road, Nutfield, Redhill, RH1 4HW, United Kingdom CurrencyFair (UK) Limted United Kingdom £1.00 Ordinary shares 100 The following company has the address Edifíco Kilamba, 7 Andar Avenida 4 de Fevereiro, Marginal, Luanda, Angola StandardChartered Bank Angola S.A. Angola AOK8,742.05 Ordinary shares 60 The following company has the address of Level 5, 345 George St, Sydney NSW 2000, Australia StandardChartered Grindlays Pty Limted Australia AUD Ordinary shares 100 The following company has the address of 17/31 Queen Street, Melbourne VIC 3000, Australia Assembly Payments Australia Pty Ltd Australia $ Ordinary shares 100 The following companyhas the address ofWilsons Landing, Level 5, 6A Glen Street, Milsons Point NSW 2061, Australia CurrencyFair Australia Pty Ltd Australia AUD Ordinary 100 The following company has the address of Level 20, 31 Queen Street, Melbourne VIC 3000, Australia Zai Australia Pty Ltd Australia AUD0.01 Ordinary shares 100 $1.00 Ordinary shares 100 The following companieshave the address of5thFloor Standard House Bldg, The Mall, Queens Road, PO Box 496, Gaborone, Botswana Standard Chartered Bank Insurance Agency (Proprietary) Limted Botswana BWP Ordinary shares 100 StandardChartered InvestmentServices (Proprietary) Limted Botswana BWP Ordinary shares 100 StandardChartered Bank Botswana Limted Botswana BWP Ordinary shares 75.8 StandardChartered Botswana Nominees (Proprietary) Limted Botswana BWPOrdinary shares 100 StandardChartered Botswana EducationTrust 2 Botswana Interest in Trust 100 40. Related undertakings ofthe Group continued Subsidary undertakings continued ![]() 423 Standard Chartered – Annual Report 2021 Financal statements Name andregistered addressCountry ofincorporation Descripton of shares Proportion of shares held (%) The following companies have the address of Avenida Brigadero Faria Lima, no 3.477, 6 andar, conjunto 62 – Torre Norte, CondominoPatioVictor Malzoni, CEP04538-133, Sao Paulo, Brazil StandardChartered Particpacoes Ltda Brazil BRL1.00 Ordinary shares 100 StandardChartered Representação Ltda Brazil BRL1.00 Ordinary shares 100 The following company has the address of G01-02, Wisma Haj Mohd Taha Buildng, Jalan Gadong, BE4119, Brunei Darussalam Standard Chartered Securites (B) Sdn Bhd Brunei Darussalam BND1.00 Ordinary shares 100 The following companyhas the address ofStandard Chartered Bank Cameroon S.A, 1155, Boulevard de la Liberté, Douala, B.P. 1784, Cameroon Standard Chartered Bank Cameroon S.A. Cameroon XAF10,000.00 Ordinary shares 100 The following company has the address of 66 Wellington Street, West, Suite 4100, Toronto Dominon Centre, Toronto ON M5K 1B7, Canada CurrencyFair (Canada) Ltd Canada CAN$Common shares 100 The following companyhas the address ofMaples Corporate Services Limted, PO Box 309, Ugland House, Grand Cayman KY1-1104, Cayman Islands Cerulean Investments LP Cayman Islands Limted Partnership interest 100 The following companyhas the address ofMaples Finance Limted, PO Box 1093 GT, Queensgate House, Georgetown, Grand Cayman, CaymanIslands SCB Investment Holding Company Limted CaymanIslands $1,000.00 A Ordinary shares 100 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 SiratHoldings Limted 4 Cayman Islands$0.01 Ordinary shares 100 The following companyhas the address ofNo. 1034, Managed by Tianin Dongjang Secretarial Services , Co., Ltd., Room 202, Office Area of Inspection Warehouse,, No.6262 Ao Zhou Road, Dongjang Free Trade Port Zone, Tianin Pilot Free Trade Zone, China Pembroke Aircraft Leasing (Tianin) Limted³ China $1.00 Ordinary shares 100 The following companyhas the address ofNo. 1035,Managed by Tianin Dongjang Secretarial Services , Co., Ltd., Room 202, Office Area of Inspection Warehouse,, No.6262 Ao Zhou Road, Dongjang Free Trade Port Zone, Tianin Pilot Free Trade Zone, China Pembroke Aircraft Leasing Tianin 1 Limted 3 China CNY1.00 Ordinary shares 100 The following companyhas the address ofNo. 1036, Managed by Tianin Dongjang Secretarial Services , Co., Ltd., Room 202, Office Area of Inspection Warehouse,, No.6262 Ao Zhou Road, Dongjang Free Trade Port Zone, Tianin Pilot Free Trade Zone, China Pembroke Aircraft Leasing Tianin 2 Limted 3 China CNY1.00 Ordinary shares 100 The following companyhas the address ofStandard Chartered Tower, 201Century Avenue,Pudong, Shanghai 200120,China StandardChartered Bank (China) Limted 3 China CNY Ordinary shares 100 The following companyhas the address of26F, FortuneFinancal Centre, #5, Dong San Huan Zhong Lu, Chaoyang Distrct, Beiing, P. R. China. StandardChartered Corporate Advisory Co. Ltd 3 China $1.00 Ordinary shares 100 40. Related undertakings ofthe Group continued Subsidary undertakings continued ![]() 424 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements Name andregistered addressCountry ofincorporation Descripton of shares Proportion of shares held (%) The following company has the address of No. 35, Xinhuanbe Road, TEDA, Tianin, 300457, China StandardChartered Global Business Services Co., Ltd 3 China $ Ordinary shares 100 The following companies have the address of Units 61-65 (Office use only), Self-numbered Room 01-04, Room 901, No 6, Zhujang EastRoad, Tianhe Distrct, GuangzhouCity, Guangdong Province, China StandardChartered Global Business Services (Guangzhou) Co., Ltd. 3 China $ Ordinary shares 100 StandardChartered (Guangzhou) Business Management Co., Ltd. 3 China $ Ordinary shares 100 The following company has the address of Room 2619, No 9, Linhe West Road, TianheDistrct, Guangzhou, China Guangzhou CurrencyFairInformation Technology Limted³ China CNY Ordinary shares 100 The following company has the address of No. 188 Yeshen Rd, 11F, A-1161 RM, Pudong New Distrct, Shanghai, 31, 201308, China StandardChartered Trading (Shanghai) Limted 3 China $15,000,000.00 Ordinary Shares 100 The following companyhas the address ofStandard 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’Ivoire XOF100,000.00 Ordinary shares 100 The following companyhas the address ofStandard Chartered Bank France, 32 Rue de Monceau,75008, Paris, France Pembroke Lease France SAS France €1.00 Ordinary shares 100 The following company has the address of 8 Ecowas Avenue, Banjul, Gambia Standard Chartered Bank Gambia Limted Gambia GMD1.00 Ordinary shares 74.85 The following company has the address of Taunusanlage 16, 60325, Frankfurt am Main, Germany Standard Chartered Bank AG Germany € Ordinary shares 100 The following companieshave the address ofStandard Chartered Bank Buildng, 87 Independence Avenue, P.O. Box 768, Accra,Ghana StandardChartered Bank Ghana PLC Ghana GHS Ordinaryshares 69.4 GHS0.52 Preference shares 87.0 StandardChartered Ghana Nominees Limted Ghana GHS Ordinary shares 100 The following companyhas the address ofStandard Chartered Bank Ghana Limted, 87, Independence Avenue, Post Office Box 678, Accra, Ghana Standard Chartered Wealth Management Limted Company Ghana GHS Ordinary shares 100 The following companyhas the address of18/F., Standard Chartered Tower, 388 Kwun Tong Road, Kwun Tong, Kowloon, Hong Kong Horsford NomineesLimtedHong Kong HKD Ordinaryshares 100 The following companies have the address of 14th Floor, One Taikoo Place, 979 King’s Road, Quarry Bay, Hong Kong. Kozagi Limted Hong Kong HKD Ordinary shares 100 StandardChartered PF Real Estate (HongKong) LimtedHong Kong $ Ordinary shares 100 40. Related undertakings ofthe Group continued Subsidary undertakings continued ![]() 425 Standard Chartered – Annual Report 2021 Financal statements Name andregistered addressCountry ofincorporation Descripton of shares Proportion of shares held (%) The following companies have the address of 15/F., Two InternationalFinance Centre, No. 8 Finance Street, Central, Hong Kong Marina Acacia Shippng Limted Hong Kong $ Ordinary shares 100 Marina Amethyst ShippngLimtedHong Kong $ Ordinary shares 100 Marina Angelite ShippngLimtedHong Kong $ Ordinary shares 100 Marina Beryl ShippngLimtedHong Kong $ Ordinary shares 100 Marina Emerald Shippng Limted Hong Kong $ Ordinary shares 100 Marina FlaxShippng LimtedHong Kong $ Ordinary shares 100 Marina Gloxina Shippng Limted Hong Kong $ Ordinary shares 100 Marina Hazel ShippngLimtedHong Kong $ Ordinary shares 100 Marina Ilex ShippngLimtedHong Kong $ Ordinary shares 100 Marina IridotShippng LimtedHong Kong $ Ordinary shares 100 Marina Leasing Limted Hong Kong $ Ordinary shares 100 Marina MimosaShippng LimtedHong Kong $ Ordinary shares 100 Marina MoonstoneShippng LimtedHong Kong $ Ordinary shares 100 Marina Peridot ShippngLimtedHong Kong $ Ordinary shares 100 Marina Sapphire Shippng Limted Hong Kong $ Ordinary shares 100 Marina Tourmaline Shippng Limted Hong Kong $ Ordinary shares 100 StandardChartered Leasing GroupLimtedHong Kong $ Ordinary shares 100 Standard Chartered Trade Support (HK) Limted Hong Kong HKD Ordinary shares 100 The following companieshave the address of13/F Standard Chartered Bank Buildng, 4-4A Des Voeux Road Central, Hong Kong StandardChartered Private EquityLimtedHong Kong HKD Ordinary shares 100 StandardChartered Private EquityManagers (HongKong) Limted Hong Kong HKD Ordinary shares 100 The following companyhas the address of13/F, Standard Chartered Bank Buildng, 4-4A Des Voeux Road, Central, Hong Kong StandardChartered Trust (Hong Kong) LimtedHong Kong HKD Ordinary shares 100 The following company has the address of 15/F, Two InternationalFinance Centre, No. 8 Finance Street, Central, Hong Kong StandardChartered Securites (Hong Kong) LimtedHong Kong HKD Ordinary shares 100 The following companyhas the address of21/F,Standard Chartered Tower, 388 Kwun Tong Road, Kwun Tong, Kowloon, Hong Kong StandardChartered Asia LimtedHong Kong HKD Deferred shares 100 HKD Ordinary shares 100 $ Ordinary shares 100 The following companieshave the address of32/F,Standard Chartered Bank Buildng, 4-4A Des Voeux Road, Central, Hong Kong StandardChartered Bank (HongKong)LimtedHong Kong HKD A Ordinary shares 100 HKD B Ordinary shares 100 $ D Ordinary shares 100 $ C Ordinary shares 100 Mox Bank Limted Hong Kong HKD Ordinary shares 65.1 40. Related undertakings ofthe Group continued Subsidary undertakings continued ![]() 426 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements Name andregistered addressCountry ofincorporation Descripton of shares Proportion of shares held (%) The following company has the address of 31/F, Tower 2 Times Square, 1 Matheson St, Causeway Bay, Hong Kong AssemblyPayments HKLimted HongKongHKD Ordinary Shares 100 The following companyhas the address ofSuites 1103-4 AXA Tower, Landmark East, 100 How Ming Street, Kwun Tong, Hong Kong Currencyfair Asia Limted Hong Kong HKD Ordinary shares 100 The following company has the address of 1st Floor, Europe Buildng, No.1, Haddows Road,Nungambakkam, Chennai, 600 006, India StandardChartered Global Business Services PrivateLimted India INR10.00 Equity shares 100 The following company has the address of 90 M.G.Road, II Floor, Fort, Mumbai, Maharashtra, 400 001, India StandardChartered Finance Private Limted India INR10.00 Ordinary shares 98.68 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 India INR1,000.00 Ordinary shares 99.996 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. StandardChartered Researchand Technology IndiaPrivate Limted India INR10.00 A Equity shares 100 INR10.00 Preference shares 100 The following company has the address of Crescenzo, 6th Floor, Plot No 38-39 G Block , Bandra Kurla Complex, Bandra East, Mumbai , Maharashtra , 400051, India StandardChartered Capital Limted India INR10.00 Equity shares 100 The following company has the address of 2nd Floor, 23-25 M.G. Road, Fort, Mumbai, 400 001, India StandardChartered Securites (India) Limted India INR10.00 Equity shares 100 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ted India INR10.00Equity shares 100 The following companyhas the address ofVaishnav Serenity, First Floor, No. 112, Koramangala Industrial Area, 5th Block, Koramangala, Bangalore, Karnataka, 560095, India StandardChartered (India)Modeling and Analytics Centre Private Limted India INR10.00 Equity shares 100 The following companies have the address of 91 Pembroke Road, Dublin 4, Ballsbridge, Dublin, DO4 EC42, Ireland CurrencyFair (Canada) Limted Ireland €1.00 Ordinary 100 CurrencyFair Nominees Limted Ireland €1.00 Ordinary 100 40. Related undertakings ofthe Group continued Subsidary undertakings continued ![]() 427 Standard Chartered – Annual Report 2021 Financal statements Name andregistered addressCountry ofincorporation Descripton of shares Proportion of shares held (%) The following companieshave the address of32 Molesworth Street, Dublin 2, D02Y512, Ireland InishbrophyLeasing Limted Ireland €1.00 Ordinary shares 100 Inishcannon Leasing Limted Ireland $1.00 Ordinary shares 100 Inishcrean Leasing Limted Ireland $1.00 Ordinary shares 100 Inishdawson Leasing Limted Ireland €1.00 Ordinary shares 100 Inisherkn LeasingLimted Ireland $1.00 Ordinary shares 100 Inishoo Leasing Limted Ireland $1.00 Ordinary shares 100 Nightar Limted Ireland $1.00 Ordinary shares 100 Pembroke Aircraft Leasing 1 Limted Ireland €1.00 Ordinary shares 100 Pembroke Aircraft Leasing 2 Limted Ireland €1.00 Ordinary shares 100 Pembroke Aircraft Leasing 3 Limted Ireland $1.00 Ordinary shares 100 Pembroke Aircraft Leasing 4 Limted Ireland $1.00 Ordinary shares 100 Pembroke Aircraft Leasing 5 Limted Ireland $1.00 Ordinary shares 100 Pembroke Aircraft Leasing 6 Limted Ireland $1.00 Ordinary shares 100 Pembroke Aircraft Leasing 7 Limted Ireland $1.00 Ordinary shares 100 Pembroke Aircraft Leasing 8 Limted Ireland $1.00 Ordinary shares 100 Pembroke Aircraft Leasing 9 Limted Ireland $1.00 Ordinary shares 100 Pembroke Aircraft Leasing 10 Limted Ireland $1.00 Ordinary shares 100 Pembroke Aircraft Leasing 11 Limted Ireland $1.00 Ordinary shares 100 Pembroke Aircraft Leasing 12 Limted Ireland $1.00 Ordinary shares 100 Pembroke Aircraft Leasing 13 Limted Ireland $1.00 Ordinary shares 100 Pembroke Aircraft Leasing 14 Limted Ireland $1.00 Ordinary shares 100 Pembroke Aircraft Leasing 15 Limted Ireland $1.00 Ordinary shares 100 Pembroke Aircraft Leasing 16 Limted Ireland $1.00 Ordinary shares 100 Pembroke AircraftLeasing HoldingsLimted Ireland $1.00 Ordinary shares 100 Pembroke Capital Limted Ireland €1.25 Ordinary shares 100 $1.00 Ordinary shares 100 Skua Limted Ireland $1.00 Ordinary shares 100 The following companies have the address of TMF, 3rd Floor, Kilmore House, Park Lane, Spencer Dock , Dublin 1, Ireland Zodia Custody (Ireland) Limted Ireland $1.00 Ordinary shares 100 Zodia Markets (Ireland) Limted Ireland $1.00 Ordinary shares 100 The following company has the address of 91 Pembroke Road, Dublin 4, Ballsbridge, Dublin, DO4 EC42, Ireland CurrencyFair Limted Ireland €0.001 AOrdinaryshares 100 €0.001 Ordinary shares 27.952 The following companyhas the address ofFirst NamesHouse, Victora Road, Douglas, IM2 4DF, Isle of Man Pembroke Group Limted 5 Isle of Man $0.01 Ordinary shares 100 The following companies have the address of 1st Floor, Goldie House, 1-4 Goldie Terrace, Upper Church Street, Douglas, IM1 1EB, Isle of Man StandardChartered Assurance Limted Isle of Man $1.00 Ordinary shares 100 $1.00 Redeemable Preference shares100 StandardChartered InsuranceLimted 5 Isle of Man $1.00 Ordinary shares 100 40. Related undertakings ofthe Group continued Subsidary undertakings continued ![]() 428 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements Name andregistered addressCountry ofincorporation Descripton of