![]() #### Annual Report 2022  # Connecting the world’s most dynamic markets #### Here for good ![]() #### We are a leading international cross-border bank Standard Chartered is a bank like no other. Our unique footprint, diverse experience, capabilit ies and culture set us apart. They enable us to capitalise on opportunities for our business, our #### customers, and the communities we serve. #### Guided by our Purpose – to drive commerce and prosperity through our unique divers ity – we connect more than 59 of the world’s most dynamic markets, backing the people and businesses who are the #### engines of global growth. #### Together, we are developing new economies that can deliver sustained prosperity in the decades ahead. As our brand promise makes clear, we are here for good. Strategic report Throughout this report, we use these icons to represent the different stakeholder groups for whom we create value. Stakeholders Clients Regulators and governments Investors Suppliers Society Employees Financ ial KPIs 1 Return on tangible equity 8.0 % 120bps Underlying basis 6.8 % 200bps Statutory basis Common Equity Tier 1 ratio 14.0 % 19bps At the top of 13-14% target range Total shareholder return 41 % 43ppt Non-financial KPIs 2 Divers ity and inclus ion: women in senior roles 4 32.1 % 1.4ppt Sustainab il ity Aspirat ions met or on track 85.7 % 2.8ppt Other financial measures 1, 3 Operating income $16,255 m 15% Underlying basis $16,318 m 16% Statutory basis Profit before tax $4,762 m 15% Underlying basis $4,286 m 30% Statutory basis Earnings per share 101.1 #### cents 15.3 cents Underlying basis 85.9 #### cents 24.6 cents Statutory basis 1 Reconcil iat ions from underlying to statutory and defin it ions of alternative performance measures can be found on pages 126 to 130 2 For more informat ion on our culture of inclus ion see page 64, and for more on our Susta inab il ity Aspirat ions see page 64 3 Year-on-Year growth on Operating Income and Profit before tax is on constant currency basis 4 Senior leadership is defined as Managing Directors and Band 4 roles (includ ing Management Team) ![]() 01 Standard Chartered – Annual Report 2022 Strategic report Strategic report 02 Who we are and what we do 04 Where we operate 06 Group Chairman’s statement 10 Group Chief Executive’s review 14 Market environment 18 Business model 22 Our strategy 24 Our Stands 26 Client segment reviews 29 Regional reviews 32 Group Chief Financ ial Officer’s review 42 Risk overview 52 Stakeholders and Sustainab il ity 124 Non-financial informat ion statement 126 Underlying versus statutory results 131 Alternative performance measures 132 Viab il ity statement 134 Directors’ report 184 Directors’ remuneration report 232 Risk review and Capital review 326 Financ ial statements 474 Supplementary informat ion #### In this report p 10 Group Chief Executive’s review Unless another currency is specif ied, the word ‘dollar’ or symbol ‘$’ in this document means US dollar and the word ‘cent’ or symbol ‘c’ means one-hundredth of one US dollar. All disclosures in the Strategic report, Directors’ report, Risk review and Capital review and Supplementary informat ion are unaud ited unless otherwise stated. Unless context requires with in the document, ‘Ch ina’ refers to the People’s Republic of China and, for the purposes of this document only, excludes Hong Kong Special Admin istrat ive Region (Hong Kong), Macau Special Admin istrat ive Region (Macau) and Taiwan. ‘Korea’ or ‘South Korea’ refers to the Republic of Korea. Asia includes Australia, Bangladesh, Brunei, Cambodia, India, Indonesia, Laos, Malaysia, Myanmar, Nepal, Phil ipp ines, Singapore, Sri Lanka, Thailand, Vietnam, Mainland China, Hong Kong, Japan, Korea, Macau, Taiwan; Africa and Middle East (AME) includes Angola, Bahrain, Botswana, Cameroon, Côte d’Ivoire, Egypt, The Gambia, Ghana, Iraq, Jordan, Kenya, Lebanon, Maurit ius, N iger ia, Oman, Pak istan, Qatar, Saudi Arabia, Sierra Leone, South Africa, Tanzania, UAE, Uganda, Zambia, Zimbabwe; and Europe and Americas (EA) include Argentina, Brazil, Colombia, Falkland Islands, France, Germany, Ireland, Jersey, Poland, Sweden, Türkiye, the UK, and the US. With in the tables in this report, blank spaces ind icate that the number is not disclosed, dashes ind icate that the number is zero and nm stands for not meaningful. Standard Chartered PLC is incorporated in England and Wales with lim ited l iab il ity, and is headquartered in London. The Group’s head office provides guidance on governance and regulatory standards. Standard Chartered PLC. Stock codes are: LSE STAN.LN and HKSE 02888. Sustainab il ity reporting We adopt an integrated approach to corporate reporting, embedding non-financial informat ion throughout our annual report. While not complying in full, in preparing this report, we have given considerat ion to the pr inc iples of the voluntary Global Reporting Init iat ive, SASB Standards and the World Economic Forum Stakeholder Capital ism Metr ics framework. Read more in our ESG report sc.com/ESGreport For more informat ion on Standard Chartered please vis it sc.com Alternative performance measures The Group uses a number of alternative performance measures in the discuss ion of its performance. These measures exclude certain items which management believes are not representative of the underlying performance of the business and which distort period-on- period comparison. They provide the reader with ins ight into how management measures the performance of the business. About this report Client segment reviews Regional reviews Our strategy p 22 Stakeholders and Sustainab il ity p 29 p 52 p 26 ![]() 02 Standard Chartered – Annual Report 2022 Strategic report #### Who we are and what we do Who we are 1. 2. 3. 4. Total operating income $16,255m Underlying basis $16,318m Statutory basis Our client segments Global functions Enabling and supporting our businesses Transformation, Technology & Operations Responsible for leading bank-wide transformation and for reshaping the Group’s systems and technology platforms to ensure we provide robust, responsive, and innovat ive technology dig ital solut ions. Also manages all client operations, seeking to provide an optimal client service and experience across the board. Legal Provides legal advice and support to the Group to manage legal risks and issues. Human Resources Maxim ises the value of investment in people through recruitment, development and employee engagement. Risk Responsible for the overall second-line- of-defence responsib il it ies related to risk management, which involves oversight and challenge of risk management actions of the first line. Group Chief Financ ial 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 ial Officer. Corporate Affairs, Brand and Marketing Manages the Group’s marketing and communicat ions and engagement with stakeholders 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 Management Team protect the assets, reputation and sustainab il ity of the Group. Conduct, Financ ial Cr ime and Compliance Partners internally and externally to achieve the highest standards in conduct and compliance to enable a sustainable business and fight financial cr ime. #### Our client-facing businesses are supported by our global functions, which work together to ensure the Group’s operations #### run smoothly and consistently. Our Purpose is to drive commerce and prosperity through our unique diversity. We serve three client #### segments in three regions, supported by eight global functions. #### 1.Corporate, Commercial and Institutional Banking Supporting clients with their transaction banking, financ ial markets, corporate finance and borrowing needs, Corporate, Commercial and Institut ional Bank ing provides solutions to more than 20,000 clients in the world’s fastest-growing economies and most active trade corridors. $10,045m Underlying basis $10,086m Statutory basis #### 2.Consumer, Private and Business Banking Serving more than 10 mill ion ind iv iduals and small businesses, Consumer, Private and Business Banking focuses on the affluent and emerging affluent in many of the world’s fastest-growing cit ies. $6,016m Underlying basis $6,016m Statutory basis #### 3.Ventures Ventures promotes innovat ion, invests in disrupt ive financial technology and explores alternative business models. Its pipel ine of over 30 ventures includes two cloud-native dig ital banks. $29m Underlying basis $29m Statutory basis 4. Central and other items $165m Underlying basis $187m Statutory basis Operating income ![]() 03 Standard Chartered – Annual Report 2022 Strategic report 4. 1. 2. 3. Valued behaviours Our regions Total operating income $16,255m Underlying basis $16,318m Statutory basis #### Better togetherDo the right thingNever settle • Continuously improve and innovate • Simpl ify • Learn from your successes and failures • See more in others • “How can I help?” • Build for the long term • Live with integr ity • Think client • Be brave, be the change We’re developing a future-ready workforce built on good conduct and our valued behaviours 1. Asia We are present in 21 markets includ ing some of the world’s fastest-growing economies. Hong Kong and Singapore are the highest income contributors. $11,213m Underlying basis $11,256m Statutory basis #### 2.Africa and Middle East We have a presence in 25 markets of which the most sizeable by income are UAE, Pakistan, Kenya, Niger ia, South Afr ica and Ghana. $2,606m Underlying basis $2,608m Statutory basis #### 3.Europe and the Americas Centred in London, with a growing presence across continental Europe, and New York, we operate in both North America and several markets in Latin America. $2,353m Underlying basis $2,352m Statutory basis 4. Central and other items $83m Underlying basis $102m Statutory basis Operating income ![]() 04 Standard Chartered – Annual Report 2022 Strategic report Business model We operate in the world’s most dynamic markets which set the pace for global growth. Our unique footprint connects high-growth and emerging markets in Asia, #### Africa and the Middle East with more established economies, allowing us to channel capital where it’s needed most. #### For over 160 years we have used the power of our network to maximise opportunities for people #### and businesses who trade, operate, or invest in these regions. #### Our diverse experience, capabilities and culture sets us apart. #### We are present in 59 markets and serve clients in a further 64 #### Where we operate We have a long-standing and deep franchise across some of the world’s fastest-growing economies. Our Asia region generatestwo-thirdsof our income. The two markets contributing the highest income areHong Kong and Singapore . Australia Bangladesh Brunei Cambodia Hong Kong India Indonesia Japan Korea Laos Macau Mainland China Malaysia Myanmar Nepal Phil ipp ines Singapore Sri Lanka Thailand Vietnam Taiwan #### Asia Read more on page 29 ![]() 05 Standard Chartered – Annual Report 2022 Strategic report #### We support clients in Europe and the Americas throughhubs in London and New Yorkand havea strong presence #### in several European and Latin American markets. Argentina Brazil Colombia Falkland Islands France Germany Ireland Jersey Poland Sweden Türkiye UK US We have adeep-rooted heritage in Africa and the Middle Eastand have been in the region for 160 years. The United Arab Emirates, Pakistan, Kenya, #### Nigeria, South Africa, and Ghana are our largest markets by income. Angola Bahrain Botswana Cameroon Côte d’Ivoire Egypt The Gambia Ghana Iraq Jordan Kenya Lebanon Maurit ius Niger ia Oman Pakistan Qatar Saudi Arabia Sierra Leone South Africa Tanzania UAE Uganda Zambia Zimbabwe #### Africa and the Middle EastEurope and the Americas Read more on page 30 Read more on page 31 ![]() #### Group Chairman’s statement ## Delivering growth opportunities in our dynamic markets Dr José Viñals Group Chairman Strategic report Group Chairman’s statement 06 Standard Chartered – Annual Report 2022 ![]() 07 Standard Chartered – Annual Report 2022 Strategic report In 2022, Standard Chartered continued to make good progress executing its strategy and delivered a strong financial performance. The external env ironment we faced was mixed. The war in Ukraine created sign ificant uncerta inty in Europe and other key markets. However, the global economy remained resil ient, w ith the recent relaxation of COVID-19 restrict ions in China provid ing more grounds for optim ism in 2023. As these events unfold, it is clear that Standard Chartered’s role – connecting high-growth and emerging markets in Asia, Africa and the Middle East with each other, and with Europe and the Americas – is more vital than ever. Our financ ial performance, and the resil iency of our un ique geographic footprint, mean that we are well-posit ioned to cap ital ise on opportunit ies for growth in the years ahead. Our performance in 2022 is due in large part to the incred ible work of our over 83,000 people across the world, supported by the Management Team, and led by Group Chief Executive Bill Winters. Every day, Standard Chartered colleagues deliver first-rate results for our clients, provid ing ta ilored products and services to help them grasp the opportunit ies ahead. Anchored in our Purpose, we continue to drive commerce and prosperity in markets across the world through our unique divers ity. I am extremely proud of what we have ach ieved together in 2022, and I look forward to the opportunit ies that 2023 will bring. Continued financ ial momentum We continue to deliver an improv ing financial performance. Bill Winters, and Andy Halford, our Group Chief Financ ial Officer, will provide more detail on our financ ial results in the following pages. Last year, our income grew by 15 per cent to $16.3 bill ion, our highest since 2014, and underlying profit before tax increased by 15 per cent to $4.8 bill ion. It is clear that our strategy to drive improved levels of return on tangible equity (RoTE) is working. RoTE for the year increased to 8 per cent, 120 basis points higher year-on-year. We have revised our target RoTE for 2024 from 10 per cent to exceed 11 per cent, with further growth thereafter. The Group mainta ined a robust l iqu id ity posit ion and our capital levels remain strong, with a Common Equity Tier 1 (CET1) ratio of 14 per cent at year end, at the top of our target range of 13-14 per cent. Our asset quality and earnings trajectories are strong, wh ich gives us confidence that we can deliver substantial shareholder returns of at least $5 bill ion by the end of 2024, as set out last year. The Board is very clear that any capital not required for growth will be distr ibuted to shareholders. We have increased the total div idend by 50 per cent to 18 cents per share and have announced a new share buy-back of $1 bill ion, start ing imm inently. Th is will take total capital, includ ing d iv idends, announced since the start of 2022, to $2.8 bill ion, wh ich is well over halfway towards our target. Ambit ion and progress on our strateg ic prior it ies Our strategy, outlined in 2021, aligns us with the major engines of global growth and we see strong progress across our four strategic prior it ies: Network, Affluent, Mass Retail and Sustainab il ity. Our Network business continues to facil itate investment, trade and capital flows across our geographic footprint, where we are one of the leading internat ional wholesale banks. Our Affluent business is setting the standard for wealth management across Asia, Africa and the Middle East. We are provid ing new d ig ital solut ions, strategic partnerships and advanced analytics to our Mass Retail clients, lift ing partic ipat ion and generating Affluent clients of the future. And we continue to focus on our Sustainab il ity agenda that supports a just transit ion ensur ing that we are making a difference where it matters most. The addit ional strateg ic actions we are targeting to accelerate our performance are outlined in Bill’s report and I am pleased to say that we are executing against these at pace. Our strategy is underpinned by our Stands, the areas where we have set long-term ambit ions for impact in the markets we call home: Accelerating Zero, Resetting Globalisat ion and Lift ing Part ic ipat ion. Through Accelerating Zero, we are progressing on our commitment to be net zero in our financed emiss ions by 2050, supporting a just transit ion – one where cl imate object ives are met without depriv ing emerg ing markets of their opportunity to grow and prosper – which will underpin future social and economic prosperity. Our 2050 Net Zero roadmap was endorsed by our shareholders at our 2022 Annual General Meeting, following extensive engagement with shareholders, clients and NGOs. During 2022 we facil itated $23.4 b ill ion of sustainable finance, as we make progress towards our 2030 target of mobil is ing $300 bill ion in sustainable finance. Through Resetting Globalisat ion we are leverag ing our network and role as one of the world’s largest trade banks, to create a fairer and more inclus ive model of global growth, and build ing more res il iency in global supply chains through internat ional d ivers ification and d ig ital technolog ies. We are also helping to address funding gaps for businesses across Asia, Africa and the Middle East, particularly for small and micro enterprises. Through Lift ing Part ic ipat ion, we continue to broaden access to financial serv ices and create special ised programmes to support disadvantaged communit ies across our footpr int. We remain hugely proud of our Futuremakers programme, which was set up in 2019 to improve economic inclus ion in our markets, with a focus on women and girls, and in 2022 worked with over 335,000 young people. In India and Kenya, we have set up Solv, an e-commerce marketplace for small and medium-sized enterprises, which served over 230,000 customers in 2022. Elsewhere, we worked in partnership with FairPr ice Group to successfully launch the fully dig ital Trust Bank in Singapore, gain ing 450,000 customers in our first five months. SC Ventures continues to invest in potentially transformational business models and ecosystems, connecting more and more clients with economic opportunity. This is just one example of our collaborative approach to innovat ion and financial inclus ion. Enhancing governance and culture During the year, we continued to drive divers ity in our Board, recognis ing the benefits of a d iverse mix of gender, social and ethnic backgrounds, skills, knowledge, experience and adequate reflection of our key markets to support our strategy. The Board was heartened by the results of the externally facil itated effect iveness review of the Board and its committees. It assessed the Board’s progress since the last external review in 2019 and concluded that the Board continues to operate effectively while also ident ify ing some areas for improvement. More detail on process, outcomes and actions can be found on page 156. ![]() 08 Standard Chartered – Annual Report 2022 In 2022, we welcomed four new independent non-executive directors to the Board. Shir ish Apte was appo inted in May 2022 and joins the Remunerat ion, Audit and Board Risk Committees. Robin Lawther was appointed in July 2022 and joins the Remunerat ion and Board Risk Committees. Jackie Hunt was appointed in October 2022 and jo ins the Aud it and Culture and Sustainab il ity Committees. Dr. Linda Yueh was appointed in January 2023 and jo ins the Remunerat ion and Culture and Sustainab il ity Committees. I am delighted to welcome them and I am sure that we will greatly benefit from their broad experience and contribut ions. Last year also saw the retirement of several long-standing and valued directors from our Board. I would like to thank Naguib Kheraj, former Deputy Chairman and Chair of the Board Risk Committee who retired from the Board in April for his unwavering dedicat ion and most s ign ificant and impactful contribut ions to the Board and Comm ittee discuss ions. My thanks also go to Byron Grote who retired from the Board in November for his many contribut ions to the Board and its Committees. In addit ion, I would l ike to thank Christ ine Hodgson, former Senior Independent Director and Chair of the Remuneration Committee, for her many ins ightful contribut ions and great ded icat ion as well as for agree ing to remain on the Board until January 2023 to ensure a smooth transit ion to a new Remunerat ion Committee Chair. We also announced that Jasmine Whitbread, Chair of the Culture and Sustainab il ity Committee, and a long-standing and much valued board member, would not be seeking re-election at the 2023 AGM and will retire from the Board at that time. Looking ahead We are well posit ioned to take advantage of cons iderable growth opportunit ies in our footprint as we navigate an uncertain external environment in 2023. Global growth, while slower, should remain resil ient. But, w ith central banks focusing on controlling inflat ion aga inst a backdrop of trade and geopolit ical tens ions, sign ificant uncerta int ies rema in. Our markets are some of the world’s most dynamic places, with a growth potential that sign ificantly outstr ips more established economies. Asia is likely to be the fastest-growing region in the world, and the sign ificant re-open ing of the Chinese economy from COVID-19 restrict ions is likely to materially boost demand and growth. This, together with India and ASEAN’s high rates of economic expansion and continued dynamism in commodity-exporting countries in our footprint, gives us plenty of reasons for optim ism as we continue to help customers build growth, prosperity and a stronger future. The Board will continue to ensure an appropriate balance of opportunity and risk, acting in your interests as shareholders. We are grateful to you for the trust you place in us and for your ongoing support of the Group. I am confident that we will continue to create long-term, sustainable value for all stakeholders in 2023 and beyond. Dr José Viñals Group Chairman 16 February 2023 Aim Mainta in a strong cap ital base and Common Equity Tier 1 (CET1) ratio. Analysis Our CET1 ratio was 14.0 per cent, at the top end of our 13-14 per cent target range. The components of the Group’s capital are summarised on page 288 Common Equity Tier 1 ratio % -19 #### bps Total shareholder return (TSR) % Aim Deliver a posit ive return on shareholders’ investment through share price appreciat ion and d iv idends pa id. Analysis Our TSR in the full year 2022 was posit ive 41.4 per cent, compared with negative 2.0 per cent in 2021. Combines simple share price appreciat ion w ith div idends pa id to show the total return to the shareholder and is expressed as a percentage total return to shareholders +43.4 % Financ ial KPIs Aim Deliver sustainable improvement in the Group’s profitabil ity as a percentage of the value of shareholders’ tangible equity. Analysis Underlying RoTE of 8.0 per cent in 2022 was a 120bps improvement on 6.8 per cent in 2021. The underlying profit attributable to ordinary shareholders expressed as a percentage of average ordinary shareholders’ tangible equity Underlying return on tangible equity (RoTE) % +120 #### bps #### Group Chairman’s statement continued 8.0 % 2022 2021 2020 6.8 % 3.0 % 14.0 % 2022 2021 2020 14.1 % 14.4 % 41.4 % 2022 2021 2020 (2.0) % (34.6) % ![]() ### Helping female entrepreneurs thrive Throughout 2022, thousands of women were able to grow their businesses by using our collateral-free subsid ised loans for female micro-entrepreneurs. Geeta Shrestha, who runs an iron metal works in Nepal, expanded her small workshop to include a hardware shop, allowing her to create more income for her family and send her children to school. Meanwhile, Sita Timals ina was able to turn her small grocery store into a profitable cosmetics shop, which she runs while looking after her family. The success of her store led to the opening of a second location and allowed her husband has been able to leave his job in the Middle East to run both stores with her. Read more online at sc.com/invest ingcommun it ies 09 Standard Chartered – Annual Report 2022 Strategic report ![]() #### Group Chief #### Executive’s review ## Executing on our strategy and driving shareholder returns Bill Winters Group Chief Executive 10 Standard Chartered – Annual Report 2022 Strategic report Group Chief Executive’s review ![]() 11 Standard Chartered – Annual Report 2022 Strategic report The Group delivered a strong performance in 2022, executing well against our strategy and the five strategic actions we set out this time last year, whilst continu ing to invest for the future. 