shares Proportion of shares held (%) 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ted Japan JPY50,000 Ordinary shares 100 The following company has the address of 15 Castle Street, St Helier, JE4 8PT, Jersey SCB Nominees (CI) Limted Jersey $1.00 Ordinary shares 100 The following company has the address of IFC 5, St Helier, JE1 1ST, Jersey StandardChartered Funding(Jersey)Limted⁶ Jersey £1.00 Ordinary shares 100 The following companieshave the address of StandardChartered@Chiromo, Number48, WestlandsRoad, P. O. Box 30003 – 00100, Nairob, Kenya Standard Chartered Bancassurance Intermediary Limted Kenya KES100.00 Ordinary shares 100 StandardChartered InvestmentServices Limted Kenya KES20.00 Ordinary shares 100 Standard Chartered Bank Kenya Limted Kenya KES5.00 Ordinary shares 74.32 KES5.00 Preferenceshares 100 Standard Chartered Securites (Kenya) Limted Kenya KES10.00 Ordinary shares 100 StandardChartered Financal ServicesLimted Kenya KES20.00 Ordinary shares 100 StandardChartered Kenya Nominees Limted Kenya KES20.00 Ordinary shares 100 The following companyhas the address of47Jongno, Jongno-gu,Seoul, 110-702, Republic ofKorea StandardChartered Bank Korea Limted Korea, Republic of KRW5,000.00 Ordinary shares 100 The following company has the address of 2F, 47 Jongno, Jongno-gu,Seoul, 110-702, Republic ofKorea StandardChartered Securites Korea Co. Ltd Korea,Republic of KRW5,000.00 Ordinary shares 100 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 StandardChartered Metropolitan Holdings SAL Lebanon $10.00 Ordinary A shares 100 The following companies have the address of Level 26, Equatorial Plaza, Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia Cartaban (Malaya) Nominees Sdn Berhad Malaysia RM Ordinary shares 100 Cartaban Nominees(Asing)SdnBhd Malaysia RM Ordinary shares 100 Cartaban Nominees(Tempatan) Sdn Bhd Malaysia RM Ordinary shares 100 Golden Maestro Sdn Bhd Malaysia RM Ordinary shares 100 Price Solutions Sdn Bhd Malaysia RM Ordinary shares 100 SCBMB Trustee Berhad Malaysia RM Ordinary shares 100 StandardChartered Bank MalaysiaBerhad Malaysia RM Irredeemable Convertible Preference shares 100 RM Ordinary shares 100 StandardChartered Saadiq Berhad Malaysia RM Ordinary shares 100 The following companieshave the address ofTMF Trust Labuan Limted, Brumby Centre, Lot 42, Jalan Muhibbah, 87000 Labuan F.T., Malaysia Marina Morganite ShippngLimted 7 Malaysia $ Ordinary shares 100 Marina Moss ShippngLimted 7 Malaysia $ Ordinary shares 100 Marina TanzaniteShippng Limted 7 Malaysia $ Ordinary shares 100 Pembroke Leasing (Labuan) 3 Berhad Malaysia $ Ordinary shares 100 40. Related undertakings ofthe Group continued Subsidary undertakings continued ![]() 429 Standard Chartered – Annual Report 2021 Financal statements Name andregistered addressCountry ofincorporation Descripton of shares Proportion of shares held (%) 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 ResolutionAlliance SdnBhd Malaysia RM Ordinary shares 91 RM Irredeemable Preference shares100 The following company has the address of Level 1, Wisma Standard Chartered, Jalan Teknologi 8, Taman Teknologi Malaysia, 57000 BukitJalil, Kuala Lumpur, WilayahPersekutuan, Malaysia StandardChartered Global Business Services Sdn Bhd Malaysia RM Ordinary shares 100 The following company has the address of 10th Floor, Menara Hap Seng, No. 1&3, Jalan P. Ramlee, 50250 Kuala Lumpur, Malaysia AssemblyPayments Malaysia Sdn.Bhd. Malaysia RM Ordinary shares 100 The following companieshave the address ofTrust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH96960, Marshall Islands Marina Alysse Shippng Limted 7 Marshall Islands$1.00 Ordinary shares 100 Marina Amandier Shippng Limted 7 Marshall Islands$1.00 Ordinary shares 100 Marina Ambroisee Shippng Limted 7 Marshall Islands$1.00 Ordinary shares 100 Marina Angelica ShippngLimted 7 Marshall Islands$1.00 Ordinary shares 100 Marina Aventurine Shippng Limted 7 Marshall Islands$1.00 Ordinary shares 100 Marina Buxus Shippng Limted 7 Marshall Islands$1.00 Ordinary shares 100 Marina Citrne ShippngLimted 7 Marshall Islands$1.00 Ordinary shares 100 Marina Dahlia Shippng Limted 7 Marshall Islands$1.00 Ordinary shares 100 Marina DittanyShippng Limted 7 Marshall Islands$1.00 Ordinary shares 100 Marina DoradoShippngLimted 7 Marshall Islands$1.00 Ordinary shares 100 Marina Lilac Shippng Limted 7 Marshall Islands$1.00 Ordinary shares 100 Marina Lolite Shippng Limted 7 Marshall Islands$1.00 Ordinary shares 100 Marina Obsidan Shippng Limted 7 Marshall Islands$1.00 Ordinary shares 100 Marina Protea ShippngLimted 7 Marshall Islands$1.00 Ordinary shares 100 Marina Quartz ShippngLimted 7 Marshall Islands$1.00 Ordinary shares 100 Marina Remora Shippng Limted 7 Marshall Islands$1.00 Ordinary shares 100 Marina Turquoise Shippng Limted 7 Marshall Islands$1.00 Ordinary shares 100 Marina Zircon Shippng Limted 7 Marshall Islands$1.00 Ordinary shares 100 The following companyhas the address of6/F, Standard Chartered Tower, 19, Bank Street, Cybercity, Ebene, 72201, Mauritus StandardChartered Bank (Mauritus) Limted Mauritus $ Ordinary shares 100 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 StandardChartered Financal Holdings Mauritus $1.00 Ordinary shares 100 Standard Chartered Private Equity (Mauritus) Limted Mauritus $1.00 Ordinary shares 100 Standard Chartered Private Equity (Mauritus) II Limted Mauritus $1.00 Ordinary shares 100 Standard Chartered Private Equity (Mauritus) lll Limted Mauritus $1.00 Ordinary shares 100 40. Related undertakings ofthe Group continued Subsidary undertakings continued ![]() 430 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements Name andregistered addressCountry ofincorporation Descripton of shares Proportion of shares held (%) The following companyhas the address ofMondial Management Services Ltd, Unit 2L, 2nd Floor Standard Chartered Tower, 19 Cybercity, Ebene, Mauritus SubcontinentalEquitesLimted Mauritus $1.00 Ordinary shares 100 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 1 Mauritus Class A $1.00 Ordinary shares 62.001 Class B $1.00 Ordinary shares 62.001 The following companyhas the address ofStandard Chartered Bank Nepal Limted, Madan Bhandari Marg, Ward No.34, KathmanduMetropolitan City, Kathmandu Distrct,Bagmati Zone,Kathmandu, Nepal StandardChartered Bank Nepal Limted Nepal NPR100.00 Ordinary shares 70.21 The following company has the address of Hoogoorddreef 15, 1101BA, Amsterdam, Netherlands Pembroke Holland B.V. Netherlands €450.00 Ordinary shares 100 The following companieshave the address of1 Basinghall Avenue, London, EC2V 5DD, United Kingdom StandardChartered Holdings (Africa) B.V. 6 Netherlands €4.50 Ordinary shares 100 StandardChartered Holdings (Asia Pacifc) B.V. 6 Netherlands €4.50 Ordinary shares 100 StandardChartered Holdings (International) B.V. 6 Netherlands €4.50 Ordinary shares 100 StandardChartered MB HoldingsB.V. 6 Netherlands €4.50 Ordinary shares 100 The following company has the address of 4 All good Place, RototunaNorth, Hamilton,New Zealand, 3210 PromisePay Limted New Zealand NZD Ordinary shares 100 The following companies have the address of 142, Ahmadu Bello Way, VictoraIsland, Lagos, 101241,Nigera Cherroots Nigera Limted Nigera NGN1.00Ordinary Shares 100 StandardChartered Bank NigeraLimted Nigera NGN1.00 Irredeemable Non Cumulative Preference shares 100 NGN1.00 Ordinary shares 100 NGN1.00 Redeemable Preference shares100 Standard Chartered Capital & Advisory Nigera Limted Nigera NGN1.00Ordinary shares 100 StandardChartered Nominees (Nigera) Limted Nigera NGN1.00Ordinary shares 100 The following company has the address of 3/F Main SCB Buildng, I.I Chundrigar Road, Karachi, Sindh, 74000, Pakistan Price Solution Pakistan (Private) Limted Pakistan PKR10.00 Ordinary shares 100 The following company has the address of P.O. Box No. 5556I.I. ChundrigarRoad, Karachi, 74000, Pakistan Standard Chartered Bank (Pakistan) Limted Pakistan PKR10.00 Ordinaryshares 98.99 The following companyhas the address ofRondo Ignacego Daszyńskiego 2B, 00-843, Warsaw, Poland StandardChartered Global Business Services spółka z ograniczoną odpowiedzalnością Poland PLN50.00 Ordinary shares 100 The following company has the address of Vistra Corporate Services Centre, Ground Floor, NPF Buildng, Beach Road, Apia, Samoa StandardChartered Nominees (Western Samoa) Limted Samoa $1.00 Ordinary shares 100 40. Related undertakings ofthe Group continued Subsidary undertakings continued ![]() 431 Standard Chartered – Annual Report 2021 Financal statements Name andregistered addressCountry ofincorporation Descripton of shares Proportion of shares held (%) 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)Saudi Arabia SAR10.00 Ordinary shares 100 The following company has the address of 9 & 11, Lightfoot Boston Street, Freetown,Sierra Leone Standard Chartered Bank Sierra Leone LimtedSierra Leone SLL1.00 Ordinary shares 80.7 The following companies have the address of 9 Raffles Place, #27-00 Republic Plaza, 048619, Singapore Actis Treit Holdings No.1 (Singapore) Private Limted¹ Singapore SGD Ordinary 100 Actis Treit Holdings No.2 (Singapore) Private Limted¹ Singapore SGD Ordinary 100 The following companieshave the address of8 Marina Boulevard, Marina Bay Financal Centre Tower 1, Level 25-01, 018981, Singapore StandardChartered Private Equity(Singapore) Pte. Ltd Singapore $ Ordinary shares 100 StandardChartered Real EstateInvestmentHoldings (Singapore) Private Limted Singapore $ Ordinary shares 100 The following companieshave the address of8 Marina Boulevard, Level 26, Marina Bay Financal Centre, Tower 1, 018981, Singapore Marina Aquata ShippngPte. Ltd. Singapore $ Ordinary shares 100 Marina Aruana Shippng Pte. Ltd. Singapore SGD Ordinary shares 100 Marina CobiaShippng Pte. Ltd. Singapore SGD Ordinary shares 100 Marina Fatmarin ShippngPte. Ltd. Singapore $ Ordinary shares 100 Marina Frabandari Shippng Pte. Ltd. Singapore $ Ordinary shares 100 Marina Gerbera ShippngPte. Ltd. Singapore $ Ordinary shares 100 Marina OpahShippng Pte. Ltd. Singapore SGD Ordinary shares 100 $ Ordinary shares 100 Marina Partawati ShippngPte. Ltd. Singapore $ Ordinary shares 100 RafflesNominees (Pte.)Limted Singapore SGD Ordinary shares 100 The following companieshave the address of8 Marina Boulevard, #27-01 Marina Bay Financal Centre Tower 1, 018981, Singapore SCTS Capital Pte. Ltd Singapore SGD Ordinary shares 100 SCTS Management Pte. Ltd. Singapore SGD Ordinary shares 100 StandardChartered Bank (Singapore) Limted Singapore SGD Ordinary shares 100 SGD Non-cumulativePreference shares100 SGD Non-cumulative Class C Preference shares 100 $ Ordinary shares 100 $ Preferenceshares 100 StandardChartered Trust (Singapore)Limted Singapore SGD Ordinaryshares 100 StandardChartered Holdings (Singapore)Private Limted Singapore SGD Ordinary shares 100 $ Ordinary shares 100 StandardChartered Nominees (Singapore)Pte Ltd Singapore SGD Ordinary shares 100 40. Related undertakings ofthe Group continued Subsidary undertakings continued ![]() 432 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements Name andregistered addressCountry ofincorporation Descripton of shares Proportion of shares held (%) The following companies have the address of 80 Robinson Road, #02-00, 068898, Singapore Autumn LifePte. Ltd. Singapore $ Ordinary shares 100 Cardspal Pte. Ltd. Singapore $ Ordinary shares 100 Nexco Pte. Ltd. Singapore $ Ordinary shares 100 Discovery Technology Services Pte. Ltd. Singapore $ Ordinary shares 100 SCV Research and Development Pte. Ltd. Singapore $ Ordinary shares 100 Power2SME Pte. Ltd. Singapore $ Ordinary shares 100 SCV Master Holding Company Pte.Ltd. Singapore $ Ordinary shares 100 PegasusDealmaking Pte. Ltd. Singapore $ Ordinary shares 100 Solv-India Pte. Ltd. Singapore $ Ordinary shares 100 The following companies have the address of 140 Robinson Road, #17-01, Crown At Robinson, 068907, Singapore Trust Bank Singapore Limted Singapore SGD Ordinary shares 60 CurrencyFair (Singapore) Pte.Ltd Singapore SGD Ordinary shares 100 The following companies have the address of 38 Beach Road, #29-11 South Beach Tower, 189767, Singapore Assembly Payments SGP Pte. Ltd. Singapore SGD Ordinary shares 100 AssemblyPayments Pte. Ltd. Singapore $ Ordinary shares 100 $ Preferenceshares 100 The following companyhas the address ofAbogado Pte Ltd,No. 8 Marina Boulevard, #05-02 MBFC Tower 1, 018981, Singapore StandardChartered IL&FSManagement (Singapore) Pte. Limted Singapore $ Ordinary 50 The following companies have the address of 2nd Floor, 115 West Street, Sandton, Johannesburg, 2196,South Africa CMB Nominees (RF) PTY Limted South Africa ZAR1.00 Ordinary shares 100 StandardChartered Nominees South AfricaProprietary Limted (RF) South Africa ZAR Ordinary shares 100 The following company has the address of 6 Fort Street, PO 785848, Birnam, Sandton, 2196 2146, South Africa Promisepay (PTY) Ltd SouthAfrica ZAR1.00 Ordinary 100 The following company has the address of 1F, No.177 & 3F-6F, 17F-19F, No.179, Liaonng Street, Zhongshan Dist., Taipe, 104, Taiwan Standard Chartered Bank (Taiwan) Limted Taiwan TWD10.00 Ordinary shares 100 The following companies have the address of 1 Floor, InternationalHouse, Shaaban RobertStreet/Garden Avenue, PO Box 9011, Dar Es Salaam, Tanzania, United Republic of Standard Chartered Bank TanzaniaLimtedTanzania,United Republicof TZS1,000.00 Ordinary shares 100 TZS1,000.00 Preference shares 100 StandardChartered Tanzania Nominees Limted Tanzania, United Republicof TZS1,000.00 Ordinary shares 100 The following companyhas the address of100 North Sathorn Road, Silom, Bangrak Bangkok , 10500, Thailand StandardChartered Bank (Thai) Public Company Limted Thailand THB10.00 Ordinary shares 99.90 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 Turkey TRL0.10Ordinary shares 100 The following companyhas the address ofStandard Chartered Bank Bldg, 5 Speke Road, PO Box 7111, Kampala, Uganda 40. Related undertakings ofthe Group continued Subsidary undertakings continued ![]() 433 Standard Chartered – Annual Report 2021 Financal statements Name andregistered addressCountry ofincorporation Descripton of shares Proportion of shares held (%) StandardChartered Bank UgandaLimted Uganda UGS1,000.00 Ordinary shares 100 The following company has the address of 251 Little Falls Drive, WilmngtonDE 19808, United States CurrencyFair (USA) Inc. UnitedStatesUS$1.00 UncertifcatedShares 100 The following company has the address of 505 Howard St. #201, San Francisco, CA 94105, United States SC Studios, LLC United States Membership Interest 100 The following companyhas the address ofStandard Chartered Bank, 37F, 1095 Avenue of the Americas, New York 10036, United States StandardChartered Bank International (Americas) LimtedUnited States $1,000.00 Ordinary shares 100 The following companieshave the address ofCorporation Trust Centre, 1209 Orange Street, Wilmngton DE 19801, United States StandardChartered Holdings Inc.United States $100.00 Common shares 100 StandardChartered Securites (North America)LLCUnited States Membership Interest 100 The following company has the address of 50 Fremont Street, San Francisco CA 94105, United States StandardChartered Overseas Investment,Inc.United States$10.00 Ordinary shares 100 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 Corporation UnitedStates $0.01 Common shares 100 The following company has the address of 25 Taylor St, San Francisco, CA,94102-3916 Assembly Escrow Inc United States $0.0001 Ordinary 100 The following company has the address of 555 Washington Av, St Louis, MO, United States of America, 63101 AssemblyPayments, Inc UnitedStates $0.0001 Ordinary 100 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 StandardChartered Bank (Vietnam) Limted Vietnam VND Charter Capital shares 100 The following companieshave the address ofVistra 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 shares 100 Sky Harmony Holdings Limted 7 Virgn Islands, Britsh $1.00 Ordinary shares 100 The following companieshave the address ofStand No. 4642, Corner of Mwaimwena Road and Addis Ababa Dri, Lusaka, Zambia, 10101, Zambia Standard Chartered Bank Zambia Plc Zambia ZMW0.25 Ordinary shares 90 StandardChartered ZambiaSecurites Services Nominees Limted Zambia ZMW1.00 Ordinary shares 100 The following companieshave the address ofAfricaUnity Square Buildng, 68 Nelson Mandela Avenue, Harare, Zimbabwe Africa Enterprise Network Trust 2 Zimbabwe Interest in Trust 100 Standard Chartered Bank Zimbabwe Limted Zimbabwe $1.00 Ordinary shares 100 StandardChartered Nominees Zimbabwe (Private)Limted Zimbabwe $2.00 Ordinary shares 100 1The 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. 2No share capital by virtue of being a trust 3Limted liablity company 4The Group has determined the princpal place of operation to be Singapore 5The Group has determined the princpal place of operation to be Ireland 6The Group has determined the princpal place of operation to be United Kingdom 7.The Group has determined the princpal place of operation to be Hong Kong ![]() 434 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 40. Related undertakings ofthe Group continued Joint ventures Name Country ofIncorporationDescript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 shares 50 $ Preferenceshares 100 Associates Name Country ofIncorporationDescript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 forInternational Development Ltd United Kingdom $0.0001 Ordinary-A 58.901 The following company has the address of 3 More London Riversde,London,England, SE1 2AQ, United Kingdom TradeInformation NetworkLimtedUnited Kingdom $1.00 Ordinary shares 16.667 The following company has the address of Bohai Bank Buildng, No.218 Hai He Dong Lu, Hedong Distrct, Tianin, China, 300012, China China Bohai Bank Co., Ltd. China CNYOrdinary shares 16.263 The following company has the address of 17/F, 100, Gongpyeong- dong, Jongno-gu,Seoul,Korea, Republic of Ascenta IV Korea, Republic of KRW1.00Partnership Interest 39.1 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 shares 9.9 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 shares 15 $ RedeemableConvertible Preference shares 28.571 The following companyhas the address ofVictora House, State House Avenue, Victora, MAHE, Seychelles Seychelles International MercantileBanking Corporation Limted. Seychelles SCR1,000.00 Ordinary shares 22 The following company has the address of Avenue de Tivol 2, 1007, Lausanne, Switzerland Metaco SA Switzerland CHF 0.01 Preference A Shares 29.505 ![]() 435 Standard Chartered – Annual Report 2021 Financal statements 40. Related undertakings ofthe Group continued Signficantinvestment holdings and other related undertakings Name Country ofIncorporationDescripton of shares Proportion of shares held (%) The following companyhas the address of1 Bartholomew Lane, London, EC2N 2AX, United Kingdom Corrasi Covered Bonds (LM) Limted United Kingdom £1.00 Ordinary 20 The following companyhas the address ofIntertrustCorporate Services (Cayman) Limted, 190 Elgin Avenue, George Town, Grand Cayman, KY1-9005, Cayman Islands ATSC Cayman Holdco Limted Cayman Islands$0.01 Ordinary-A shares 5.272 $0.01Ordinary-Bshares 100 The following company has the address of 3, Floor 1, No.1, Shiner Wuxingcayuan, West ErHuan Rd,Xi Shan Distrct, Kunming, Yunnan Province, PRC, China Yunnan Golden Shiner Property Development Co., Ltd. China CNY1.00 Ordinary shares 42.5 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ted Hong Kong $ Class A Ordinary shares 39.689 $ Class B Ordinary shares 39.689 Actis Temple Stay Holdings (HK) Limted Hong Kong $ Class A Ordinary shares 39.689 $ Class B Ordinary shares 39.689 Actis Jack Holdings (HK) Limted Hong Kong $ Class A Ordinary shares 39.689 $ Class B Ordinary shares 39.689 Actis Rivendell Holdings (HK) Limted Hong Kong $ Class A Ordinary shares 39.689 $ Class B Ordinary shares 39.689 Actis Young City Holdings (HK) Limted Hong Kong $ Class A Ordinary shares 39.689 $ Class B Ordinary shares 39.689 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ted India INR10.00Ordinary shares 26 The following company has the address of 4th Floor, 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. Ltd India INR100.00 Ordinary shares 26 The following company has the address of 17F, 100, Gongpyeong- dong, Jongno-gu,Seoul,Korea, Republic ofKorea Ascenta III Korea KRW Class B Equity Interest 31 The following company has the address of 3 Jalan Pisang, c/o Watiga Trust Ltd, 199070 Singapore SCIAIGF Liqudating Trust 1 Singapore Interest in trust 43.96 The following company has the address of 49, Sungei Kadut Avenue, #03-01 S729673, Singapore Omni Centre Pte. Ltd. Singapore SGD Redeemable Convertible Preference shares 99.998 The following company has the address of 251 Little Falls Drive, Wilmngton, New Castle DE 19808, United States Paxata, Inc.United States US$0.0001 SeriesC2 Preferred Stock 40.741 US$0.0001Series C2 Preferred Stock 10.11% ![]() 436 Standard Chartered – Annual Report 2021 Financal statements Notes to thefinancalstatements 40. Related undertakings ofthe Group continued In liqudation Subsidary Undertakings Name Country ofIncorporationDescripton of shares Proportion of shares held (%) The following companieshave the address ofC/O Teneo Restructuring Limted156GreatCharles Street Queensway Birmngham West MidlandsB3 3HN Compass Estates Limted United Kingdom £1.00 Ordinary shares 100 StandardChartered Masterbrand Licensng Limted United Kingdom $1.00 Ordinary Shares 100 The following companieshave the address ofBucktrout House, Glategny Esplanade, St Peter Port, GY1 3HQ, Guernsey Birdsong Limted Guernsey £1.00 Ordinary shares 100 Nominees OneLimted Guernsey £1.00 Ordinary shares 100 Nominees Two Limted Guernsey £1.00 Ordinary shares 100 Songbird Limted Guernsey £1.00 Ordinary shares 100 StandardChartered Secretaries (Guernsey) Limted Guernsey £1.00 Ordinary shares 100 StandardChartered Trust (Guernsey)Limted Guernsey £1.00 Ordinary shares 100 The following companyhas the address of8/Floor,Gloucester Tower , The Landmark, 15 Queen’s Road Central, Hong Kong Leopard Hong Kong Limted Hong Kong $ Ordinary shares 100 The following company has the address of 32 Molesworth Street, Dublin 2, D02Y512, Ireland Inishlynch Leasing Limted Ireland €1.00 Ordinary shares 100 The following companyhas the address ofMenara Standard Chartered, 3rd Floor, Jl. Prof.Dr. Satrio no. 164, Setiabud, Jarkarta Selatan, Indonesia PT Solusi Cakra Indonesia (dalam likudasi) Indonesia IDR23,809,600.00 Ordinary shares 99 The following company has the address of No. 157 – 157 A, Jakarta Barat, 11130, Indonesia. PT.Price Solutions Indonesia(dalamlikudasi) Indonesia $100.00Ordinary shares 100 The following companyhas the address ofStandard Chartered@ Chiromo, Number 48, Westlands Road, P. O. Box 30003 – 00100, Nairob, Kenya StandardChartered Management Services Limted Kenya KES20.00 Ordinary shares 100 The following company has the address of 30 Rue Schrobilgen, 2526, Luxembourg Standard Chartered Financal Services (Luxembourg) S.A. Luxembourg €25.00 Ordinary shares 100 The following company has the address of Level 26, Equatorial Plaza, Jalan Sultan Ismail, 50250 Kuala Lumpur, Malaysia Popular Ambience Sdn Bhd Malaysia RM Ordinary shares 100 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 FAILimted Mauritus US$1.00 Ordinary shares 76.598 The following company has the address of Jiron Huascar 2055, Jesus Maria, Lima 15072, Peru Banco StandardChartered en Liqudacion Peru $75.133 Ordinary shares 100 The following company has the address of 8 Marina Boulevard, Level 27, Marina Bay Financal Centre, Tower 1, 018981, Singapore StandardChartered (2000) Limted Singapore SGD1.00 Ordinary shares 100 The following company has the address of Luis Alberto de Herrera 1248, Torre II, Piso 11, Esc. 1111, Uruguay StandardChartered Uruguay Representacion S.A. Uruguay UYU1.00 Ordinary shares 100 1 The Group has determined the princpal place of operation to be Singapore ![]() 437 StandardChartered – Annual Report 2021 Financal statements 40. Related undertakings ofthe Group continued Signficantinvestment holdings and other related undertakings Name Country ofIncorporationDescript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 BHD Malaysia RM1.00 Ordinary shares 25 Liqudated/dissolved/sold Subsidary Undertakings Name Country ofIncorporationDescripton of shares Proportion of shares held (%) SC Leaseco Limted United Kingdom $1.00 Ordinary shares 100 StandardChartered APR Limted United Kingdom $1.00 Ordinary shares 100 StandardChartered Finance (Brunei) Bhd Brunei Darussalam BND1.00Ordinary shares 100 StandardChartered Princpal Finance (Cayman) Limted¹ Cayman Islands$0.0001 Ordinary shares 100 SunflowerCayman SPC Cayman Islands $1.00 Management shares 100 Marina Amaryllis Shippng LimtedHong Kong $ Ordinary shares 100 Marina AmetrineShippng LimtedHong Kong $ Ordinary shares 100 Marina ApolloShippng LimtedHong Kong $ Ordinary shares 100 Marina Carnelian ShippngLimtedHong Kong $ Ordinary shares 100 Marina HonorShippng LimtedHongKong HKD Ordinary shares 100 $ Ordinary shares 100 Marina Kunzite Shippng LimtedHong Kong $ Ordinary shares 100 Marina SplendorShippng LimtedHong Kong HKD Ordinary shares 100 $ Ordinary shares 100 Ori Private Limted Hong Kong $ Ordinary shares 100 $ A Ordinary shares 90.7 S C Learning Limted Hong Kong HKD Ordinary shares 100 StandardChartered Sherwood (HK) LimtedHong Kong HKD Ordinary shares 100 ResolutionAlliance Korea Ltd 2 Korea,Republic of KRW5,000.00 Ordinary shares 100 Pembroke Leasing (Labuan) 2 Berhad Malaysia $ Ordinary shares 100 Pembroke Leasing (Labuan) Pte Limted Malaysia $ Ordinary shares 100 Marina Pissenlet Shippng Limted Marshall Islands$1.00 Ordinary shares 100 Actis Asia Real Estate (Mauritus) Limted Mauritus Class A $1.00 Ordinary shares 100 Class B $1.00 Ordinary shares 100 Kwang HuaMocatta CompanyLtd. Taiwan TWD1,000.00 Ordinary shares 97.92 Actis RE Investment 1 Private Limted Singapore SGD Ordinary shares 100 Actis RE Investment 2 Private Limted Singapore SGD Ordinary shares 100 Actis RE Investment 3 Private Limted Singapore SGD Ordinary shares 100 Actis RE Investment 4 Private Limted Singapore SGD Ordinary shares 100 Marina Aster Shippng Pte. Ltd. Singapore $ Ordinary shares 100 Marina Poise ShippngPte. Ltd. Singapore $ Ordinary shares 100 Marina Mars Shippng Pte.Ltd. Singapore $ Ordinary shares 100 Marina Mercury Shippng Pte. Ltd. Singapore $ Ordinary shares 100 Marina DaffodilShippng Pte. Ltd. Singapore $ Ordinary shares 100 Marina Freesia Shippng Pte. Ltd. Singapore $ Ordinary shares 100 Standard Chartered Capital Management (Jersey), LLC United States $ Ordinary shares 100 StandardChartered International (USA)LLCUnited States Membership Interest 100 StanChart Securites International LLCUnited States MembershipInterest 100 1 The Group has determined the princpal place of operation to be Singapore ![]() This year’s overall winner, is Sing Yi Chai and her take on Accelerating Zero. The photo is taken insde Singapore’s famous Tree Tunnel. “My subject had taken some calculated risks and overcome physical challenges to get up there,” she says. “Likewse, the journey towards carbon-free is not without its risks andchallenges. Look up to our goal and we will get there.” #### Employee photo competiton This year ourphotocompetitonasked our employeesto interpret ourStands: Accelerating Zero, LiftngParticpation andResetting Globalisaton. Here are thethreewinners… For more informaton on our Stands see pages 24 and 25 #### Accelerating Zero by Sing Yi Chai, Singapore 438 Standard Chartered – Annual Report 2021 ![]() In third place is Premanand Managaran.The photo represents the power to build back from COVID-19. “The picture was taken before the pandemic,” Premanand explains. “We are not as free as we were and, as a bank, we aim to empower small businesses to build backstronger.” In second place, is Md Ahidul Hasan, and his interpretaton of Accelerating Zero, a shot of bamboo – essential buildng blocks formany households. “My photograph shows bamboo being transported to the market throughthe canals. Bamboo can be a good alternative to more carbon intensve buildng materialfor households.” #### De Lat Market by PremanandManagaran, Malaysia #### Bamboo Market by Md Ahidul Hasan, Bangladesh Supplementaryinformaton 439 Standard Chartered – Annual Report 2021 #### Supplementary informaton 440Supplementary financalinformaton 446Supplementary people informaton 450Supplementary sustainablity informaton 457Shareholder informaton 460Main awards and accolades in 2021 462 Glossary ![]() 440 Standard Chartered – Annual Report 2021 Supplementaryinformaton Supplementary financalinformaton Five-year summary 1 2021 $millon 2020 $millon 2019 $millon 2018 $millon 2017 $millon Operating profit before imparment losses and taxation 3,777 4,374 4,484 3,142 4,008 Impairment losses on loans and advances and other credit risk provisons (254) (2,325) (908) (653) (1,362) Other imparment (372) (98) (136) (182) (179) Profit before taxation 3,347 1,613 3,713 2,548 2,415 Profit/(loss) attributable to shareholders 2,315 724 2,3031,054 1,219 Loans and advances to banks 2 44,383 44,347 53,549 61,414 78,188 Loans and advances to customers 2 298,468 281,699 268,523 256,557 282,288 Total assets 827,818 789,050 720,398 688,762 663,501 Deposits by banks 2 30,041 30,255 28,562 29,715 30,945 Customer accounts 2 474,570 439,339 405,357 391,013370,509 Shareholders’ equity 46,011 45,886 44,835 45,118 46,505 Total capitalresources 3 69,282 67,383 66,868 65,353 68,983 Information per ordinary share Basic earnings/(loss) per share 61.3c 10.4c 57.0c 18.7c 23.5c Underlying earningsper share 76.2c 36.1c 75.7c 61.4c 47.2c Divdends per share 4 – – 22.0c 17.0c – Net asset value per share 1,456.4c 1,409.3c1,358.3c1,319.3c 1,366.9c Net tangible asset value per share 1,277.0c 1,249.0c 1,192.5c 1,167.7c 1,214.7c Return onassets 5 0.3% 0.1% 0.3%0.3%0.2% Ratios Statutory return onordinary shareholders’equity 4.2% 0.8% 4.2% 1.4% 1.7% Statutory return onordinary shareholders’ tangible equity 4.8% 0.9% 4.8% 1.6% 2.0% Underlying return on ordinary shareholders’ equity 5.3% 2.6% 5.6% 4.6% 3.5% Underlying return on ordinary shareholders’ tangible equity 6.0% 3.0% 6.4% 5.1% 3.9% Statutory cost to income ratio (excluding UK Bank Levy) 73.6% 68.1% 68.7% 76.6% 70.7% Statutory cost to income ratio (includng UK Bank Levy) 74.3% 70.4% 70.9% 78.8% 72.2% Underlying cost to income ratio (excluding UK Bank levy) 69.8% 66.4% 65.9% 67.7% 69.3% Underlying cost to income ratio (includng UK Bank levy) 70.5% 68.7% 68.2% 69.9% 70.8% Capital ratios: CET 1 6 14.1% 14.4% 13.8% 14.2% 13.6% Total capital 6 21.3% 21.2%21.2% 21.6% 21.0% 1The amounts for the financal year ended 2017 are presented in line with IAS 39 and, therefore, not on a comparable basis to the current financal year presented in accordance with IFRS 9 2Excludes amounts held at fair value through profit or loss 3Shareholders’ funds, non-controlling interests and subordinatedloan capital 4Divdend paid during the year per share 5Represents profit attributable to shareholders divded by the total assets of the Group 6 Unaudited #### Supplementary financal informaton ![]() 441 Standard Chartered – Annual Report 2021 Supplementaryinformaton Analysis of underlying performance by key market The following tables provide informaton for key markets in which the Group operates. The numbers are prepared on a management view. Refer to Note 2 for details. 