2022 income was over $16 bill ion, our h ighest since 2014 and up 15 per cent, with about half coming from underlying business growth and the remainder from the normalisat ion in interest rates. This is particularly impress ive g iven the material headwinds in our Wealth Management business. We have been disc ipl ined with expenses, generating savings which allow for continued investment and sign ificantly pos it ive income-to-cost jaws. Loan impa irment rose, ma inly due to the challenges of the China commercial real estate sector and sovereign risk. The broader portfolio remains resil ient and we continue to be vig ilant in the face of volatile global markets. All this has helped us increase underlying profit before tax for the year to $4.8 bill ion, an improvement of 15 per cent year-on-year. Our strategy is working and deliver ing improved performance and returns to shareholders. Return on Tangible Equity (RoTE) at 8 per cent is now above the levels it was before the pandemic. We intend to build on our momentum to approach 10 per cent RoTE in 2023, to over 11 per cent in 2024, and continue to grow thereafter. Our equity generation and disc ipl ine on RWA this year has meant our year end Common Equity Tier 1 (CET1) ratio is at the top of our target range, allowing us to increase our full year ordinary div idend to 18 cents per share, a 50 per cent increase. We have also announced a further share buy-back of $1 bill ion, start ing imm inently, wh ich will bring our total shareholder returns since the start of 2022 to $2.8 bill ion, well on our way to our 2024 target of at least $5 bill ion. Good progress on our strategic actions We are proud to connect the world’s most dynamic markets. Our Purpose is to drive commerce and prosperity through our unique divers ity and th is guides our strategy and everything we do. The businesses we serve, and with which we connect and partner, are the engines of trade and innovat ion, and central to the transit ion to a fa ir, sustainable future. In support of our Purpose, we continue to focus on three ‘Stands’, areas where we have long-term ambit ions for posit ive bus iness and societal impact – Accelerating Zero, Resetting Globalisat ion and L ift ing Part ic ipat ion. These stands are fully consistent with our strategy, stretching our think ing, our act ion and our leadership to accelerate our growth. We set out our strategy in early 2021, built on the four pillars of Network, Affluent, Mass Retail and Sustainab il ity. Two years on, these themes and areas of focus are even more relevant; our strategy is working, and will continue to drive future growth. In 2022 we also set out five strategic actions that we would take to accelerate delivery of double-dig it RoTE, includ ing: • Driv ing improved returns in Corporate, Commercial & Institut ional Bank ing (CCIB) • Transforming profitab il ity through productiv ity in Consumer Private & Business Banking (CPBB) • Seiz ing the opportun ity in China with the ambit ion to double onshore and offshore profit before tax • Creating operational leverage and deliver ing gross cost savings of $1.3 bill ion • Deliver ing over $5 b ill ion of cap ital returns to our shareholders We have made good progress across all five areas. In CCIB we are targeting around a 160 basis point improvement in income return on risk weighted assets (IRORWA) to 650 basis points with RWA capped at full year 2021 levels. We have already delivered on this IRORWA improvement target in 2022 and RWA levels are $20 bill ion below 2021 levels. The recently announced strategic review of our Aviat ion F inance business will create further capacity for CCIB to grow higher return business. In CPBB the team has already achieved gross savings of $233 mill ion aga inst their 2024 target of $500 mill ion. These savings have come from rational is ing the branch network, process re-engineer ing, headcount efficienc ies and further automation. Despite a challenging Wealth Management performance in 2022 the CPBB cost-to-income ratio improved 5 percentage points to 69 per cent and should show further improvement in 2023. China has faced COVID-19 and economic headwinds. Despite those diff icult ies, our onshore China business increased its income by 10 per cent in 2022, and offshore-related income is up 21 per cent. However, impa irments on Ch ina commercial real estate related risk have pushed our offshore and onshore China operating profit down in 2022. We are confident in the long-term opportunity in China and committed to achiev ing our 2024 targets for China-related growth. The Group’s posit ive income-to-cost jaws of 6 per cent in 2022 were driven by strong income growth and disc ipl ine on expenses. We have delivered about a third of the $1.3 bill ion expense save target we set out earlier this year. Inflationary pressures are now evident in many of our footprint markets and these expense saves help us manage those pressures, whilst creating capacity to invest. We will now target posit ive income-to-cost jaws of around 3 per cent in 2023 and 2024. Cash investments Network income Number of active Affluent Clients $2.0 bn 5% $5.7 bn 24% 2.1 #### million 7% ![]() 12 Standard Chartered – Annual Report 2022 Strategic report Group Chief Executive’s review Further opportunit ies emerg ing In 2022 we continued to transform and innovate with in our business to drive sustainable growth, includ ing develop ing our dig ital and susta inab il ity capabil it ies. Our colleagues bring unrivalled financ ial expert ise to help ident ify opportun it ies across growing markets, sectors and in sustainable finance. We continue to prove ourselves as a trusted partner, working with start-ups, multinat ionals, fintechs and governments to create new ideas, technology and innovat ion. In our Ventures segment, we were delighted to announce the launch of our second wholly dig ital bank, Trust Bank, in Singapore. Partnering with FairPr ice Group, the largest supermarket chain in Singapore, and build ing on our successful experience of creating the Mox virtual bank in Hong Kong, we were able to bring Trust Bank to the market quickly and effic iently. The early success of Trust Bank, onboarding over 450,000 customers so far, or 9 per cent of the addressable market, has exceeded our most ambit ious expectations. In 2023, Trust Bank will build on this momentum to roll out addit ional products to better serve our customers. Together with Mox, we now have fully developed virtual and tradit ional bank offer ings in two of our most sign ificant markets. The sustainab il ity agenda continues to gather pace as the world faces sign ificant cl imate and environmental challenges, with the imperat ive to invest, find solutions and support a just transit ion to net zero hav ing never been greater. In 2022 we reshaped our organisat ion to better address the challenges and opportunit ies, creat ing a Chief Sustainab il ity Officer role as we continue to invest in the capabil it ies and expertise that our business and clients need. At the 2022 Annual General Meeting, our 2050 Net Zero pathway was endorsed by our shareholders, and we are on track to deliver on our plans to reach net zero in our operations by 2025 and in our financed emiss ions by 2050. We have made good progress during the year and we have accelerated progress in some areas where more market data on emiss ions has become ava ilable. We have a deep understanding of how climate change affects our footprint markets, clients and communit ies and we continue to play a leading role in addressing these challenges. The estimates of the financ ing needed to del iver net zero continues to grow and we mobil ised $48 b ill ion of susta inable finance in the last 21 months as we support our clients on their transit ion plans. Our amb it ion is to mobil ise $300 b ill ion in sustainable finance by 2030 and we have developed a Green and Sustainable Product Framework and Transit ion F inance Framework to guide us. Optim ist ic outlook for the markets in our footprint Looking forward into 2023, whilst there is recession risk in the US and Europe, ongoing geopolit ical issues and the war in Ukraine, we also see reasons for increased optim ism for the areas of the world in which we operate. The impact of the COVID-19 pandemic is now finally abating in the last few markets in our footprint. China’s new approach to dealing with COVID-19 will drive economic growth and this in turn will help further improve GDP growth in the economies of Asia. This will also act as a catalyst for our Wealth Management business which was subdued in 2022. Clients remained on the side-lines as market volatil ity underm ined confidence. This together with the last remain ing pandem ic restrict ions led to a year-on-year fall in income. As we go into 2023, we are optim ist ic that as these factors recede the Wealth Management business can rebound from a diff icult year. Ris ing interest rates will inev itably feed through further into loan impa irment at some stage. However, reflect ing the work we have done over a number of years to reshape our loan portfolios, there are only relatively small pockets of stress in our books. Our loan loss rate remains well below the histor ic range. Whilst China commercial real estate exposures remain a challenge for the banking sector generally, it remains a small part of our portfolio, against which we feel appropriately provided. We remain watchful on sovereign risk where continued USD strength will remain problematic for some of our markets though we have the capital strength to navigate these challenges. Finally, reflecting our increased optim ism, we are l ift ing our earnings targets. We had said that we will deliver double dig it RoTE in 2024, if not earlier. As we start the new year we think we will be approaching 10 per cent RoTE in 2023 and have raised our 2024 RoTE target to be at least 11 per cent and to continue to grow thereafter. In conclusion The Group has delivered a strong performance in 2022. The revenue outlook into 2023 is posit ive, w ith our core business momentum supported by the tailw ind of r is ing interest rates. We are optim ist ic for the markets in our footprint as they finally emerge from the challenges brought by the pandemic and as economic activ ity rebounds. Our strategy is clear, we continue to make good progress on our five targeted strategic actions and remain committed to deliver ing over $5 b ill ion of shareholder returns by 2024. Finally, echoing José, I would like to highl ight the remarkable efforts of our more than 83,000 colleagues. Their deep expertise combined with resil ience in some challenging circumstances in certain markets has delivered seamless service to our customers and communit ies that we serve, bring ing to l ife our brand promise to be here for good. Bill Winters Group Chief Executive 16 February 2023 #### Group Chief Executive’s review continued ![]() 13 Standard Chartered – Annual Report 2022 Strategic report Management Team 1. Bill Winters Group Chief Executive 2. Andy Halford Group Chief Financ ial Officer 3. Simon Cooper CEO, Corporate, Commercial & Institut ional Bank ing and Europe & Americas 4. Claire Dixon Group Head, Corporate Affairs, Brand and Marketing 5. Judy Hsu CEO, Consumer, Private and Business Banking 6. Benjamin Hung CEO, Asia 7. Tanuj Kapilashram i Group Head, Human Resources 8. Sunil Kaushal CEO, Africa & Middle East 9. Roel Louwhoff Chief Technology, Operations and Transformation Officer 10. Tracey McDermott, CBE Group Head, Conduct, Financ ial Cr ime and Compliance 11. Sandie Okoro Group General Counsel 12. Sadia Ricke Group Chief Risk Officer 13. Paul Day\* Group Head, Internal Audit 14. Mary Huen CEO, Hong Kong and Cluster CEO for Hong Kong, Taiwan and Macau \* Paul represents Group Internal Audit as an inv itee at Management Team meetings 13. 