2021 Hong Kong $millon Korea $millon China $millon Singapore $millon India $millon Indonesia $millon UAE $millon UK $millon US $millon Operating income 3,440 1,102 1,087 1,608 1,282 213 546 895 818 Operating expenses (2,008) (772) (765) (1,054) (744) (175) (362) (721) (533) Operating profit before imparment losses and taxation 1,432 330 322 554 538 38 184 174 285 Credit imparment (251) (14) (49) 88 (23)(3) 5858 27 Other imparment –2 (301) (1) 1–– 96 – Profit from associates and jont ventures –– 175 –––––– Underlying profitbefore taxation 1,181 318 147 641 516 35 242 328 312 Total assets employed 177,46067,31137,908 94,881 28,416 4,836 19,224 193,807 68,148 Of which: loans and advancesto customers 1 89,063 45,323 18,01456,454 14,991 2,257 8,937 52,878 19,375 Total liablites employed 166,727 58,406 35,637 93,884 20,509 3,769 13,922 149,064 70,648 Of which: customer accounts 1 141,256 47,86727,618 75,154 14,730 2,622 11,466 105,490 37,407 2020 Hong Kong $millon Korea $millon China $millon Singapore $millon India $millon Indonesia $millon UAE $millon UK $millon US $millon Operating income 3,485 1,046 926 1,562 1,245 309 579 946 783 Operating expenses (1,959) (723) (667) (977) (680) (176) (409) (673) (525) Operating profit before imparment losses and taxation 1,526 323 259 585 565 133 170 273 258 Credit imparment (199) (43) (112) (474) (227) (84) (277) (128) (30) Other imparment (55) 3 (1) – (1) – (3) 9– Profit from associates and jont ventures –– 163 –––––– Underlying profit/(loss) before taxation 1,272 283 309 111 337 49 (110) 154 228 Total assets employed 167,080 69,214 41,827 88,246 28,272 4,968 19,856 174,346 63,330 Of which: loans and advancesto customers 1 78,398 42,636 16,877 53,444 14,258 2,212 10,31645,803 18,103 Total liablites employed 160,976 60,329 36,713 83,554 20,728 3,494 14,324 133,862 65,307 Of which: customer accounts 1 135,487 44,748 26,319 63,30315,058 2,382 11,720 81,198 36,717 1Loans and advances to customers and customer accounts includes FVTPL and repurchase agreements ![]() 442 Standard Chartered – Annual Report 2021 Supplementaryinformaton Supplementary financalinformaton Analysis of operating income by product and segment The following tables provide a breakdown of the Group’s underlying operating income by product and client segment. 2021 Corporate, Commercial & Institutonal Banking $millon Consumer, Private & Business Banking $millon Central & other items (segment) $millon Total $millon Transaction Banking 2,505 87 – 2,592 Trade 1,102 51 –1,153 Cash Management 1,403 36– 1,439 Financal Markets 4,921 –– 4,921 Macro Trading 2,216 –– 2,216 Credit Markets 1,823 –– 1,823 Credit Trading 437 –– 437 Financng Solutions &Issuance 1,386 –– 1,386 Structured Finance 480 –– 480 Financng & Securites Services 387 –– 387 DVA 15––15 Lending & Portfolio Management 968 40 – 1,008 Wealth Management 1 2,224 – 2,225 Retail Products 1 3,357 – 3,358 Credit Cards & Personal Loans (CCPL) & other unsecured lending – 1,272 – 1,272 Deposits 1 859 – 860 Mortgage & Auto – 1,036 – 1,036 Other Retail Products – 190 – 190 Treasury –– 698698 Other 11 25 (125) (89) Totalunderlying operating income 8,407 5,733 573 14,713 2020 (Restated)¹ Corporate, Commercial & Institutonal Banking 1 $millon Consumer, Private & Business Banking 1 $millon Central & other items (segment) $millon Total $millon Transaction Banking 2,745 93 – 2,838 Trade 951 43 – 994 Cash Management 1,794 50 – 1,844 Financal Markets 4,912 –– 4,912 Macro Trading 2,532 –– 2,532 Credit Markets 1,621 –– 1,621 Credit Trading 404 –– 404 Financng Solutions &Issuance 1,217 –– 1,217 Structured Finance 382 –– 382 Financng & Securites Services 364––364 DVA 13 –– 13 Lending & Portfolio Management 846 38 – 884 Wealth Management 1 1,989 – 1,990 Retail Products 1 3,565 – 3,566 Credit Cards & Personal Loans (CCPL) & other unsecured lending – 1,211 – 1,211 Deposits 1 1,456 – 1,457 Mortgage & Auto – 750 – 750 Other Retail Products – 148 – 148 Treasury –– 635635 Other (20) 6 (46) (60) Totalunderlying operating income 8,485 5,691 589 14,765 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 ![]() 443 Standard Chartered – Annual Report 2021 Supplementaryinformaton Average balance sheets and yields and volume and price variances Average balance sheets and yields For the purposes of calculating net interest margin the following adjustments are made: • Statutory net interest income is adjusted to remove interest expense on amortised cost liablites used to provide funding to the Financal Markets business • Financal instruments measured at fair value through profit or loss are classifed as non-interest earning • Premiums on financal guarantees purchased to manage interest earning assets are treated as interest expense In the Group’s view this results in a net interest margin that is more reflective of banking book performance. The following tables set out the average balances and yields for the Group’s assets and liablites for the periods ended 31 December 2021 and 31 December 2020 under the revised defintion of net interest margin. For the purpose of these tables, average balances have been determined on the basis of daily balances, except for certain categories, for which balances have been determined less frequently. The Group does not believe that the informaton presented in these tables would be signficantly different had such balances been determined on a daily basis. Average assets 2021 Average non-interest earning balance $millon Average interest earning balance $millon Interest income $millon Gross yield interest earning balance % Gross yield total balance % Cash and balances at central banks 23,612 55,991 92 0.160.12 Gross loans and advances to banks 22,335 45,953 490 1.07 0.72 Gross loans and advances to customers 56,582 307,5527,574 2.46 2.08 Impairment provisons against loans and advances to banks and customers – (6,013) ––– Investment securites 32,250 155,925 2,090 1.34 1.11 Property, plant and equipment and intangble assets 8,869 –––– Prepayments, accrued income and other assets 111,564 –––– Investment associates andjont ventures 2,330 –––– Total average assets 257,542 559,408 10,246 1.83 1.25 2020 Average non-interest earning balance $millon Average interest earning balance $millon Interest income $millon Gross yield interest earning balance % Gross yield total balance % Cash and balances at central banks 18,185 43,210 113 0.26 0.18 Gross loans and advances to banks 27,684 54,142 801 1.48 0.98 Gross loans and advances to customers 51,322291,432 8,558 2.94 2.50 Impairment provisons against loans and advances to banks and customers – (6,526) ––– Investment securites 28,313 144,112 2,820 1.96 1.64 Property, plant and equipment and intangble assets 9,787 –––– Prepayments, accrued income and other assets 116,263 –––– Investment associates andjont ventures 2,122 –––– Totalaverage assets 253,676 526,370 12,292 2.34 1.58 ![]() 444 Standard Chartered – Annual Report 2021 Supplementaryinformaton Supplementary financalinformaton Average liablites 2021 Average non-interest bearing balance $millon Average interest bearing balance $millon Interest expense $millon Rate paid bearing balance % Rate paid total balance % Deposits by banks 18,486 27,402 136 0.500.30 Customer accounts: Current accounts and savings deposits 51,104 262,191 848 0.320.27 Time and other deposits 54,658 149,367 1,348 0.90 0.66 Debt securites in issue 6,288 59,135 566 0.960.87 Accruals, deferred incomeand other liablites 115,477 1,149 53 4.61 0.05 Subordinatedliablites andother borrowed funds – 16,525 497 3.013.01 Non-controlling interests 343 –––– Shareholders’ funds 51,307 –––– 297,663 515,769 3,448 0.67 0.42 Adjustmentfor Financal Markets fundingcosts (97) Financal guaranteefees on interestearning assets 99 Total average liablites and shareholders’ funds 297,663 515,769 3,450 0.67 0.42 2020 Average non-interest bearing balance $millon Average interest bearing balance $millon Interest expense $millon Rate paid bearing balance % Rate paid total balance % Deposits by banks 17,899 27,178 2370.870.53 Customer accounts: Current accounts and savings deposits 43,729 226,278 1,140 0.50 0.42 Time and other deposits 58,789 154,865 2,531 1.63 1.18 Debt securites in issue 6,883 52,391 836 1.60 1.41 Accruals, deferred incomeand other liablites 122,1941,169 59 5.050.05 Subordinatedliablites andother borrowed funds – 16,170 637 3.943.94 Non-controlling interests 319 –––– Shareholders’ funds 50,377 –––– 300,190 478,051 5,440 1.14 0.70 Adjustmentfor Financal Markets fundingcosts (173) Financal guaranteefees on interestearning assets 104 Total average liablites and shareholders’funds 300,190 478,051 5,371 1.12 0.69 Net interestmargin 2021 $millon 2020 $millon Interestincome (statutory) 10,246 12,292 Average interest earning assets 559,408 526,370 Gross yield (%) 1.83 2.34 Interestexpense (statutory) 3,448 5,440 Adjustmentfor Financal Markets fundingcosts (97) (173) Financal guaranteefees on interestearning assets 99 104 Adjusted interest expense used to fund financal instruments held at fair value 3,450 5,371 Average interest-bearing liablites 515,769 478,051 Rate paid (%) 0.67 1.12 Net yield (%) 1.16 1.22 Net interest income adjusted for Financal Markets funding costs and Financal guarantee fees on interest earning assets 6,796 6,921 Net interest margin (%) 1.21 1.31 ![]() 445 Standard Chartered – Annual Report 2021 Supplementaryinformaton Volume and price variances The following table analyses the estimatedchange in theGroup’snet interest income attributable tochanges in the average volume of interest-earning assets and interest-bearing liablites, and changes in their respective interest rates for the years presented. Volume and rate variances have been determined based on movements in average balances and average exchange rates over the year and changes in interest rates on average interest-earning assets and average interest- bearing liablites. 2021 versus2020 (Decrease)/increase in interest due to: Net increase/ (decrease) in interest $millon Volume $millon Rate $millon Interest earning assets Cash and unrestricted balances at central banks 21 (42) (21) Loans and advances to banks (87) (224) (311) Loans and advances to customers 418 (1,402) (984) Investment securites 158 (888) (730) Total interest earningassets 510 (2,556) (2,046) Interest bearing liablites Subordinatedliablites andother borrowed funds 11 (151) (140) Deposits by banks 1 (102) (101) Customer accounts: Current accounts and savings deposits 123 (420) (297) Time and other deposits (50) (1,134)(1,184) Debt securites in issue 65 (335) (270) Total interest bearingliablites 150 (2,142) (1,992) 2020 versus 2019 (Decrease)/increase in interest due to: Net increase/ (decrease) in interest $millon Volume $millon Rate $millon Interest earning assets Cash and unrestricted balances at central banks 37 (253) (216) Loans and advances to banks (102) (931) (1,033) Loans and advances to customers 442 (2,659) (2,217) Investment securites 191 (982) (791) Total interest earningassets 568 (4,825) (4,257) Interest bearing liablites Subordinatedliablites andother borrowed funds 44 (163) (119) Deposits by banks (4)(498) (502) Customer accounts: Current accounts and savings deposits 233 (1,148) (915) Time and other deposits (213) (1,409) (1,622) Debt securites in issue 49 (333) (284) Total interest bearingliablites 109 (3,551) (3,442) ![]() 446 Standard Chartered – Annual Report 2021 Supplementaryinformaton Supplementary people informaton #### Supplementary people informaton Global 1 2021 2020 % change Full-time equivalent (FTE) 81,904 83,601 (2.0) Headcount (year end) 81,957 83,657 (2.0) Employedworkers (permanent) 80,605 82,084 (1.8) of which female 36,644 37,245 (1.6) Fixedterm workers (temporary) 1,352 1,573 (14.0) of which female 637 768 (17.1) Non-employed workers (NEW) 13,845 11,632 19.0 Non-outsourced NEW 2 6,130 5,765 6.3 Outsourced NEW 3 7,715 5,867 31.5 Headcount (12-month average) 82,736 84,740 (2.4) Male FTE 44,033 45,198 (2.6) Headcount 44,045 45,210 (2.6) Full-time 44,002 45,172 (2.6) Part-time 43 38 13.2 Female FTE 37,240 37,969 (1.9) Headcount 37,281 38,013 (1.9) Full-time 37,138 37,860 (1.9) Part-time 143 153 (6.5) Undisclosed 4 FTE 631 434 45.4 Headcount 631 434 45.4 Full-time 630 433 45.5 Part-time 1 1 – Nationalties 132 131 0.8 Positon type 2021 2020 % change Executive and non-executive director 13 13 – of which female 4 4– Management team and their direct reports 5 116 129 (10.1) of which female 33 41 (19.5) Senior leadership 6 4,227 4,196 0.7 of which female 1,299 1,236 5.1 Rest of Employees 77,730 79,461 (2.2) of which female 35,982 36,777 (2.2) Employmenttype 2021 2020 % change Business FTE 30,595 34,883 (12.3) Business headcount 30,614 34,905 (12.3) Business female headcount 15,866 18,016 (11.9) Support services FTE 51,308 48,717 5.3 Support services headcount 51,343 48,752 5.3 Female support servicesheadcount 21,415 19,997 7.1 ![]() 447 Standard Chartered – Annual Report 2021 Supplementaryinformaton Region 2021 2020 % change Asia FTE 67,840 68,357 (0.8) Asia headcount 67,870 68,385 (0.8) Asia female headcount 31,470 31,610 (0.4) Asia employedworkers headcount 66,968 67,449 (0.7) Asia fixed term workers headcount 902 936 (3.6) Asia full time headcount 67,774 68,300 (0.8) Asia part time headcount 96 85 12.9 AME FTE 9,372 10,694 (12.4) AME headcount 9,373 10,695 (12.4) AME female headcount 4,100 4,652 (11.9) AME employed workers headcount 8,999 10,139 (11.2) AME fixed term workers headcount 374 556 (32.7) AME full time headcount 9,369 10,691 (12.4) AME part time headcount 4 4– EA FTE 4,691 4,550 3.1 EA headcount 4,714 4,577 3.0 EA female headcount 1,711 1,751 (2.3) EA employed workers headcount 4,638 4,496 3.2 EA fixed term workers headcount 76 81 (6.2) EA full time headcount 4,627 4,474 3.4 EA part time headcount 87 103 (15.5) Age 2021 2020 % change < 30 years FTE 14,063 15,979 (12.0) < 30 years headcount 14,069 15,984 (12.0) < 30 years female headcount 7,623 8,409 (9.3) 30-50 years FTE 60,891 60,881 0.0 30-50 years headcount 60,919 60,912 0.0 30-50 years female headcount 26,583 26,641 (0.2) > 50 years FTE 6,949 6,741 3.1 > 50 years headcount 6,969 6,761 3.1 > 50 years female headcount 3,075 2,963 3.8 ![]() 448 Standard Chartered – Annual Report 2021 Supplementaryinformaton Supplementary people informaton Talent management 7 2021 2020 % change Global voluntary turnover – FTE 10,214 6,001 70.2 Global turnover – FTE 13,160 8,088 62.7 Global voluntary turnover rate (%) 12.5% 7.3% 71.7 Global turnover rate (%) 16.0% 9.8% 63.1 Male turnover FTE 7,332 4,386 67.2 Male (%) 16.5% 9.9% 67.0 Female turnoverFTE 5,736 3,673 56.2 Female (%) 15.4% 9.7% 58.9 Asia turnover FTE 11,004 6,588 67.0 Asia (%) 16.3% 9.8% 66.3 AME turnover FTE 1,454 1,046 39.1 AME (%) 14.3% 9.6% 49.5 EA turnover FTE 703 454 54.7 EA (%) 15.7% 10.6% 47.9 < 30 years turnover FTE 3,712 2,561 44.9 < 30 years (%) 24.2% 14.1% 71.9 30-50 years turnover FTE 8,144 4,765 70.9 30-50 years (%) 13.5% 8.2% 65.4 > 50 years turnover FTE 1,304 762 71.2 > 50 years (%) 19.9% 12.6% 57.4 Average tenure (years) – Male 7.2 7.1 1.3 Average tenure (years)– Female 7.7 7.6 1.7 Global new hires – FTE 12,660 8,639 46.6 Global new hire rate (%) 15.1% 10.2% 47.8 Male new hire FTE 6,758 4,96336.2 Male (%) 15.0% 11.0% 36.4 Female new hire FTE 5,580 3,423 63.0 Female (%) 14.7% 8.8% 66.7 Asia new hire FTE 11,387 7,591 50.0 Asia (%) 16.7% 11.1% 50.2 AME new hire FTE 431 366 17.8 AME (%) 4.0% 3.2% 27.5 EA new hire FTE 842 682 23.5 EA (%) 18.5% 15.8% 17.1 < 30 years new hire FTE 5,857 4,020 45.7 < 30 years (%) 36.7% 21.1% 74.0 30-50 years new hire FTE 6,514 4,433 46.9 30-50 years (%) 10.7% 7.5% 42.5 > 50 years new hire FTE 290 186 55.6 > 50 years (%) 4.3% 3.0% 43.8 Roles filled internally (%) 40.8% 39.6% 3.1 of which filled by females (%) 42.8% 41.1% 4.1 Employees with completed performance appraisal (%) 99.9% 97.7% 2.3 Absenteeism rate 8 (%) 1.6% 1.3% 23.3 ![]() 449 Standard Chartered – Annual Report 2021 Supplementaryinformaton Learning 9 2021 2020 % change Employees receivng trainng (%) 99.4% 99.5% (0.1) Employees receivng trainng for personal development (%) 91.7% 91.5% 0.2 Female (%) 91.2% 89.9% 1.5 Senior leadership (%) 6 96.2% 94.5% 1.8 Average number of trainng hoursperemployee 37.6 31.818.0 Female 36.9 30.3 21.9 Employed workers 37.6 31.918.1 Fixed term workers 34.0 27.3 24.5 Average cost of trainng per employee ($) 10 708 567 24.9 Work-related Health& Safety 2021 2020 % change Fatalites 11 0 1– Fatalites (rate per millon hours worked) 0 0.01 – Major inuries 11,12,13,14 24 23 4.3 Major inuries (rate per millon hours worked 15 ) 0.13 0.12 4.5 Recordablework-related inuries 16 79 84 (6.0) Recordable work-related inuries (rate per millon hours worked 15 ) 0.43 0.45 (5.8) Work-related ill-health (fatalites) 0 –– 1Excludes 247 employees (headcount) from Solv and Zai (formerly known as Currency Fair Assembly Payments) entites 2Non-outsourced NEWs are resources engaged on a time and materials basis where task selection and supervison is the responsiblity of the Bank, such as agency workers. References tototal number of colleagues inthis report includeemployees plusnon-outsourced NEWs 3Outsourced NEWs are arrangements with a third party vendor where the delivery is based on a specifc service or outcome at an agreed price, irrespectve of the number of resources required to perform the service. These resources are not considered as the Group’s headcount 4The disclosure ofgender informaton isnotmandatory insome markets 5Management team (MT) and colleagues who report to them, excluding adminstrative or executive support roles (personal assistant, business planning managers).Includes GroupHead of InternalAudit. 6Senior leadership is defined as Managing Directors and Bands 4 (includng Management Team) 7Turnover metrics are based on permanent employed workers only. New hire metrics are based on external new hires. Turnover and new hire metrics for the undisclosed gender populationis not showndue tosmall populationsize 8Represents health and disablity related absence, includng quarantine and vaccinaton leave in respect of COVID-19. Excludes Korea 9Learning metrics have been updated to exclude non-employed workers (NEWs) and 2020 has been updated for comparison. Trainng for personal development is defined as all trainng excluding mandatory or role specifc trainng. 10Average costof trainng peremployee includes costof learning management system 11 Includes commuting 12 Per UK HSE defintion 13Most common types of major inury are fractures (52%) 142021 includes4 contractors/vistors. 2020 includes1 contractor/vistor 15 2021 hours worked = 184,997,097 . 2020 hours worked = 185,313,634. 16 2021 includes23 contractors/vistors. 2020 includes14 contractors/vistors ![]() 450 Standard Chartered – Annual Report 2021 Supplementaryinformaton Supplementary sustainablity informaton #### Supplementary sustainablity informaton Pillar 1: Business Employees trained in environmental and social risk management 2021 20202019 Employees trained 1 1,280 1,604 1,149 1Employees targeted for trainng are those in client-facing roles and relevant support teams Environmentaland socialrisk management 2021 20202019 Number of transactions reviewed 547 402 321 Number of clients reviewed 786 688 804 Equator Princples Projectfinance mandates Project-related corporate loansProject-related refinance 4 Project advisory mandates 6 Cat A 1 Cat B 2 Cat C 3 Cat ACat BCat CCat ACat BCat C Total 2019 67 – 112 –––– Total 2020 48 – 21 ––––– Total 2021 8 12 3160010 2021 Sector Minng 0000000000 Infrastructure 2331600000 Oil & Gas 2000000000 Renewables 2900000100 Telecoms 0000000000 Power 2000000000 Other 0000000000 Region GCNA 0020300000 ASA 3410000000 Americas 4201300000 EA 1600000100 Designaton 5 Designated 0610000100 Non-Designated 8621600000 Independent Review Yes 8 12 11200100 No 0020400000 1‘Cat A’ or Category A are projects with potential signficant adverse environmental and social risks and/or impacts that are diverse, irreversble or unprecedented 2‘Cat B’ or Category B are projects with potential limted adverse environmental and social risks and/or impacts that are few in number, generally site-specifc, largely reversible andreadily addressed through mitgation measures 3‘Cat C’ or Category C are projects with minmal or no adverse environmental and social risks and/or impacts 4In line with Equator Princples 4, Standard Chartered now reports those transactions that trigger Project Related Refinance 5‘Designaton’ is split into designated and non-designated countries. Designated countries are deemed by the Equator Princples to have robust environmental and social governance, legislaton systems and insttutional capacity designed to protect their people and the natural environment. Non-designated countries are countries that arenot found onthe list ofdesignated countries.The list ofcountries canbefound at www.equator-princples.com 6Standard Chartered did not particpate in any Project Advisory mandates that triggered the applicablity of the Equator Princples in 2021 ![]() 451 Standard Chartered – Annual Report 2021 Supplementaryinformaton Pillar 2: Operations Environment See footnote: 2021 20202019 Measured Scaled Up Measured Scaled Up Measured Scaled Up Offices reporting 838 756 164 – Net internal area of occupied property (m 2 ) 976,520 998,571 933,132 1,050,414 825,088 1,154,999 Green lease clause incluson (%) 1 85 85 82 – Occupied net internal area where data is collected (%) 98 89 71 – Headcount 2 80,318 81,957 74,316 83,657 73,094 84,398 Annual operating income from 1 October to 30 September ($m) – 14,541 – 15,233 – 15,200 Greenhouse gas emissons – Absolute (tonnes CO 2 eq/year) Scope 1 emissons(combustion of fuels) 2,834 2,902 3,589 3,988 3,435 4,542 Scope 2 emissons (purchased electricty – location based) 80,835 82,761 102,477 113,870 98,383 141,771 Scope 2 emissons (purchased electricty – market based) 3 73,016 74,906 Scope 1 & 2 emissons (location based) 83,669 85,662 106,066 117,858 101,818 146,313 Scope 1 & 2 emissons (UK and offshore area only) 4 –– Scope 3 emissons with distance uplift (air travel) 5 3,4103,654 31,617 33,930 87,295 94,043 Scope 3 emissons (outsourced Global Data Centre) 43,132 - 29,562 –46,362 Scope 1, 2 & 3 emissons (location based) 87,079 132,448 137,683 181,350 189,113 286,718 Greenhouse gas emissons – Intensity Scope 1 &2 emissons/headcount (tonnes CO 2 eq/headcount/year) 1.041.05 1.431.411.391.73 Scope 1 & 2 emissons/$m operating income (tonnes CO 2 eq/$m/year) 5.89 – 7.74 –9.63 Scope 3 emissons/headcount with distance uplift (tonnes CO 2 eq/headcount/year) 0.040.04 0.40 0.41 1.111.11 Scope 1, 2 & 3 emissons/headcount (tonnes CO 2 eq/headcount/year) 1.08 1.62 1.85 2.17 2.59 3.40 Scope 1, 2 & 3 emissons/$m operating income (tonnes CO 2 eq/$m/year) 9.11 –11.91–18.86 Environmentalresource efficency Energy 6 Indirect non-renewable energy consumption (GWh/year) 139.3 142.4 163.6 184.2 153.5 222.6 Indirect renewable energy consumption (GWh/year) 26.8 27.5 12.5 14.1 16.4 17.0 Direct non-renewable energy consumption (GWh/year) 12.212.4 14.6 16.5 14.4 18.8 Direct renewable energy consumption (GWh/year) 7 0.70.7 0.70 0.800.500.80 Energy consumption (GWh/year) 8 179 183 191.5 215.6 184.3 258.3 Energy consumption (GWh/year) (UK and offshore area only) 55 Energy consumption/Headcount (kWh/Headcount/year) 2,229 2,233 2,260 2,544 2,522 3,061 Water 9 Water consumption (ML/year) 256 384 363483 425 654 Water consumption in regions of high or extremely high water stress (%) 10 3030 Water consumption/headcount (m 3 /headcount/year) 35 4668 Waste Waste (ktonnes/year) 2.21 3.5 3.67 5.4 4.8 – Waste per colleague(kg/headcount/year) 28 43 43 65 66 – Waste reused or recycled (%) 32 23 - 35 – ![]() 452 Standard Chartered – Annual Report 2021 Supplementaryinformaton Supplementary sustainablity informaton 1Percentage of green lease clause incluson in all new and renewed leases withn the reporting year. 2Refers to the Group’s headcount as at 31 December 2021. 3This is a new reporting additon for 2021. Market-based data is unavailable for previous years. All aggregate and intensty emissons figures use location based data as their foundation. 4This is a location based consumption value emisson. This is zero, as all energy consumed in the UK is from verifed renewable sources. 5Measured Scope 3 flight emissons are drawn from reliable data collected from 35 countries, based on seating class and distance flown. This data is then scaled up to reflect the portion of the portfolio we do not gather measurements from. As we operate largely outside of the UK, all flights domestic or internatonal with flight distance of less than 785km, labelled by the Department for Business, Energy and Industrial Strategy (DBEIS) as domestic flights, have been classifed as short haul. All flights with distance flown ranging from 785 to 3,700km, labelled by DBEIS as short haul have been classifed as medium haul. All flights with a distance flown in excess of 3,700km are classifed as long haul. Note that 2020 scaled up flight emissons, along with associated totals and intensty metrics have been restated due to an error made in previous reporting periods. This was an immateral change of less than one per cent. 6We measured data from 98% of our properties to calculate our energy use across our properties. This is then scaled up to reflect the portion of the portfolio we do not gather measurements from. Warehouses, emptyland, car parks, unoccupied sites forbusinesscontinutypurposes,residental properties, space occupied by automated tellermachines, vaults andspace sub-let totenants are excluded fromthisextrapolation. Figuresfor renewable,non-renewable andtotal energyin GWh are rounded to one decimal place – therefore some discrepances in rounded sum totals may arise. Total consumption figures have been verifed as accurate from source data. This also applies to previous periods which are therefore restated to the same level of detail. Further detail on the types of energy included withn these calculations can be found at sc.com/environmentcritera. 7In 2021, reporting has changed to GWh for this metric. In previous years this was reported in MWh. 8This value represents the total energy of heating, cooling and electricty consumption globally. Total energy use is normalised to reflect periods of vacancy in certain sites during the reporting period. 9We measured data from 67% of our properties to calculate our water use across our properties. This is then scaled up to reflect the portion of the portfolio we do not gather measurements from. 10Areas of high and extremely high water stress determined according to WRI Aquaduct tool. As accessed on 10 Jan 2022, these countries are South Africa, Saudi Arabia, Bahrain, Oman, Qatar, UAE, Pakistan, India, Thailand and China. This is a new reporting additon for 2021, data is unavailable for previous years. 11We measured data from 63% of our properties to calculate our waste across our properties. This is then scaled up to reflect the portion of the portfolio we do not gather measurements from. Additonal notes on environment data The emissons withn our inventory correspond to a reporting period of 1 October 2020 to 30 September 2021. This is to allow 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 period rather than the calendar year used in financal reporting. This is consistent with internatonal carbon reporting practice. We use an independent third-party assurance provider to verify our greenhouse gas (GHG) emissons. In 2021, our measured Scope 1 and Scope 2 emissons, as well as waste and water consumption, were assured by Global Documentation Ltd, ensuring the accuracy andcrediblity of our reporting. Read ourenvironment reporting critera at sc.com/environmentcritera Read ourindependentassurancereport at sc.com/environmentalassurance ![]() 453 Standard Chartered – Annual Report 2021 Supplementaryinformaton Pillar 2: Operations Financal crime prevention Completion rates of Financal Crime Risk trainng 2021 % 2020 % 2019 % Internal Financal Crime Risks Group total 99.6 99.999.9 Asia 99.5 Governance body NA Employees – Employed Workers 99.5 Employees – Fixed term workers 99.8 AME 99.8 Governance body NA Employees – Employed Workers 99.9 Employees – Fixed term workers 99.7 EA 99.8 Governance body 100 Employees – Employed Workers 99.8 Employees – Fixed term workers 100 External FinancalCrime Risks Group total 99.6 99.999.9 Asia 99.6 Governance body NA Employees – Employed Workers 99.6 Employees – Fixed term workers 99.8 Business Partners 100 AME 99.9 Governance body NA Employees – Employed Workers 99.9 Employees – Fixed term workers 99.7 Business Partners 100 EA 99.8 Governance body 100 Employees – Employed Workers 99.8 Employees – Fixed term workers 100 Business Partners 100 Additonal notes on financal crime prevention data With the introducton of alignment to GRI and WEF metrics, enhanced data related to employee categories and regions has been provided for 2021. Total trainng rates have been provided for previous periods, for which regional and category breakdowns are not available. In 2020, the Financal Crime Compliance (FCC)e-learning courses mergedintoExternal and Internal FinancalCrime Risk courseswhich cover anti-money laundering (AML), sanctions, anti bribery and corruption (ABC) and fraud risks.2019 reported data provides the total employees completing three separate e-learning courses on sanctions, AML and ABC. Governance body refers to Standard Chartered PLC Board members. All Board members are reported under EA region. Employed workers are permanent employees of Standard Chartered PLC. Fixed term workers are employed for a fixed period. Business partners refers to suppliers and third parties that received our Supplier Charter in 2021. The Supplier Charter communicates our expectations and minmum standards with regards to ABC and financal crime. Computing method :(Completed +Due) / (Total Population– Untagged) =rate of Completion. Data isthe “Tagged” population. ![]() 454 Standard Chartered – Annual Report 2021 Supplementaryinformaton Supplementary sustainablity informaton Pillar 3: Communites Community expenditure Total ($millon) 2021 20202019 Cash contributons 28.1 71.5 27.5 Employee time (non-cash item) 11.4 11.6 16.9 Gifts in kind (non-cash item) 1 2.6 1.1 0.3 Management costs 4.7 4.4 4.5 Total (direct investment by the Group) 46.8 88.6 49.2 Leverage 2 1.9 7.1 1.9 Total(incl. leverage) 48.7 95.7 51.1 Percentage ofprior yearoperating profit(% PYOP) 3 