1. 2. 6. 5. 12. 14. 3. 4. 11. 7. 8. 9. 10. ![]() 14 Standard Chartered – Annual Report 2022 Strategic report Market environment Global macro trends #### Market environment #### Macroeconomic factors affecting the global landscape #### Trends in 2022 • Global GDP growth slowed sharply in 2022, likely to 3.4 per cent, following the 6.0 per cent expansion in 2021, as inflat ion soared and central banks were forced to tighten policy aggressively. • MENAP was the best-performing region, recording growth of 6.2 per cent, supported by elevated commodity prices; Asia recorded growth of 4.2 per cent, down from 7.1 per cent in 2021, primar ily dr iven by the slowdown in China, with growth falling to 3.0 per cent in 2022 from 8.4 per cent in 2021. • Among the majors, despite a technical recession in the first half of the year, the United States recorded annual growth of 2.1 per cent on the back of resil ient domest ic demand, while the UK likely grew by 4.0 per cent. • The euro-area economy likely grew by 3.5 per cent in 2022 following 5.3 per cent growth in 2021; while the recovery was strong in H1 due to COVID-19 reopening effects, H2 was held back by ris ing energy costs related to the Russ ia-Ukraine conflict. • In most majors, labour markets showed signs of further tighten ing, desp ite slowing growth. • Central banks began to unwind support, at first gradually and then more rapidly as the year progressed and inflat ionary pressures bu ilt. Fiscal support continued in the euro area as governments sought to shield households and businesses from elevated energy costs, but provided less of a tailw ind in the United States as COVID-19 support measures were unwound. #### Outlook for 2023 • Global growth is expected to weaken to 2.5 per cent in 2023, as central banks focus on bring ing inflat ion back under control. • Asia will likely be the fastest-growing region and will continue to drive global growth, expanding by 5.3 per cent. Among the majors, the United States is expected to witness a mild contraction of 0.2 per cent in 2023, the UK a larger contraction of 0.5 per cent, while the euro area is likely to see an overall modest expansion of 0.4 per cent. • 2023 will be a tale of two halves, with global growth likely to pick up in H2 2023 as the United States and euro area recover from mild recessions, and a reopening of the China economy from COVID-19 restrict ions helps boost demand and growth. • Tight global liqu id ity condit ions are l ikely to make it diff icult for some emerg ing markets to access internat ional financing, forc ing them to seek multilateral support. • Downside risks to this outlook include sustained inflat ionary pressures, COVID-19 mutat ions following China’s quick reopening, and another flare-up of geopolit ical tens ions, includ ing the Russia-Ukraine war. #### Medium- and long- term view Stagflation risks • Tight labour markets and the broadening of inflat ionary pressures to the serv ices sector are likely to keep stagflation a key concern for central banks over the coming quarters. • The need to meet ESG targets could also prove inflat ionary in the medium term as the cost of using fossil fuels during the transit ion per iod rises due to a combinat ion of taxes, carbon pr ic ing and external tariffs. • As companies aim to reduce concentration risks and move towards onshore/nearshore production, the risk is a lowering of effic iency gains that might push up consumer prices. • However, easing of supply-chain bottlenecks is likely to help dampen some of these pressures. • Fiscal policy might also turn from a tailw ind to a headwind for growth. High public debt and government deficits also mean that most economies are looking to tighten fiscal policy over the medium term. 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. • Long-term growth in the developed world is constrained by ageing populations and high levels of debt, exacerbated by the policy response to COVID-19. • Ris ing nat ional ism, ant i-globalisat ion and protection ism are threats to long-term growth prospects in emerging markets. • However, there are potential offsets. Higher capex to meet sustainab il ity targets, and moves towards dig ital isat ion could boost product iv ity growth, proving an antidote to economic scarring concerns. With in emerg ing markets, countries in Asia are best placed to take advantage of dig ital isat ion. • Relatively younger populations, as well as the adoption of dig ital technology, w ill allow emerging markets to become increas ingly important to global growth. ![]() 15 Standard Chartered – Annual Report 2022 Strategic report See our regional performance on page 29 Regional outlook • China’s GDP growth slowed to 3.0 per cent in 2022 from 8.4 per cent in 2021, falling short of the 5.5 per cent target. Weak consumption and property investment were the main drag on the economy, due to the stringent zero-COVID-19 policy and ongoing housing market correction. We forecast 2023 growth at 5.8 per cent, as the government appears more determined after the conclusion of the Party Congress in October to address the two headwinds. China scrapped the COVID-19 zero policy sooner than expected. Recent measures aimed at supporting property financ ing w ill likely stabil ise home sales and investment in H2 2023. In addit ion, the regulatory storm targeting internet platforms will likely give way to more normalised regulation. Consumption is likely to become a key growth driver, and property investment less of a drag. • Monetary policy is likely to remain accommodative near term, diverg ing from major econom ies, to curb the downside risk that may linger in early 2023. However, China’s growth will likely rebound sign ificantly in Q2 following the expected reopening, driv ing inflat ion h igher and prompting the central bank to shift to a more neutral policy stance to stabil ise the total debt-to-GDP rat io. The broad budget deficit is likely to be scaled back in 2023 on sustainab il ity concerns. • We expect Hong Kong’s economy to grow 3.2 per cent in 2023 following a 3.5 per cent contraction in 2022. While there are some domestic bright spots, includ ing a much- improved labour market and relaxation of travel curbs, external drags will likely be substantial, with tradit ional export markets such as the Un ited States and euro area experienc ing recess ion at the start of 2023. We expect South Korea’s economy to grow just 1.7 per cent on concerns about weaker external demand and slowing domestic consumption amid ris ing interest rates and tighter fiscal policy. • In India, recovery momentum remains robust, driven by firmer reopening in the services sector. Nevertheless, we expect FY24 (year beginn ing Apr il 2023) GDP growth to moderate to 5.5 per cent, from 7.0 per cent in the current financ ial year, g iven moderating global growth, erosion of real purchasing power and high domestic interest rates. Easing inflat ion back to the comfort threshold of 2-6 per cent in FY24 should also lead to a prolonged pause from the MPC after the terminal repo rate hits 6.5 per cent by February 2023. The external sector will remain in focus amid the likel ihood of still-elevated crude oil prices and relatively better economic activ ity in India. Ample foreign exchange (FX) reserves, however, are likely to remain a strong buffer for the economy. The central bank is likely to focus on rebuild ing FX reserves, although th is might remain challenging amid a still-wide current account defic it. The central government budget presentation in February 2023 will be closely watched for any growth-supportive measures ahead of national elections in mid-2024. We believe the government will stay focused on narrowing the fiscal defic it, wh ich is already sign ificantly w ider relative to the pre-pandemic phase. • Singapore and Indonesia are likely to see softer growth in 2023 compared to 2022, and ASEAN growth is set to ease to its long-term average of 5.0 per cent in 2023. As well as high base effects, external demand for ASEAN exports may soften due to global synchronised monetary policy tighten ing and the electron ic cycle peak. Domestic demand may ease as COVID-19 induced pent-up demand normalises, while local monetary policy tighten ing may re in in overall consumer and investment impetus. However, stable labour markets will help support spending. The recovery in the tourism sector, which is a large growth contributor for the region, will also help drive growth. In addit ion, investments may be boosted by FDI seeking divers ification and alternat ive production capacity. • We expect inflat ion to be m ilder in 2023 due to high base effects. External prices may be more manageable, while tighter monetary policy should help. While monetary policy tighten ing may pause by early 2023, any easing might not be forthcoming amid potentially sticky inflat ion, unless growth deter iorates sign ificantly. #### Asia Actual and projected growth by market in 2022 and 2023 % 5.8 % 2023 China 2022 2023 Hong Kong Korea India Indonesia 2022 2023 2022 2023 2022 2023 2022 Singapore 2023 2022 3.6 % 3.0 % 3.2 % (3.5) % 1.7 % 2.7 % 5.5 % 7.0 % 5.1 % 5.4 % 2.0 % ![]() 16 Standard Chartered – Annual Report 2022 Strategic report Market environment Regional outlook continued • After a robust post-COVID-19 recovery in early 2022 on ris ing global demand and economic reopening, includ ing the re-establ ishment of internat ional travel, Sub-Saharan Afr ican economies are now set to see a growth moderation. Notwithstand ing global trends, r is ing food and fuel prices are still pressuring domestic inflat ion, w ith transmiss ion often exacerbated by FX weakness. The impact of 2022’s monetary policy tighten ing w ill be felt with a lag, with a number of central banks still expected to raise interest rates further. • In Niger ia, pres ident ial and general elect ions in February/March 2023 will be a key focus, with the likel ihood of FX and fuel subs idy reforms potentially establish ing cond it ions for more robust medium-term investment and growth. While load-shedding will dampen near-term growth prospects in South Africa, a faster embrace of renewables and increased corporatisat ion of South Africa’s rail and port infrastructure, could unlock a greater private sector contribut ion to growth. In Kenya, efforts to boost lend ing to small and medium enterprises (SMEs), and the increased adoption of dig ital channels for financial intermed iat ion, should help lift loan growth. • Across the Sub-Saharan Africa space, monetary tighten ing w ill drive healthier net interest margins. However, internat ional cap ital market access is likely to remain constrained for a number of sovereigns, rais ing doubts over the easy refinancing of external debt obligat ions. The t imely conclusion of debt restructuring in Zambia and Ghana could help boost investor sentiment. A pause in Fed tighten ing, may help to reduce investor demand for higher-risk premia. • A supportive energy price environment will likely provide continued benefit to Gulf Cooperation Council (GCC) growth. The focus is once again on the region as a provider of capital, as Gulf economies proceed with longer-term economic divers ification plans, seek to reduce the tradit ional procycl ical ity of spend ing, and invest strategically in green technology. In the United Arab Emirates and Saudi Arabia, we expect the continuat ion of robust growth, driven by strong investment across both the hydrocarbon and non-hydrocarbon sectors. For smaller GCC economies such as Oman, higher oil prices will