2.58 2.01 1Giftsin kindcomprisesall non-monetary donations 2Leverage data relates to the proceeds from staff and other fundraisng activty ![]() 455 Standard Chartered – Annual Report 2021 Supplementaryinformaton Pillar one: Business Theme Aspiraton Target Date Green and TransitonFinance Achievng a just transiton will require directng capital and specialsed support to the regions that need it most todrive sustainable economic growth Mobilse $300 billon aligned to our Green and Sustainable Product Framework and Transiton Finance Framework includng contributon from existngtarget to: Jan 2021 – Dec 2030 Mobilse project financng services for $40 billon of infrastructure projects that promote sustainable development that align to our verifed Green and Sustainable Product Framework Jan 2020 – Dec 2024 Launch and grow green mortgages in key markets across our footprintJan 2022 – Dec 2023 Climate Climatechange isone of today’s greatest challenges and addressing it isessential to promote sustainable economic growth Measure, manage and reduce emissons associated with our financng via the implementaton of our net zero roadmap Jan 2022 – Dec 2022 Only provide financal services to clients who are: • by 2024, less than 80% dependent on thermal coal (based on % revenue); • by 2025, are less than 60% dependent on thermal coal (based on % revenue); • by 2027, are less than 40% dependent on thermal coal (based on % revenue); • by 2030, are less than 5% dependent on thermal coal (based on % revenue) Jan2020 – Jan 2030 Achieve emissons reductionin our most carbon-intensve sectors of: • 63% in Power (Scopes 1 and 2 intensty); • 33% in Steel Producers (Scopes 1 and 2 intensty); • 33% in Minng (ex Coal) (Scopes 1 and 2 intensty); • 30% in Oil and Gas (Scopes 1, 2 and 3 intensty), and; • 85% emissons reduction in coal minng (Scopes 1, 2 and 3 absolute) Jan2020 – Dec 2030 Measure and report mortgage emissons witha view to settingtargets by 2023 Jan 2022 – Dec 2023 Entrepreneurs Entrepreneurs are the heart of local economies, creating jobs and empoweringpeople Provide $15 billon of financng to small business clients (Business Banking) Jan 2020 – Dec 2024 Provide $3 billon of financng to microfnance insttutionsJan 2020 – Dec 2024 Commerce Trade createsjobs and contributes to economiesby enabling peopleto connect across borders Bank 10,000 of our clients’ internatonal and domestic networks of suppliers and buyers through banking the ecosystem programmes Jan 2020 – Dec 2024 Impact Finance Innovative financal products and partnerships canhelp us solve global development challenges and improve the lives of millons in our markets Double sustainable investng assets under management frommutual funds only to a more holistc propositon includng exchange traded funds (ETFs), bonds, equites, structured products, discretonary portfolio mandates (DPMs) and insurance-linked plans (ILPs) Jun 2021 – Dec 2025 Integrate ESGconsideratonsin wealth managementadvisory activties Jan 2021 – Dec 2025 #### 2022 Sustainablity Aspiratons ![]() 456 Standard Chartered – Annual Report 2021 Supplementaryinformaton 2022 Sustainablity Aspiratons Pillar two: Operations Theme Aspiraton Target Date People Our people are our greatest asset, and our diversty drives our businesssuccess Increase gender representation to35% women insenior roles Sep 2016 – Dec 2025 Increase our ‘Culture of Inclusion’ score to 84.5%Jan 2020 – Dec 2024 Embedan integratedhealth and wellbeing strategyto support buildng and re-skillng a future-ready, diverse workforce Jan 2020 – Dec 2022 Create Diversty & Inclusion Supplier Plansfor all our markets to support 40% of our newly onboarded suppliers being diverse Jan 2022 – Dec 2025 Grow our employee My Voice score to the question “the way that we operate day-to-day is aligned with our vison of being the world’s most sustainable and responsible bank” from 2021 baseline of 84% to 88% Jan 2022 – Dec 2024 Support at least 50% of all employees to complete our learning programme on Sustainablity Support at least 70% of relevant employees to complete our Sustainable Finance trainng programme Jan 2022 – Dec 2022 Environment Reducing our own impact on the environment will protect our planet for the benefit of our communites Reduce annual Scope 1 & 2 greenhouse gas emissons to net zero by2025 Jan 2019 – Dec 2025 Source allenergyfrom renewablesources Jan 2020 – Dec 2025 Achieve and maintan flight emissons 28% lower than our 2019 baseline of 94,000 tonnes Jan 2021 – Dec 2023 Reduce waste per colleague to 40kg/FTE/yearJan 2020 – Dec 2025 Recycle 90% of wasteJan 2020 – Dec 2025 Offset all residual emissons from our operations (Scope 1 and 2, Scope 3 flights, waste and data centres), doubling our average cost from $7.65 in 2021 to $15per tonne in 2022 Jan 2022 – Dec 2022 Conduct and Compliance By partnering proactively and effectively, we can drive the right outcomes for clients and communites Tacklefinancalcrimes by contributng todevelopingtypologies and red flags for financal flows, trainng frontline staff to identfy potential suspicous transactionsand particpating in public-private partnerships to share intellgence and good practices Ongoing Develop and deliver a targeted outreach programme, includng through key internatonal platforms, aimed at safely and transparently reducing barriers to capital mobilsationfor sustainable development Jan 2022 – Dec 2024 Pillar three: Communites Theme Aspiraton Target Date Communites Everyone deserves economic opportunites that enable them to learn, earn and grow Invest 0.75% of prior year operating profit (PYOP) in our communites Ongoing Raise $75 millon for Futuremakers by Standard CharteredJan 2019 – Dec 2023 Education: Reach 1 millon girls and young women through GoalJan 2006 – Dec 2023 Employabilty: Reach 100,000 young peopleJan 2019 – Dec 2023 Increase particpation for employee volunteering to 55%Jan 2020 – Dec 2023 ![]() 457 Standard Chartered – Annual Report 2021 Supplementaryinformaton #### Shareholder informaton Divdend and interest payment dates Ordinary shares Final divdend Results and divdend announced 17 February 2022 Ex-divdend date 24 (UK) 23 (HK) February 2022 Recorddate for divdend 25 February 2022 Last date to amend currency election instructons for cash divdend\*12 April 2022 Divdend payment date 12 May 2022 \*In either US dollars, sterling, or Hong Kong dollars Preferenceshares 1st half yearly divdend2nd half yearly divdend 7 3  8 per cent non-cumulative irredeemable preference shares of £1 each1 April 20221 October 2022 8 1  4 per cent non-cumulative irredeemable preference shares of £1 each1 April 20221 October 2022 6.409 per cent non-cumulative redeemable preference shares of $5 each 30 January and 30 April 2022 30 July and 30 October 2022 7.014 per cent non-cumulative redeemable preference shares of $5 each30 January 202230 July 2022 Annual General Meeting The Annual General Meeting (AGM) will be held on Wednesday 4 May 2022 at 11:00 UK time (18:00 Hong Kong time). Further details regarding the format, location and business to be transacted at the meeting will be disclosed withn the 2022 Notice of AGM. Details of voting at the Company’s AGM and of proxy votes cast can be found on the Company’s website at sc.com/agm Interim results The interm results will be announced to the London Stock Exchange,The StockExchange ofHong Kong Limted and put on the Company’s website. Country-by-Country Reporting In accordance with the requirements of the Capital Requirements (Country-by-Country Reporting) Regulations 2013,the Group willpublish additonal country-by-country informaton in respect of the year ended 31 December 2021, on or before 31 December 2022. We have also published our approach to tax and tax policy. This informaton will be available on the Group’s website at sc.com ShareCare ShareCare is available to shareholders on theCompany’s UK register who have a UK address and bank account. It allows you to hold your Standard Chartered PLC shares in a nominee account. Your shares will be held in electronic form so you will no longer have to worry about keeping your share certifcates safe. If you jon ShareCare, you will still be invted to attend the Company’s AGM and you will receive any divdend at the same time as everyone else. ShareCare is free to jon and there are no annual fees to pay. If you would like to receive more informaton, please vist our website at sc.com/shareholders orcontact the shareholder helpline on 0370 702 0138 . Donating shares toShareGift Shareholders who have a small number of shares often find it uneconomical to sell them. An alternative is to consider donating them to the charity ShareGift (registered charity 1052686), which collects donations of unwanted shares until there are enough to sell and uses the proceeds to support UK charites. There is no implcation for capital gains tax (no gain or loss) when you donate shares to charity, and UK taxpayers may be able to claim income tax relief on the value of their donation. Further informaton can be obtained from the Company’s registrars or from ShareGift on 020 7930 3737 or from sharegift.org Bankers’ Automated Clearing System (BACS) Divdends can be paid straight into your bank or buildng societyaccount. Please register online at investorcentre.co.uk orcontact our registrar for a divdend mandate form. Registrars and shareholder enquires If you have any enquiresrelating to your shareholding and you hold your shares on the UK register, please contact our registrar Computershare Investor Services PLC, The Pavilons, Bridgwater Road, Bristol, BS99 6ZZ or call the shareholder helpline number on 0370 702 0138. If you hold your shares on the Hong Kong branch register and youhave enquires, please contact Computershare Hong Kong Investor Services Limted, 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong. You can check your shareholding at computershare.com/hk/investors ![]() 458 Standard Chartered – Annual Report 2021 Supplementaryinformaton Shareholder informaton Substantial shareholders The Company and its shareholders have been granted partial exemption from the disclosure requirements under Part XV of the Securites and Futures Ordinance (SFO). As a result of this exemption,shareholders nolonger have an obligaton under Part XV of the SFO (other than Divsions 5, 11 and 12 thereof) to notify theCompany of substantial shareholding interests, and the Company is no longer required to maintan a register of interests of substantial shareholders under section 336 of the SFO. The Company is, however, required to file with The Stock Exchange of Hong Kong Limted any disclosure of interests made in the UK. Taxation No tax is currently withheld from payments of divdends by StandardChartered PLC. Shareholders and prospective purchasers should consult an appropriate independent professional adviser regardingthetax consequences ofan investment in shares in light of their particular circumstances, includng the effect of any national, state or local laws. Previous divdend payments (unadjusted for the impact of the 2015/2010/2008 rights issues) Divdend and financal year Payment date Divdend per ordinaryshare Cost of one new ordinary share under share divdend scheme Final 2008 15 May 2009 42.32c/28.4693p/HK$3.279597 £8.342/$11.7405 Interim 2009 8 October 2009 21.23c/13.25177p/HK$1.645304 £13.876/$22.799 Final 2009 13 May 2010 44.80c/29.54233p/HK$3.478306 £17.351/$26.252 Interim 2010 5 October 2010 23.35c/14.71618p/HK$1.811274/INR0.984124 1 £17.394/$27.190 Final 2010 11 May 2011 46.65c/28.272513p/HK$3.623404/INR1.9975170 1 £15.994/$25.649 Interim 2011 7 October 2011 24.75c/15.81958125p/HK$1.928909813/INR1.13797125 1 £14.127/$23.140 Final 2011 15 May 2012 51.25c/31.63032125p/HK$3.9776083375/INR2.6667015 1 £15.723/$24.634 Interim 2012 11 October 2012 27.23c/16.799630190p/HK$2.111362463/INR1.349803950 1 £13.417/$21.041 Final 2012 14 May 2013 56.77c/36.5649893p/HK$4.4048756997/INR2.976283575 1 £17.40/$26.28792 Interim 2013 17 October 2013 28.80c/17.8880256p/HK$2.233204992/INR1.6813 1 £15.362/$24.07379 Final 2013 14 May 2014 57.20c/33.9211444p/HK$4.43464736/INR3.354626 1 £11.949/$19.815 Interim 2014 20 October 2014 28.80c/17.891107200p/HK$2.2340016000/INR1.671842560 1 £12.151/$20.207 Final 2014 14 May 2015 57.20c/37.16485p/HK$4.43329/INR3.514059 1 £9.797/$14.374 Interim 2015 19 October 2015 14.40c/9.3979152p/HK$1.115985456/INR0.86139372 1 £8.5226/$13.34383 Final 2015 No divdenddeclared N/AN/A Interim 2016 No divdend declared N/AN/A Final 2016 Nodivdend declared N/AN/A Interim 2017 No divdend declared N/AN/A Final 2017 17 May 2018 11.00c/7.88046p/HK$0.86293/INR0.653643340 1 £7.7600/$10.83451 Interim 2018 22 October 2018 6.00c/4.59747p/HK$0.46978/INR0.3696175 1 £6.7104/$8.51952 Final 2018 16 May 2019 15.00c/11.569905p/HK$1.176260/INR0.957691650 1 N/A Interim 2019 21 October 2019 7.00c/5.676776p/HK$0.548723/INR0.425028600 1 N/A Final 2019 Divdend withdrawn N/AN/A Interim 2020 No divdend declared N/AN/A Final 202020 May 2021 9.00c/6.472413p/HK$0.698501 N/A Interim 2021 22 October 2021 3.00c/2.204877p/HK$0.233592 N/A 1The INR divdend is per Indian Depository Receipt. In March 2020, the Group announced the terminaton of the IDR programme. The IDR programme was formally delisted from the BSE Limted (formerly the Bombay Stock Exchange) and National Stock Exchange of India Limted with effect from 22 July 2020 Chinese translation If you would like a Chinese version of the 2021 Annual Report please contact Computershare Hong Kong InvestorServices Limted, 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, HongKong. 二〇二一年年報之中文譯本可向香港中央證券登記有限公司索取， 地址：香港灣仔皇后大道東183號合和中心17M樓。 