drive a reduction in accumulated debt levels. For the non-GCC MENAP region, condit ions rema in challenging. Pakistan’s abil ity to reassure on its external debt commitments, amid dwindl ing FX reserves, w ill remain a key focus. In Egypt, recent currency depreciat ion and a more accommodat ive risk backdrop globally could see the return of the carry trade. But economic condit ions rema in diff icult am id higher inflat ion, and the authorit ies’ comm itment to FX flexib il ity will be closely monitored. See our regional performance on page 30 • We see a high risk of contraction in the United States in H1 2023; in the euro area, we expect annual growth to decline sharply in 2023 as high inflat ion and central bank t ighten ing we igh on economic activ ity. • The peak for consumer price inflat ion is likely behind us for both the United States and euro area, but will take time to return to target. Central banks will remain alert to any signs of inflat ion expectat ions becoming unanchored or wage pressures build ing over the med ium term. • The Fed is likely to end its rate tighten ing cycle in H1 2023, and we expect rate-cuts to begin in H2 2023. The ECB is likely to hike its main refinanc ing rate unt il Q2 2023, but not start cutting rates until 2024 as inflat ion proves st icky on the downside. • Fiscal support is likely to remain focused on supporting households and businesses struggling with elevated energy costs in Europe, but otherwise we can expect the tailw ind from fiscal support to ease in both the euro area and United States. • In Latin America, we expect a sign ificant growth slowdown in 2023 following a strong 2022. The delayed impact of aggressive monetary tighten ing and other id iosyncrat ic issues are likely to weigh on domestic demand; external headwinds and looming recession risks in the United States are likely to drag down the region’s growth. See our regional performance on page 31 #### Europe and the Americas #### Africa and the Middle East Actual and projected growth by market in 2022 and 2023 % 3.5 % 2023 Nigeria 2022 2023 UAE 2022 3.1 % 4.5 % 6.9 % Actual and projected growth by market in 2022 and 2023 % (0.5) % 2023 UK 2022 2023 USA 2022 4.0 % (0.2) % 2.1 % #### Market environment continued ![]() ### Helping entrepreneurs bounce back after ### COVID-19 In early 2022, we collaborated with Habitat for Humanity Indonesia to support small, medium and micro businesses impacted by COVID-19. As part of the joint effort, 20 shops were constructed in Madang Babakan village, West Java to help female entrepreneurs re- establish their businesses following the pandemic. This project was part of our IDR16 bill ion donat ion to Indonesia to support female micro-entrepreneurs and young adults affected by the pandemic. Read more online at www.sc.com/invest ingcommun it ies 17 Standard Chartered – Annual Report 2022 Strategic report ![]() 18 Standard Chartered – Annual Report 2022 Strategic report Business model #### Business model How we generate returns #### We earn net interest on the margin for loans and deposit products, fees on the provision of adv #### isory and other services, and trading income from providing risk management in financial markets. Income Net interest income Fee income Trading income Profits Income gained from provid ing our products and services minus expenses and impa irments Return on tangible equity Profit generated relative to tangible equity invested Our business #### Corporate, Commercial and Institutional Banking #### (CCIB) #### We support companies across the world, from small and medium-sized enterprises to large corporates and institut #### ions, both digitally andin person. #### Ventures We promote innovation,invest in disruptive financial technology and explore alternative business models. Our pipel #### ine of over thirty ventures includes two cloud-native digital banks. #### Consumer, Private and Business Banking #### (CPBB) We support small businesses and individuals, from Mass Retail clients to affluent and high-net-worth individuals, #### both digitally andin person. #### We help international companies connect and maximise opportunities across our global network and we support indiv #### iduals and local businesses in growing their wealth. Our products and services Financ ial Markets • Macro, commodit ies and credit trading • Financ ing and securit ies serv ices • Sales and structuring • Debt capital markets and leveraged finances • Project and transportation finance Transaction Banking • Cash management • Trade finance • Working capital Wealth Management • Investments • Insurance • Wealth advice • Portfolio management Retail Products • Deposits • Mortgages • Credit cards • Personal loans ![]() 19 Standard Chartered – Annual Report 2022 Strategic report How we are shaping our future #### We remain committed to executing against our strategy to accelerate returns 1 We are committ ing resources to grow our franchise in large and high-returns markets, and accelerate progress in markets being optim ised. We cont inue to review our business models to drive performance. In 2022, we refocused our resources in the Africa and Middle East (AME) region into exist ing and new markets w ith the greatest scale and growth potential, provided further clarity on how we are planning to achieve net zero in financed emiss ions by 2050, and successfully launched Trust, a dig ital bank in Singapore. In addit ion, in April 2022, we expanded our reporting structure with the creation of Ventures. The increased reporting transparency for Ventures reflects the growing sign ificance of the Group’s investment in technology and innovat ion. We are on-track and now expect to deliver a return on tangible equity (RoTE) of over 11 per cent by 2024, from: • focusing on driv ing improved returns in CCIB to reach 6.5% Income RoRWA by 2024 (2022: 6.5%) • transforming profitab il ity in CPBB to improve cost-to-income ratio to ~60% by 2024 (2022: 69%) • seiz ing opportun it ies in China to double China onshore and offshore profit before tax (2022: $0.5bn, -35% decline year-on-year ) • improv ing efficiency through creat ing operational leverage to improve group cost-to-income ratio to ~60% by 2024 (2022: 65%) and to deliver gross expense savings of $1.3bn by 2024 (2022: $0.4bn) • deliver ing susta inable shareholder distr ibut ions in excess of $5bn from 2022 - 2024 (2022: $2.8bn). Over the medium term, we will continue to relentlessly transform and innovate to become a leading cross-border bank that supports a sustainable future. #### Distinct proposition Our understanding of our markets and our extensive internat ional network allow us to offer a tailored proposit ion to our cl ients, combin ing global expert ise and local knowledge. #### Sustainable and responsible business We are committed to sustainable social and economic development across our business, operations and communit ies. #### Client focus Our clients are our business. We build long-term relationsh ips through trusted advice, expertise and best-in-class capabil it ies. What makes us different Our purpose is to drive commerce and prosperity through our unique diversity – this is underpinned by our brand promise, here for good. Our Stands – aimed at tackling some of the world’s biggest issues – Accelerating Zero, Lifting #### Participation and Resetting Globalisation (see page 24 for more), challenge us to use our unique position art #### iculated below. #### Robust risk management We are here for the long term. Effective risk management allows us to grow a sustainable business. 1 Reconcil iat ions from underlying to statutory and definit ions of alternative performance measures (APMs) can be found on pages 126 to 131. ![]() 20 Standard Chartered – Annual Report 2022 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 • We continue to create a work environment that supports resil ience, innovat ion and inclus ion, w ith an ongoing focus on mental, physical, social and financ ial wellbeing. This includes further rolling out hybrid working across our markets. • More than 32,000 colleagues have undertaken learning in 2022 to build the future skills that we need – includ ing analytics, data, dig ital, cyber secur ity, sustainable finance and leadership. • We continue to invest in transforming our core business into a leading dig ital-first and data-dr iven platform, posit ion ing us to deliver superior client experiences, access new high-growth segments, grow wallet with exist ing cl ients and create new business model opportunit ies. • Our network remains one of our key competit ive advantages and we continue to leverage our network to drive growth in Transaction Banking and Financ ial Markets solutions for our clients. • In Business Banking, we continue to support the growth of SMEs across our footprint by meeting their trade and working capital, supply chain financ ing, cash management and investment needs. We granted over $3 bill ion in new loans to SMEs in 2022. • We launched new dig ital partnersh ips in China, India and Vietnam to offer a superior banking experience to small businesses, offering innovat ive d ig ital solut ions to meet their evolving needs in the trade and e-commerce ecosystems. • Stronger capital and a much more resil ient balance sheet with growth in high-quality deposits. • CET1 ratio at 14 per cent, at the top of our target range of 13 – 14 per cent. CET1 capital #### Financial strength With $820 bill ion in assets on our balance sheet, we are a strong, trusted partner for our clients. $34 bn • We are leveraging partnerships to create market- leading dig ital platforms includ ing D ig ital Banks and Banking as a Service, util is ing next- generation technologies to service our clients. • We continue to invest in our engineer ing capab il it ies, provid ing best- in-class tools, growing our engineer ing talent, and creat ing an automated and scalable technology stack capable of continuously deliver ing value to our cl ients. • We are accelerating the simpl ification and harmonisat ion of our technology estate to re inforce strong dig ital foundat ions, integrate platforms using the cloud where appropriate, to provide consistent, secure, and resil ient technology. Consumer 1 client satisfact ion metr ic 48.1 % 2021: 43.1% Strong brand We are a leading internat ional 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 strong dig ital foundations and leading technological capabil it ies to enable a data-driven dig ital bank wh ich delivers world class client service #### International network We have an unparalleled internat ional network, connect ing companies, inst itut ions and ind iv iduals to, and in, some of the world’s fastest-growing and most dynamic regions. #### Human capital Divers ity d ifferent iates us. Del iver ing our Purpose rests on how we continue to invest in our people, the employee experience 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 economy, offering us ins ights that help our clients achieve their ambit ions. • In 2022, we continued to embed our refreshed brand ident ity across cl ient and employee touchpoints. We also introduced a sonic ident ity to br ing to life the sound of Standard Chartered in interact ive d ig ital interfaces. • We have been successful in leveraging our brand and ins ights to support bus iness growth. The Group successfully improved its reputation in 2022, exceeding the average score for the banking sector, and ranking top three in the major ity of our key markets over 2022. 1 Excludes CCIB, and Business Banking clients. Includes Private Banking. Restated for 2021. ![]() 21 Standard Chartered – Annual Report 2022 Strategic report Read more on stakeholder engagement on pages 55 to 63 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 simple, everyday banking solutions to provide our clients with a great dig ital client experience. We enable ind iv iduals to grow and protect their wealth; we help businesses trade, transact, invest and expand. We also help a variety of financial inst itut ions, includ ing banks, publ ic sector and development organisat ions, w ith their banking needs. #### Suppliers We engage diverse suppliers, locally and globally, to provide effic ient and susta inable goods and services for our business. Taxes paid in 2022 $821 m 2021: $1.2bn #### Regulators and governments We engage with public authorit ies to play our part in supporting the effective function ing of the financial system and the broader economy. #### Employees We believe great employee experience drives great client experience. We want all our people to pursue their ambit ions, del iver with purpose and have a rewarding career enabled by great people leaders. Total spent in 2022 $4.3 bn 2021: $4.1bn Active suppliers 11,700 2021: 12,100 Total active ind iv idual clients 1 Total CCIB and Business Banking clients 10.5m 2021: 9.9m 235,000 2021: 234,000 Senior appointments which are internal 67 % 2021: 69% Employees committed to our success 96 % 2021: 96% Div idends declared in 2022 $523 m 2021: $370m Share buy-backs in 2022 $1.3 bn 2021: $504m #### 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 economic development. Community investment $51.2 m 2021: $48.7m 1 2021 restated due to a change in the defin it ion of active partnership clients. ![]() 22 Standard Chartered – Annual Report 2022 Strategic report Strategy We will continue to increase focus on: • Four strategic prior it ies: Network business, Affluent client business, Mass Retail business, and Sustainab il ity • Three crit ical enablers: People and Culture, Ways of Working, and Innovation Over the past year, we have executed against our strategy. While there are adjacent areas we will continue focusing on, such as managing down low-returning risk-weighted assets (RWA) in Corporate, Commercial and Institut ional Bank ing (CCIB), and accelerating cost-savings across Consumer, Private and Business Banking (CPBB), 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 ives. We remain committed to achieve our ambit ions by 2025: • To be the number one Network dig ital bank ing platform • To be among the top three Affluent brands • To double our Mass presence • To become a market leader in Sustainab il ity Going forward, our strategic prior it ies and enablers will continue to be supported by our three Stands: Accelerating Zero, Lift ing Part ic ipat ion and Resetting Globalisat ion. More details on our Stands can be found on page 24. Crit ical enablers #### Innovation We have a three-pronged innovat ion approach to transform the Bank, to achieve our goal of 50 per cent income from new businesses. • Transform our core via dig it isat ion • Leverage partnerships to drive scale and extended reach • Build new business models to create value We have established Ventures as a separate operating segment. During 2022, we launched six new ventures and serviced more than 1.8 mill ion customers through our venture portfolio . #### People and Culture We are continu ing to invest in our people to build future-ready skills, provide them with a different iated experience and strengthen our inclus ive and innovat ive culture. This includes: • Embedding our refreshed approach to performance, reward and recognit ion, that puts greater focus on ambit ion, collaborat ion, and innovat ion • Increasing re-skill ing and upsk ill ing opportunit ies towards future roles that are aligned with the business strategy and ind iv iduals’ aspirat ions • Expanding hybrid working across our footprint, with 78 per cent of colleagues across 43 markets on flexi working arrangements • Focusing on wellbeing to enhance ind iv idual resil ience, product iv ity, and performance • Strengthening leadership capabil ity through a modern ised development offering #### Ways of Working We continue to be client-centric, to improve our operating rhythm in organisat ional ag il ity and to empower our people to continuously improve the way we work. We are working on ident ify ing ways to track derived value and enhance our speed of decis ion- making and delivery, as a key source of competit ive advantage. Women in senior roles Culture of inclus ion score Average time taken from approval to technology go-live 1 Percentage of revenue from new businesses 3 6.2 #### weeks 2021: 7.6 weeks 22 % 2021: 13% 32.1 % 2021: 30.7% 48.1 % 2021: 43.1% 83.07 % 2021: 80.65% 1 2022 figure includes measurement from Functions operations and cannot be directly compared to 2021 figure 2 Excludes CCIB, and Business Banking clients. Includes Private Banking. Restated for 2021. 3 Income from dig ital in it iat ives, innovat ion and transformat ion of the core, the major ity of wh ich will come from new and upgraded platforms and partnerships. Also includes Sustainable Finance income and 100% of Ventures income. 2021 figure has been restated. #### To become a leader in global finance #### Our strategy Consumer client satisfact ion metr ic 2 ![]() 23 Standard Chartered – Annual Report 2022 Strategic report #### Sustainability In Sustainab il ity, in line with our stands, we continue to focus on sustainable and transit ion finance, ach iev ing net zero carbon emiss ions for our operat ions, supply chains and financ ing. We provide access to finance, networks and train ing to young people, and support companies in improv ing the ir environmental, social and governance standards, ratings, and net zero trajectories. We aim to promote social and economic development, and deliver sustainable outcomes in support of the UN Sustainable Development Goals. We are: • Leveraging climate risk management to support clients in managing climate risk and ident ify ing transit ion opportun it ies, e.g., mobil is ing green and sustainable finance • Integrating Sustainable Finance as a core component of our customer value proposit ion and del iver ing product solut ions • Continu ing to promote econom ic inclus ion in our footprint through Futuremakers by Standard Chartered • Targeting net zero carbon emiss ions in our operations by 2025, and in our supply chain and financed emiss ions by 2050, w ith inter im 2030 targets for our h ighest-emitt ing sectors Sustainab il ity Aspirat ions achieved or on track 85.7% 2021: 82.9% #### Mass Retail business We deliver banking solutions to help our clients prosper by integrat ing our d ig ital serv ices into our clients’ everyday lives. New dig ital solut ions, strategic partnerships and advanced analytics are instrumental to our business, enabling us to sign ificantly increase our relevance and reach, serve our clients in a meaningful way and lift partic ipat ion in the communit ies we serve. We are: • Making sign ificant progress in rebuild ing foundat ions for a profitable Mass Retail business • Continu ing to transform to a d ig ital-first model, deepen ing our capabil it ies in dig ital sales and market ing as well as data and analytics • Becoming the partner of choice to leading global and regional companies and scaling thoughtfully with our partners Mass market active clients 2 8.4m 2021: 7.6m Percentage of dig ital sales for Retail Products 3 48 % 2021: 41% Strategic prior it ies #### Network business Through our unique network, we facil itate investment, trade and capital flows, with an increas ing focus on Susta inable Finance. We are one of the leading internat ional network banks in our emerging markets footprint through: • Taking leading posit ions in high-returning, high-growth sectors • Deliver ing a market-lead ing dig ital platform by cont inu ing to invest in core dig ital capab il it ies • Speeding up growth in large markets while expanding in growing markets and corridors e.g., intra-Asia and East–West CCIB network income $5.7 bn 2021: $4.6bn Percentage of CCIB transactions dig itally in it iated 1 61 % 2021: 55% #### Affluent client business We offer outstanding personalised advice and exceptional experiences for our Private, Prior ity and Prem ium Banking clients to help them grow and prosper internat ionally and at home. Our deep-rooted network, trusted brand and long-standing commitment with clients in our markets are key sources of competit ive advantage. As a leading internat ional wealth manager, we focus on: • Unlocking the value of our strong affluent client portfolio across Asia, Africa and the Middle East, with suitable client proposit ions, coverage models and adv isory capabil it ies • Maxim is ing the reach of our deep-rooted internat ional network, with Hong Kong, Singapore, UAE and Jersey as our wealth advisory hubs • Deliver ing personal ised and dig ital-first wealth solut ions to our clients anchored in investment thought leadership, an open architecture approach and supported by scalable platforms Affluent client income $3.8 bn 2021: $3.6bn Affluent active clients 2.1m 2021: 2.1m 1 Includes measurement across all countries and products. 2021 restated. 2 2021 restated due to a change in the defin it ion of active partnership clients. 3 Calculation methodology has been amended to exclude Mass Retail dig ital partnersh ips and the markets that were announced for exit in 2022. 2021 figure has been restated. ![]() We’re helping emerging markets in our footprint reduce carbon emiss ions w ithout slowing crit ical local development. This is just one of the ways we’re playing our part in putting the world on a sustainable path to net zero by 2050. The need for a just transit ion to an inclus ive, net zero economy brings with it a huge opportunity for innovat ion and growth for our clients and our Bank. Our plan to achieve net zero has three aims: reduce emiss ions, catalyse susta inable finance and partnerships, and accelerate new solutions. We aim to reduce the emiss ions assoc iated with our financing act iv it ies to net zero by 2050, with 2030 inter im targets in our most carbon-intens ive sectors. #### Accelerating #### Zero #### Our Stands The impact of climate change, stark inequality and the unfair aspects of globalisationimpact us all. We’re taking a stand by setting long-term ambitions on theseissues where they matter most. This works in #### unison with our strategy, stretching our thinking, our action and our leadership to accelerate our growth. Inequality, along with gaps in economic inclus ion, mean that many young people, women and small businesses struggle to gain access to the financ ial system to save for their futures and grow their businesses. We want to democratise access to finance and make it easily accessible at low cost. We strive to expand the reach and scale of financ ial services – expanding accessible banking and connecting clients to opportunit ies that promote access to finance and economic inclus ion. Our goal is to help companies improve working and environmental standards and give everyone the chance to partic ipate in the world economy, so growth becomes fairer and more balanced. We stand for a new model of globalisat ion based on transparency, inclus ion and d ialogue. Globalisat ion has l ifted mill ions out of poverty, but too many people have been left behind. We advocate a new, more inclus ive model of global isat ion based on transparency and fairness. We aim to increase transparency across supply chains to enable consumer choice and drive responsible trade. In addit ion, we want to make global trade more equitable by improv ing access to finance for smaller suppliers that often lack adequate financ ing. #### Lifting #### Participation #### Resetting #### Globalisation In 2022, we were part of a consortium of banks which created a EUR350 mill ion green trade facil ity for Polestar, an electric performance car maker. Case study #### Supporting the rollout of electric vehicles in Sweden See pages 326 and 327 In October, we launched Trade Track-It, a dig ital transaction tracking portal which gives our clients end-to-end vis ib il ity of their trade-transaction status globally. Case study #### Real-time trade transaction status with Trade Track-It See pages 232 and 233 Throughout 2022, thousands of women were able to grow their businesses by using our collateral-free subsid ised loans product for female micro-entrepreneurs. Case study #### Helping female entrepreneurs thrive See page 9 Strategic report Our Stands 24 Standard Chartered – Annual Report 2022 ![]() 25 Strategic report Standard Chartered – Annual Report 2022 ![]() 26 Standard Chartered – Annual Report 2022 Strategic report Client segment reviews 1 Capital-lite income refers to products with low RWA consumption or of a non-funded nature. This mainly includes Cash Management and FX products 2 Our next-generation Client dig ital transact ion in it iat ion platform. 