Shareholders onthe Hong Kong branch register who have asked to receive corporate communicatons in either Chinese orEnglish can changethiselectionby contacting Computershare. If there is a dispute between any translation and the English version of this Annual Report, the English text shall prevail. Electroniccommunicatons If you hold your shares on the UK register and in future you would like to receive the Annual Report electronically rather than by post, please register online at: investorcentre.co.uk. Click on ‘register’ and follow the instructons. You will need to have your Shareholder or ShareCare reference number to hand. You can find this on your share certicate or ShareCare statement. Once you have registered and confirmed your email communicaton preference, you will receive future notifcations via email enabling you to submit your proxy vote online. In additon, as a member of Investor Centre, you will be able to manageyour shareholding online and submit divdend elections electronically and changeyour bank mandate or address informaton. ![]() 459 Standard Chartered – Annual Report 2021 Supplementaryinformaton #### Important notices Forward-looking statements This document may contain ‘forward-looking statements’ that are based on current expectations or beliefs, as well as assumptions about future events. These forward-looking statements can be identfied by the fact that they do not relate only tohistorcal or currentfacts. Forward-looking statements often use words such as ‘may’, ‘could’, ‘will’, ‘expect’, ‘intend’, ‘estimate’, ‘anticpate’, ‘believe’, ‘plan’, ‘seek’, ‘continue’ or other words of simlar meaning. By their very nature, forward-looking statements are subject to known and unknown risks and uncertaintes and can be affected by other factors that could cause actual results, and the Group’s plans and objectves, to differ materially from those expressed or impled in the forward-looking statements. Recipents should notplace reliance on, and are cautioned about relying on, any forward-looking statements. There are several factors whichcould cause actualresults todiffer materially from those expressed or impled in forward-looking statements. The factors that could cause actualresults to differ materially from those described in the forward-looking statements include (but are not limted to): changes in global, politcal, economic, business, competitve and market forces or conditons; future exchange and interest rates; changes in environmental,social or physical risks; legislatve, regulatory and policy developments; the development of standards and interpretatons; the abilty of the Group to mitgate the impact of climate change effectively; risks arisng out of health criss and pandemics; changes in tax rates, future business combinatonsor dispostions; and otherfactors specic to the Group. Any forward-looking statement contained in this document is based on past or current trends and/or activties of the Group and should not be taken as a representation that such trends or activties will continue in the future. No statement in this document is intended to be a profit forecast or to imply that the earnings of the Group for the current year or future years will necessarily match or exceed the historcalor published earnings of the Group.Each forward-looking statement speaks only as of the date of the particular statement. Except as required by any applicable laws or regulations, the Group expressly disclams any obligatonto revise or update any forward-looking statement contained withn this document, regardless of whether those statements are affected as a result of new informaton, future events or otherwise. Financal instruments Nothing in this document shall constitute, in any jursdicton, an offer or solictation to sell or purchase any securites or other financal instruments, nor shall it constitute a recommendation or advicein respect of any securites or other financal instruments or any other matter. Caution regarding climate and environment related informaton Some of the climate and environment related informaton in this document is subject to certain limtations, and therefore the reader should treat the informaton provided, as well as conclusions, projectons and assumptions drawnfrom such informaton, with caution. The informaton may be limted due to a number of factors, which include (but are not limted to): a lack ofreliable data;a lack of standardisaton of data; and future uncertainty. The informaton includes externally sourced data that may not have been verifed. Furthermore, some of the data, models and methodologies used to create the informaton is subject to adjustment which is beyond our control, and the informaton is subject to change without notice. ![]() 460 Standard Chartered – Annual Report 2021 Supplementaryinformaton Awards #### Main awards and accolades in 2021 The Banker Transaction Banking Awards 2021 • Transaction Bank of the Year for Trade Finance Corporate Treasurer Award 2021 • Best Transaction Bank South Asia • Best Transaction Bank China and Hong Kong • Best Trade Finance Bank South Asia • Best Trade Finance Bank China and Hong Kong GTR Deal of the Year 2021 • Deal of the Year (Tanzania Standard Gauge Railway) • Deal of the Year (TDB) Leader in Trade 2021 • Leaders in Trade for Innovation Asiamoney Awards • Best for ESG in Asia • Best International Private Bank (Singapore) • Best International Private Bank (India) • Best internatonal Bank (Bangladesh) Asiamoney Middle East Awards • Best International Bank (MiddleEast) The Asset Triple A Treasury, Trade, SSC and Risk Management Awards 2021 • Best RenminbBank • Best in Treasury and Working Capital – LLCs • Best in Working Capital and Trade Finance • Best in Treasury and Cash Management, MENA • Best in Working Capital Trade Finance, North Asia and South Asia and MENA • Best Cash Management Bank, Bangladesh, Pakistan, Sri Lanka, Vietnam • Best Supply Chain Bank, Pakistan • Best Specialst: Liqudity Management Bank, China, Hong Kong, Taiwan • Best Transaction Bank, China • Best Trade FinanceBank, Hong Kong, India, South Korea, Sri Lanka • Best in Treasury and Working Capital – SMEs, South Korea • Best E-Solutions Partner, HongKong, South Korea, Vietnam The Asset Triple A Infrastructure Awards 2021 • Project Finance House of the Year (Vietnam) • Green Project of the Year (Vietnam) • Renewable Energy Deal of the Year – Solar (Vietnam) • Best Sustainablity Effort (Vietnam) TMI Awards for Innovation & Excellence in Treasury 2021 • Best Bank for Cash & Liqudity Management APAC • Best Bank for Trade & Financal Supply Chain APAC • Technology & innovaton Awards: Best Customer Experience • Technology & Innovation Awards: Highly Commended for Solution Innovation • Treasury4Good Awards: Best EmployeeEngagement Project • Treasury4Good Awards: Highly commended: Best Sustainable SCF Solution • Treasury4 Good Awards: Highly Commended: Best Supply Chain Solution • CorporateRecogniton Technology Awards Best Virtual Accounts Solution • Corporate Recogniton Awards Best Trade FinanceSolution • CorporateRecogniton Technology Awards: Best Blockchain Solution • Corporate Recogniton Awards: Best Accounts Receivable Solution Treasury TodayAsia Adam Smith Awards Asia 2021 • Highly Commended: First Class Relationshp Management • Highly Commended: Best AR Solution • Highly Commended: Best AP Solution • Highly Commended: First Class Relationshp Management • Top Treasury Team 2021 – Shell Treasury Centre East Pte Ltd • Best E-Cash Solution – DHL • Best Working Capital Management Solution – SAIC HK International Finance Ltd The Digtal Banker ‘Global Retail Banking Innovation Awards’ Global • Best Automated AdvisoryService • Best Frictonless CRM • Best Machine Learning Initative • Outstanding Digtal Acceleration in response to Covid-19 • Outstanding Client onboarding & Account Opening Regional • Best Digtal Bank – Africa Country • Best Digtal Bank – 8 markets • Best Islamic Retail Bank – 4 markets Global Finance ‘World’s Best Digtal Bank’ Awards • Best Consumer Digtal Bank – Africa • Best Consumer Digtal Bank – 11 markets • Best Islamic Digtal Bank – Asia-Pacifc • Best Bill Payment and Presentment (global) • Best Open Banking APIs – Mox Bank (global) ![]() 461 Standard Chartered – Annual Report 2021 Supplementaryinformaton Global Private Banking Innovation Awards • Best Private Bank – AI and Big Data MEA Finance Awards 2021 • Best Technology Executive of the Year, Financal Services – Mohamed Abdel Razek, CIO, Standard Chartered Bank • Best M&A deal • Best Global Bank in Middle East (second year in a row) • Best Overall Wealth Management Service in the Middle East Middle East and Africa Retail Banking Innovation Awards 2021 • Excellence in Digtal Wealth Management • Best Digtal Financal Inclusion Initative Diversty & incluson and #### employer awards Bloomberg • Sixthconsecutiveyear on Bloomberg Gender Equality Index EDGE • Second-highest level of EDGE Strategy Certifcation in Malaysia and Sri Lanka Empower Ethnic Minorty Role Models • 50 Advocates list – Jeremy Amias • Ethnic Minorty Executives list – Fenil Khiroya • Ethnic Minorty Future Leaders list – Donna Hill European Diversty Awards • Supplier Diversty Programme of theYear FinancalTimes • Recognised on list of European Leaders for Workplace Diversty and Inclusion Forbes • Recognised as a World’s Best Employer HERoesWomen Role Model Lists • Women Executives – Jaine Mwai, Michele Sun San Wee, Souad Benkradda • Women Future Leaders – Ankita Gupta and Swastika Somaddar • Advocate Executives– SimonCooper India Workplace Equality Index • Gold Employer OUTstanding LGBT+ Executive List • Carmen Muller, Sunil Daswani Refintiv Diversty and Inclusion Index • Placed Top 100 #### Sustainablity indces We particpate in the Workforce Disclosure Initative and in 2021 scored a top 10 per cent response. We particpate in the CDP Climate questionnare, scoring a B in 2021. Further detail on our indcies and analysts ratings can be found at sc.com/ESGratings #### Sustainablity #### and community #### engagement awards ADB – TSCFP Awards • Most Responsive Bank Against COVID-19 (Confirmng Bank) Award (SriLanka) BT Banking Awards • Best CSR Bank (Bangladesh) China Sustainablity Tribune • Sustainablity Development Solution Award (China) Community Chest Awards • Charity Gold Award (Standard Chartered Singapore) CorpComms Awards • Best International Campaign - Zeronomics • Best Sustainablity Campaign – Zeronomics The EconomicObserver • Sustainable Finance Contributon Award (China) The Excellent Magazine • Best Social Inclusion (Taiwan) Global Brandsmagazine • Best CSR Bank (Bangladesh) PRWeek Global Awards • Best Global Content Award – Opportunity 2030 PRCA City & Financal Awards • Best StrategicCommunicatons/ Corporate Brand Campaign – Opportunity 2030 Singapore President • Community Spirt Platinum Award (Singapore) Taiwan Advertisers’ Associaton and Brain Magazine • Best CSR-Social Engagement – Silver Award (Futuremakers, Taiwan) ![]() 462 Standard Chartered – Annual Report 2021 Supplementaryinformaton Glossary #### Glossary Absolute financed emissons A measurement of our attributed share of our clients greenhouse gas emissons. 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(as it forms part of UK domestic law) 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 performance measures A financal measure of historcalor 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 operationsin Brunei, Indonesia, Malaysia, Philppines, Singapore, Thailand and Vietnam. AUM or Assets 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 capitaladequacy framework issued by the Basel Committee on Banking Supervison (BCBS) in June 2006 in the form of the International Convergence of Capital Measurement and Capital 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 adocument 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. Basic earnings per share (EPS) Represents earnings divded by the basic weighted averagenumber of shares. 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veand the UK onshored Capital Requirements Regulation (CRR). The package implements the Basel III framework 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 mostchanges 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onon 1 January 2022. Capital-lite income Income derived from products with low RWA consumption or products which are non-funding in nature. Capital resources Sum of Tier 1 and Tier 2 capital after regulatory adjustments. CGU or Cash-generating unit The smallest identfiable groupof assets that generates cash inflows that are largely independent ofthe 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. 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.Commercialreal estate loans are those backed by a package of commercial real estate assets. 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- controllinginterests andregulatory adjustments required in the calculation of 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. ![]() 463 Standard Chartered – Annual Report 2021 Supplementaryinformaton 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onalcapital requirement ofup 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 creditrisk The risk that acounterparty defaults before satisfyng its obligatonsunder 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 theGroup 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 receivespremium 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 by a rating agency. 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 suchthat 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. Dayspast due One or more days that interest and/or princpal payments are overdue based on the contractual terms. 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 ofindebtedness ofthe 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 ofdeductible 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 oftaxable 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 defaultrepresent 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 beunlikely to pay, includng those that are credit-impared. Defined benefit obligaton The present value of expected future payments requiredto settle the obligatons ofa defined benefit scheme resulting from employee service. Defined benefitscheme Pension or other post-retirement benefitscheme otherthan a defined contributon scheme. Defined contributon scheme A pension or other post-retirement benefit scheme where the employer’s obligatonis limted to its contributons to the fund. Delinquency A debt orotherfinancal obligaton is considered to be in a state of delinquency when payments are overdue. Loans and advances are considered to bedelinquent when consecutive payments are missed. Also known as arrears. Deposits by banks Depositsby banks comprise amounts owed to other domestic or foreign credit insttutions by the Group includng securites sold under repo. Diluted earnings per share (EPS) Represents earnings divded by the weighted average number of shares that would have been outstanding assuming the conversion of all dilutve potential ordinary shares. 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. ![]() 464 Standard Chartered – Annual Report 2021 Supplementaryinformaton Glossary Early alert, purely and non- purely precautionary A borrower’s account which exhibts risks or potential weaknesses of a material naturerequirng closer monitorng, supervison, or attentionby management. Weaknesses in such a borrower’s account, if left uncorrected, could resultin deterioraton of repaymentprospects 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 ornon-purely precautionary. Apurelyprecautionary account is one that exhibts early alert characteristcs, but these do not present anyimm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 taxrate The tax on profit/ (losses) on ordinary activties as a percentage of profit/(loss) on ordinary activties before taxation. Encumbered assets On-balancesheetassets pledged or used as collateral in respect of certain of the Group’s liablites. 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 valueof 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 forcapital adequacy calculations. It is measured as the Group-modelled view ofanticpated loss based on probabilty of default, loss given defaultand 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 atdefault 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 acentral bank issung credit ratings which is exempt from the applicaton of this regulation. ESG Environment, Social and Governance. FCA orFinancal Conduct Authority The FinancalConduct Authority regulates the conductof 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 madeto 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esthe‘curing’ conditonsdescribed in Note 8 to the financal statements. 