3 Reconcil iat ions from underlying to statutory and defin it ions of alternative. performance measures (APM) can be found on pages 80-85 4 FY 2020 and FY 2021 Income is adjusted for aviat ion deprec iat ion for Income RoRWA calculation #### Partnering with SAP #### Taulia for sustainable supply chains In October, we signed a framework agreement to collaborate with SAP Taulia, a market leader in working capital solutions. As part of the agreement, we will work with Taulia to provide clients access to supply chain finance through our unique emerging-markets network. This will help our clients to make their supply chains more resil ient and sustainable by enabling their suppliers to gain access to working capital more effic iently and cost effect ively. This is the first agreement that Taulia has signed with a banking inst itut ion, following its acquis it ion by SAP. Segment overview Corporate, Commercial and Institut ional Bank ing (CCIB) supports local and large corporations, governments, banks and investors with their transaction banking, financ ial markets and borrowing needs. We provide solutions to more than 20,000 clients in some of the world’s fastest-growing economies and most active trade corridors. Our clients operate or invest across 50 markets across the globe. Our strong and deep local presence enables us to help co-create bespoke financing solut ions and connect our clients multilaterally to investors, suppliers, buyers and sellers. Our products and services enable our clients to move capital, manage risk and invest to create wealth. Our clients represent a large and important part of the economies we serve. CCIB is at the heart of the Group’s Purpose to drive commerce and prosperity through our unique divers ity. We are also committed to sustainable finance in our markets and to channelling capital where the impact will be greatest. We are deliver ing on our amb it ion to support susta inable economic growth, increas ing support and fund ing for financ ial offerings that have a posit ive impact on our communit ies and environment. Strategic prior it ies • Deliver sustainable growth for clients by leveraging our network to facil itate trade, cap ital and investment flows across our footprint markets. • Generate high-quality returns by improv ing fund ing quality and income mix, growing capital-lite 1 income and driv ing balance sheet velocity while mainta in ing disc ipl ined risk management. • Be the leading dig ital bank ing platform, provid ing integrated solutions to cater to our clients’ needs and enhance client experience, and partnering with third parties to expand capabil it ies and access new clients. • Accelerate our sustainable finance offering to our clients through product innovat ion and enabl ing the transit ion to a low-carbon future. Progress • Our underlying income is driven by our divers ified product su ite and expanded client solutions is supported by the ris ing interest rate environment. Our network income currently contributes to 57 per cent of total CCIB income with growth across strategic network corridors. • Improved balance sheet quality with investment-grade net exposures represent 70 per cent of total corporate net exposures (2021: 64 per cent) and high-quality operating account balances at 67 per cent of Transaction Banking and Securit ies Serv ices customer balances (2021: 63 per cent). • Migrated more than 73,000 client entit ies to our S2B 2 NextGen platform and increased S2B cash payment transaction volumes by 10.3 per cent. • We are half of the way towards developing our $1 bill ion income from sustainable finance franchise. Performance highl ights • Underlying profit before tax of $4,100 mill ion, up 31 per cent, primar ily dr iven by higher income, partially offset by higher expenses and credit impa irment charges. • Underlying operating income of $10,045 mill ion, up 19 per cent, w ith Cash Management in Transaction Banking benefit ing from r is ing interest rates and strong Macro Trading activ ity in Financ ial Markets. • Risk-weighted assets down $20 bill ion s ince 31 December 2021, mainly as a result of optim isat ion in it iat ives and favourable currency movement, partly offset by business growth and regulatory impact. • Underlying RoTE increased from 9.6 per cent to 13.7 per cent. Corporate, #### Commercial and Institutional Banking KPIs Contribut ion of F inanc ial Inst itut ions segment Aim: Drive growth in high-returning Financ ial Inst itut ions segment. Analysis: Share of Financ ial Inst itut ions income improved to 45 per cent of total CCIB client income in 2022 as we allocate more capital to this segment to drive income and returns. Improving CCIB Income RoRWA Aim: Achieve RoRWA of 6.5% by 2024. Analysis: CCIB income RoRWA improved to 6.5% in 2022, up 160bps YoY and in line with our 2024 target, driven by higher income and disc ipl ined risk management. Risk-weighted assets (RWA) $144bn $20bn Profit before taxation $4,100 m 31% underlying basis $4,050 m 35% statutory basis 13.6 % 430bps statutory basis Return on tangible equity (RoTE) 3 13.7 % 410bps underlying basis 6.5 % 2022 2021 4 2020 4 4.9 % 4.9 % 45 % 2022 2021 2020 41 % 42 % ![]() 27 Standard Chartered – Annual Report 2022 Strategic report #### Our first ever ESG #### Structured Note In February, we issued our first ever ESG Structured Note for affluent clients in Hong Kong and Singapore. The note received strong interest from clients, generating $100 mill ion of new sales in less than two weeks, with the final amount raised standing at $370m. Use of proceeds from the note includes both green and social categories, enabling prior ity and private banking clients to have exposure to our impactful emerging-markets asset base. Segment overview Consumer, Private and Business Banking serves more than 10 mill ion ind iv iduals and small businesses, with a focus on the affluent and emerging affluent in many of the world’s fastest-growing markets. We provide dig ital bank ing services with a human touch to our clients, with solutions spanning across deposits, payments, financ ing 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 iv iduals. We also support our small business clients with their business banking needs. We are closely integrated with the Group’s other client segments; for example, we offer employee banking services to Corporate, Commercial and Institut ional Bank ing clients, and Consumer, Private and Business Banking also provides a source of high-quality liqu id ity 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 continuously uplift the client experience and improve productiv ity by dr iv ing end-to-end d ig ital isat ion and process simpl ification. Strategic prior it ies • Be a leading internat ional Affluent franch ise with dist inct ive client value proposit ions to unlock the value of our Affluent cl ient continuum. • Maxim ise the reach of our deep-rooted internat ional network, w ith Hong Kong, Singapore, UAE and Jersey as our wealth advisory hubs • Deliver advisory-led wealth proposit ions w ith dig ital-first and personalised experiences, leveraging an open architecture platform with best-in-class product offering. • Profitable Personal Banking franchise enabled by partnerships, data and dig ital infrastructure. • A mobile-first dig ital channel strategy offer ing exceptional end-to-end client experience. • Continuous improvement in ways of working for process simpl ification and operat ional excellence. Progress • Strong affluent client growth momentum across Prior ity Bank ing and Private Banking. • Strong traction on Standard Chartered-INSEAD Wealth Academy with more than 350 senior frontline staff across Hong Kong and Singapore on the development journey. • Launched myWealth suite of dig ital adv isory tools to deliver personalised portfolio construction and investment ideas for clients; recognised as a leader in dig ital wealth capab il it ies with more than 15 industry awards received in 2022. • Enhanced dig ital exper ience in key markets focusing on frict ionless mobile experience, leading to an average rating of 4.4 on App Store and Play Store in Hong Kong, Singapore, India, China and Pakistan. • Continued Personal ‘scale through automation’ transformation accelerated by acquir ing customers from partnersh ips, engaging and cross-selling dig itally, and serv ic ing them through low-cost channels. • Seven Mass Retail partnerships instances live in China, Indonesia and Vietnam, reaching more than 1.2 mill ion cl ients. Performance highl ights • Underlying profit before tax of $1,596 mill ion was up 30 per cent driven by higher income and lower expenses and credit impa irments. • Underlying operating income of $6,016 mill ion was up 5 per cent (up 10 percent constant currency). Asia was up 5 per cent and Africa and the Middle East, and Europe was up 4 per cent. Expenses were well managed and down 2 per cent. • Strong income momentum growth mainly from Deposits up 138 per cent with improved margins and balance sheet growth. These were offset by slow down in Wealth Management products due to risk off sentiment and Mortgages margin compression impacted by a ris ing interest rate environment. • Underlying RoTE increased from 11.6 per cent to 15.8 per cent. 1 Reconcil iat ions from underlying to statutory and defin it ions of alternative performance measures (APM can be found on pages 80-85) #### Consumer, Private and Business Banking KPIs Affluent Wealth Active Clients (YoY %) Aim: Grow and deepen client relationsh ips, improve investment penetration and attract new clients. Analysis: Affluent Wealth Active Clients stands at 857,000 clients in 2022, deliver ing growth of 5 per cent. Dig ital Sales for Reta il Products Aim: Accelerate the Group’s dig ital offer ings to enable clients to be on-boarded dig itally, thereby reduc ing manual processes and improv ing efficiency. Analysis: Online applicat ions for Reta il Products have continued to grow with the proportion increas ing from 38 per cent in 2020 to 48 per cent at the end of 2022. Risk-weighted assets (RWA) $51bn $1bn Profit before taxation $1,596 m 30% underlying basis $1,533 m 55% statutory basis Return on tangible equity (RoTE) 1 15.8 % 420bps underlying basis 48 % 2022 2021 2020 41 % 38 % 5 % 2022 2021 2020 6 % 3 % 15.2 % 580bps statutory basis ![]() 28 Standard Chartered – Annual Report 2022 Strategic report Client segment reviews #### Ventures KPIs Gross Transaction Value $16 bn $6bn Customers 2 m Underlying Loss before taxation $363 m 39% New Minor ity Investments $153 m 42% Risk-weighted assets (RWA) $1.4 bn $0.6bn New Ventures launched 7 6 #### Solv goes from strength to strength Lift ing the part ic ipat ion of micro and small businesses in the economy, Solv, our B2B e-commerce platform, raised $40 mill ion in Series-A funding in June 2022. Build ing on its strong performance in India and continu ing expans ion plans, Solv launched in Kenya in October 2022 and now has a network of approximately 300,000 micro and small businesses. Solv has plans to grow further, aim ing to be present in more than 300 cit ies in India, scale in Africa and enter Southeast Asia in 2023. Solv announced its platform launch in December 2020 targeting micro, small and medium enterprises in India. Segment overview As part of the ongoing execution of its refreshed strategy, the Group has expanded and reorganised its reporting structure with the creation of a third client segment, Ventures, effective on 1 January 2022. Ventures is a consolidat