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 considered to be impared. See ‘Forbearance’. Funded/unfunded exposures Exposureswhere the notionalamount of the transactionis 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 systemic interconnectedness meanthat their distress or failure would cause signficant disrupton to the widerfinanc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 UK, the G-SIB buffer is implemented via the CRD as Global Systemically ImportantInstitutons (G-SII)buffer requirement Green andSustainable Product Framework Sets out underlying eligble qualifyng themes andactivties that maybe considered green, social or sustainable. This has been co-authored with a third party verifer (Sustainalytcs) and has been informed by industry and supervisory princples and standards such as the Green Bond Princples and EU Taxonomy. Hong Kong regional hub StandardChartered Bank (Hong Kong) Limted andits subsidaries includng the primary operating entites inChina, Korea and Taiwan. Standard Chartered PLC is the ultimate parent company of StandardChartered Bank (Hong Kong) Limted. Interestrate 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. ![]() 465 Standard Chartered – Annual Report 2021 Supplementaryinformaton 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 Standards framework. IASB or International Accounting Standards Board An independent standard-setting body responsible for the development and publicaton of IFRS, and approving interpretatons ofIFRS standards that are recommended by the IFRS Interpretations Committee (IFRIC). IFRS orInternational Financal Reporting Standards A set of internatonal accounting standards developed and issued by the InternationalAccountingStandards 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 accountingtreatment of issuesnot 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ngcertain 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dassets should be unencumbered, liqud in markets during a time of stress and, ideally, be central bank eligble. Loan exposure Loans and advances to customers reported on the balance sheetheld at amortised cost or FVOCI, non- cancellable credit commitments and cancellablecredit 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 boughtunder 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. Loans past due Loans onwhich payments havebeen 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 termshave been renegotiated on terms not consistent with current market levels due to financal diffculties of the borrower. Loans in this category arenecessarily 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 outstanding balances. 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-optimal clients’. Malus An arrangement that permits the Group to prevent vesting of all or part of the amount of anunvested variable remuneration award, due to a specifc crystallisedrisk, behaviour, conduct or adverse performance outcome. Master nettingagreement 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, orterminaton of, any one contract. Mezzanine capital Financng that combinesdebt and equitycharacteristcs. Forexample, a loan that also confers some profit particpation tothe lender. MREL or minmum requirement for own funds and eligble liablites A requirement under the BankRecovery and Resolution Directve for EU resolution authorites to seta minmum requirement for own funds and eligble liablites for banks, implementng the FSB’s Total LossAbsorbing Capacity (TLAC) standard. MREL is intendedto 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 endof a reportingperiod. 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. Net Zero The aim of reaching net zero carbon emissons from our operations by2025 and from our financng by 2050. NII or Net interest income The difference between interest received on assets and interest paid on liablites. ![]() 466 Standard Chartered – Annual Report 2021 Supplementaryinformaton Glossary NSFR or Net stable funding ratio The ratio ofavailable stable funding to required stable funding over a one-year time horizon, assuming astressed scenario. It is a longer-term liqudity measure designed to restrain the amount of wholesale borrowing and encourage stablefunding over a one-yeartime 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. Thisexcludes 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. Non-linearty Non-linearty ofexpected creditloss occurswhen the average ofexpected credit loss for a portfolio is higher than the base case (median) due to the fact that bad economicenvironmentcould have a larger impact on ECL calculation than good economic environment. Normalised items See ‘Underlying/Normalised’ on page 85. Operating expenses Staff and premises costs, general and adminstrative expenses, depreciaton and amortisaton. Underlying operating expensesexcludeexpenses as described in ‘Underlying earnings’. A reconcilation between underlying and statutory earnings is contained in Note 2 tothe financ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 usingvaluation 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. Perennialsub-optimalclients 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 levelrise. Pillar 1 The first pillar of the three pillars of the Basel framework which provides the approach tocalculation 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 aconsistent and comprehensive disclosure framework that enhances comparabilty between banks and further promotes improvementsin risk practices. Priorty Banking Priorty Banking customers are indvidualswho have metcertain critera for deposits, AUM, mortgage loans or monthly payroll. Critera varies bycountry. 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 suchas 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 obligorwill default on an obligaton over a given time horizon. Probabilty weighted Obtained by considerngthe values the metric can assume, weighted by the probabilty of each value occurring. 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 forthe 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. Revenue-based carbon intensty A measurement of the quantity of greenhouse gases emitted by our clients per USD of their revenue. 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 are consolidatedfor 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, CorrasiCovered BondsLLP, Pegasus Dealmaking Pte. Ltd., Standard Chartered Botswana Education Trust, Standard Chartered Bancassurance Intermediary Limted, Standard Chartered Bank Insurance Agency (Proprietary) Limted, Standard Chartered Research and Technology India Private Limted, Standard Chartered Trading (Shanghai) Limted. ![]() 467 Standard Chartered – Annual Report 2021 Supplementaryinformaton Repo/reverse repo 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 collateralfor 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 thetransaction (buyingthe security and agreeing to sell in the future), it is a reverse repurchase agreement or reverse repo. 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 andis specifedwhereused. 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 thenperformed to generatethe final PDsby delinquency bucket over different time horizons. Scope 1 emissons Arise from the consumption ofenergy from direct sources during the use of property occupied by the Group. On-site combustion of fuels such as diesel, liquefed petroleum gas and natural gas is recorded using meters or, where metering is not available,collated from fuel vendor invoces. Emissons fromthe combustion of fuel inGroup-operated transportation devices, as well as fugitve emissons, are excluded as being immateral. Scope 2 emissons Arise from the consumption ofindrect sources of energy during the use of property occupied by the Group. Energy generated off-site in the form of purchased electricty, heat, steam or cooling is collected as kilowatt hours consumed using meters or, where metering is not available,collated from vendor invoces. Forleased properties we include all indrect and direct sources of energy consumed by buildng services (amongst otheractivties) withnthe space occupied by the Group. This can include base buildng servicesunder landlord control but over which we typicallyholda reasonable degree of influence. All data centre facilties with conditoning systems and hardware remainng under the operational control of the Group are included in the reporting. Thisdoes not includeenergy used at outsourced data centre facilties which are captured under Scope 3. Scope 3 emissons Occur as a consequence of the Group’s activtiesbut arisng fromsources not controlled by the Group. Business air travel data is collected as person kilometrestravelled by seating class by employees of the Group. Data are drawn from country operations that have processes in place to gather accurate employeeair travel data from travel management companies. Flights are categorised as short, medium or long haul trips. Emissonsfromother potential Scope 3 sources such as electricty transmisson and distrbution line losses are not currently accounted for on the basis that they cannot be calculated withan acceptable level of reliablity or consistency. The Group does however capture Scope 3 emissons from outsourced datacentres managedby third parties. 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 ableto 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 bepartly 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. Undertradit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 of the orignating insttution and transfers risk to externalinvestors in a way that meets their risk appetite. Under synthetic securitsation transactions, the transfer ofrisk 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 othercreditors receive anypayment. SICR or Signficant increase in credit risk Assessed by comparing the risk of default of an exposure at the reporting date to therisk of defaultat orignation (after considerng the passage of time). Solo The solo regulatory group as defined in the Prudential RegulationAuthority waiver letter dated 10 August 2020 differs from Standard Chartered Bank Company in that it includes the full consolidatonof nine subsidaries, namely Standard Chartered Holdings (International) B.V., Standard Chartered MB Holdings B.V.,Standard Chartered UK Holdings Limted, Standard Chartered Grindlays PTY Limted, SCMB Overseas Limted, Standard Chartered Capital Management (Jersey) LLC, CeruleanInvestments L.P., SC Ventures InnovationInvestment L.P.and SC Ventures G.P. Limted. ![]() 468 Standard Chartered – Annual Report 2021 Supplementaryinformaton Glossary Sovereignexposures Exposures to central governmentsand central governmentdepartments, 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 supervisoryrisk weights. In relation to operational risk, a method of calculating the operational capital requirement by the applicaton of a supervisory definedpercentage 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. Sustainablity Aspiratons A series of targets and metrics by which we aim to promote social and economic development, and deliversustainable outcomes in the areas in which we can make the most material contributon to the delivery of the UN Sustainable Development Goals. Sustainable Finance assets Assets from clients whose activties are aligned with the Green and Sustainable Product Framework and/or from transactions for which the use of proceedswill beutilseddirectlyto contribute towards eligble themes and activties set out withn the Green and Sustainable Product Framework. Sustainable Finance revenue Revenue from clients whose activties are aligned with the Green and Sustainable Product Framework and/or from transactions for which proceeds will be utilsed directly to contribute towards eligble themes and activties set out withn the Green and Sustainable Product Framework and/or from approved ‘labelled’ transactions such as any transaction referred to as “green”, “social”, “sustainable”, “SDG (sustainable development goal) aligned”, “ESG”, “transiton”, “COVID-19 facilty” or “COVID-19 response” which have been approved by the Sustainable Finance Governance Committee. 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 2capital comprises qualifyng subordinated liablites and related share premium accounts. TLAC or Total loss absorbing capacity An internatonal standardfor 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 functionsand avoid exposing public funds to loss. 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 ofthe chargeable equites and liablites on the Group’s UK tax resident entites’balance sheets.Key exclusionsfromchargeable 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 favourablyor unfavourably by users. Unlikely to pay Indicatons of unlikelness to pay shall include placingthe credit obligatonon non-accrued status; the recogniton of a specifc credit adjustment resulting from a signficant perceived decline in credit quality subsequent tothe 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onwherethis 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 asimlar order in respect of anobligor’s creditobligat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 expectedcash flows expectedto 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 debtis 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’. ![]() Designed and produced by Friend www.friendstudo.com Printed by Park Communicatons on FSC ® certifedpaper. Park works to the EMAS standard and its Environmental Management System is certifed to ISO 14001. This publicaton has been manufactured using 100% offshore wind electricty sourced from UK wind. This is a certifed climate neutral print product for which carbon emissons have been calculated and offset by supportingrecognised carbonoffset projects. The carbon offset projects are audited and certifed accordingto internatonal standards anddemonstrably reduce emissons. Theclimate neutrallabel includes a unique ID number specifc to this product which can be tracked at www.climatepartner.com, givng details of the carbon offsetting process includng informaton on the emissons volume and the carbon offset project being supported. 100% of the inks used are vegetable oil based, 95% of press chemicals are recycled for further use and, on average 99% of any waste associated with this production will be recycled and the remainng 1% used to generateenergy. This document is printed on Nautilus Superwhite 100% Recycled paper containng 100% recycled fibre. The FSC ® label onthis product ensuresresponsibleuse of the world’s forest resources. © Standard CharteredPLC. All rights reserved. The STANDARD CHARTERED word mark, its logo device and associated product brand names are owned by Standard Chartered PLC and centrally licensed to its operating entites. Registered Office: 1 Basinghall Avenue, London EC2V 5DD. Telephone +44 (0) 20 7885 8888. Princpal place of business in Hong Kong: 32nd Floor, 4-4A Des Voeux Road, Central, Hong Kong. Registered in England No. 966425. ![]() Global headquarters Standard Chartered Group 1 Basinghall Avenue London, EC2V 5DD United Kingdom telephone: +44 (0)20 7885 8888 facsimle: +44 (0)20 7885 9999 Digtal AnnualReport sc.com/annualreport Shareholder enquires ShareCare informaton website:sc.com/shareholders helpline: +44 (0)370 702 0138 ShareGift informaton website: ShareGift.org helpline: +44 (0)20 7930 3737 Registrar informaton UK ComputershareInvestor ServicesPLC The Pavilons Bridgwater Road Bristol, BS99 6ZZ helpline: +44 (0)370 702 0138 Hong Kong Computershare Hong Kong Investor Services Limted 17M Floor, HopewellCentre 183 Queen’s Road East Wan Chai Hong Kong website:computershare.com/hk/investors Chinese translation Computershare Hong Kong Investor Services Limted 17M Floor, HopewellCentre 183 Queen’s Road East Wan Chai Hong Kong Register for electronic communicatons website:investorcentre.co.uk LSE stock code: STAN.LN HKSE stock code: 02888