ion of SC Ventures and its related entit ies as well as the Group’s two majority- owned dig ital banks, Mox in Hong Kong and Trust Bank in Singapore. • SC Ventures is the platform and catalyst for the Group to promote innovat ion, invest in disrupt ive financial technology and explore alternative business models. • Mox, a cloud-native, mobile-only dig ital bank, was launched in Hong Kong as a jo int venture w ith HKT, PCCW and Ctrip in September 2020. • Trust Bank was launched in Singapore in partnership with FairPr ice Group, the nat ion’s leading grocery retailer, in September 2022. Strategic prior it ies • SC Ventures’ focus is on build ing and scal ing new business models – across the four themes of Online Economy & Lifestyle, SMEs & World Trade, Dig ital Assets and Susta inab il ity & Inclusion. We do this by connecting ecosystems, partners and clients to create value and new sources of revenue, provid ing opt ional ity for the Bank. SC Ventures is also advancing the Fintech agenda – ident ify ing, partnering and taking minor ity interests through the fund in companies that provide technology capabil it ies, which can be integrated into the Bank and Ventures. Focus is on innovat ive, fast-growing, technology-focused companies which accelerate transformation in the financ ial industry. • Mox continues to grow the customer base and drive main bank relationsh ips across mass and mass affluent segments in Hong Kong. Mox’s vis ion is to build the global benchmark for dig ital banking. It aims to be the leading virtual bank in Hong Kong for Cards and Dig ital Lend ing and continues to further expand services, includ ing the soon-to-launch D ig ital Wealth Management services. • Trust Bank is targeting continued strong growth, in particular through its deep and extensive partner ecosystem, and to establish itself as a scale player in the mass and upper mass consumer segment in Singapore. Progress • SC Ventures marks its fifth year anniversary in 2023. Some of the key achievements include build ing a d iverse portfolio of over 30 ventures and 20+ investments. Our ventures processed $16 bill ion of transactions in 2022 with a customer base of 1 mill ion. By work ing with strategic partners like SBI Holdings, we will accelerate the growth of Solv, the B2B dig ital marketplace for m icro, small and medium enterprises and connect with a wider ecosystem across multiple markets. Our Financ ial Conduct Author ity (FCA) authorised, inst itut ional grade crypto businesses, Zodia Custody and Zodia Markets, commenced onboarding clients during the year. • In 2022, Mox had a strong focus on expanding its card and dig ital lending services and recorded a strong performance and an engaged customer base. Mox has more than 400,000 customers, up two times year-on-year, and Mox customers had on average 3.1x products. Mox was named as the most recommended virtual bank in Hong Kong and continued to be the number one rated virtual bank app in Hong Kong on the Apple App Store. • With in five months of launch, Trust Bank scaled rapidly to over 450,000 customers, equating to around 9 per cent of the addressable market in Singapore, and making it one of the world’s fastest growing dig ital banks. Customer engagement was strong, with almost 7 mill ion transact ions made, and more than 400,000 dig ital coupons redeemed through the app dur ing this period. Performance highl ights • Underlying loss before tax of $363 mill ion was up $102 m ill ion, dr iven mainly by higher expenses as we continue to invest in new and exist ing ventures. • Risk-weighted assets of $1.4 bill ion have increased $0.6 bill ion mainly due to continued investment in new and exist ing ventures and minor ity interests. Customers Gross Transaction Value $ 16 bn 2022 2021 $ 10 bn 2 m 2022 2021 1 m ![]() 29 Standard Chartered – Annual Report 2022 Strategic report Region overview The Asia region has a long-standing and deep franchise across the markets and some of the world’s fastest-growing economies. The region generates 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 ified franch ise and deeply rooted presence. The region is highly interconnected, with three dist inct and potent sub-regions: Greater China, ASEAN and South Asia. Our global footprint and strong regional presence, dist inct ive proposit ion, and cont inued investment posit ion us strongly to capture opportunit ies as they ar ise from the continu ing opening up of China’s economy, the growing connectiv ity of ASEAN, and the strong economic growth of India. The region is benefit ing from r is ing trade flows, cont inued strong investment, and a ris ing m iddle class, which is driv ing consumption growth and improv ing d ig ital connect iv ity. Strategic prior it ies • 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, China–South Asia, Korea-ASEAN • Capture opportunit ies ar is ing from Ch ina’s opening, and accelerate growth in ASEAN and India/South Asia. • Turbocharge our Affluent and Wealth Management businesses through different iated propos it ions and serv ice. • Continue to invest and advance in technology, dig ital capab il it ies and partnerships to enhance the client experience and build scale efficiently. • Support clients’ sustainable finance and transit ion needs and continue to strengthen our thought leadership status. Progress • We have continued to advance our China strategy both onshore and offshore, with steady progress in capturing affluent growth, adding new clients through dig ital partnersh ips and growing internat ional trade and investment corridors. In 2022 the China business delivered its highest ever onshore income while also growing network income strongly, with the China-ASEAN and China-South Asia corridors being respectively up 62 per cent and 21 percent year-on-year. Progress was made in the dig ital reta il space with new partnerships involv ing JD.com and WeBank. • Our two strong internat ional financial hubs in Hong Kong and Singapore, which enable us to serve the three sub-engines of economic growth in Asia, continued to be the highest income contributors in the region. Income growth was driven by the Affluent segment and Transaction Banking, helped in part by ris ing interest rates, and also by Financ ial Markets. • Execution of our strategy in the Greater Bay Area (“GBA”) continues to be on track with the establishment of a solid cross border wealth management platform and strong growth in new economy sectors and in network business. • The CPBB dig ital agenda cont inues to progress. Mox has the second largest deposit base among virtual banks in Hong Kong while Trust Bank, in partnership with Fairpr ice Group in Singapore, has onboarded more than 450,000 customers after five months of its launch. Performance highl ights • Underlying profit before tax of $3,688 mill ion was up 8 per cent, primar ily from h igher income partly offset by higher credit impa irment from charges on Ch ina Commercial Real Estate exposures and the sovereign ratings downgrade of Sri Lanka. • Underlying operating income of $11,213 mill ion was up 7 per cent (up 12 per cent on a constant currency), mainly driven by a strong Financ ial Markets performance and an expans ion in the net interest margin benefit ing Cash Management and Reta il Deposits. This was partially offset by lower Lending and Wealth Management income as market condit ions reduced transact ion volumes, as well as the impact of COVID-19 restrict ions impact ing in our key markets, Hong Kong and China. • Loans and advances to customers were up 2 per cent (up 6 per cent on a constant currency), Customer accounts were down 3 per cent (flat on a constant currency) since 31 December 2021. • Risk-weighted assets (RWA) were down $19 bill ion s ince 31 December 2021 as we continue to focus on RWA optim isat ion. #### Asia Profit before taxation $3,688 m 8% underlying basis Risk-weighted assets (RWA) $151 bn $19bn $3,325 m 17% statutory basis Income split by key markets Loans and advances to customers (% of group) #### Planting trees in Sri #### Lanka and Malaysia Our employees planted more than 1,000 trees in Sri Lanka and Malaysia in 2022. Between March and October in Sri Lanka, employees planted 650 trees in total, both as part of an employee challenge and the Bank’s global employee volunteering campaign. Meanwhile, between August and December, as part of our Taman Tugu Donation and Tree Planting Programme, employees in Malaysia planted 500 trees. Taman Tugu is a 66-acre regenerated forest park located in Kuala Lumpur city centre. 76 % 33 % 17 % 11 % 39 % Hong Kong Singapore India Others ![]() 30 Standard Chartered – Annual Report 2022 Strategic report Regional reviews #### Celebrating our launch in Egypt In 2022, we received offic ial approval from the Central Bank of Egypt in for our first branch in the market. The branch, designated to be offic ially launched in 2023, will be part of a fully-fledged banking operation in Egypt replacing our current representative office set-up. Region overview We have a deep-rooted heritage in Africa and Middle East (AME), of which the United Arab Emirates, Pakistan, Kenya, Niger ia, South Afr ica, and Ghana are the largest by income. A rich history, deep client relationsh ips and a un ique footprint in the region, as well as across centres in Asia, Europe, and the Americas, enable us to seamlessly support our clients. AME is an important element of global trade and investment corridors and we are well placed to facil itate these flows. Gulf Cooperation Council (GCC) markets are expected to outpace global growth on the back of oil price recovery, higher government spend and bilateral trade negotiat ions. The macro-economic risk remains elevated in Pakistan and some markets in Africa due to a high level of sovereign debt and FX liqu id ity challenges. Overall, AME’s medium and long-term attractiveness remains compelling and intact, and it is an important part of our global network proposit ion for our clients. Strategic prior it ies • Provide best-in-class structuring and financ ing solut ions and drive creation through client in it iat ives. • Invest to accelerate growth in different iated internat ional network and Affluent Client businesses. • Invest in market-leading dig it isat ion in it iat ives in CPBB to protect and grow market share in core markets, continue with our transformation agenda to recalibrate our network and streamline structures. • Be an industry leader in the transit ion to net zero across the reg ion. • Refocusing and simpl ify ing our presence in AME. Progress • We have strengthened our footprint with the approval for a banking licence in Egypt. • We have once again led the AME bond and Sukuk markets in 2022, taking the top spot in the AME league tables and ranking #1 in MENA G3 issuance for the fifth year in a row. Our commitment to ESG across Debt Capital Markets (DCM) helped us almost double our issuance ESG volumes and brought the year’s most innovat ive deals to market. • On Sustainable Finance we have brought new ideas to the market, and supported our clients with closing market firsts and landmark transactions that are creating a strong reputation for us among clients. • We have successfully launched end-to-end dig ital onboard ing in Pakistan with embedded eKYC (Electronic Know Your Customer), allowing clients to seamlessly open accounts from the SC Mobile App. We have also expanded our agent banking proposit ion to five countries, helping to drive financ ial inclus ion by offer ing multiple touchpoints for clients to transact. • We have expanded dig ital wealth management solut ions in Kenya and UAE. Our micro-investment solution in Kenya has attracted 85 per cent new to wealth clients, while in UAE, clients have access to online Trade FX and online Equit ies. • Broad-based growth in income across products, with Financ ial Markets at the highest level since 2015. • Continu ing cost d isc ipl ine has allowed investments to continue through the cycle. Cost to Income Ratio lower at 64 per cent (vs. 66 per cent in ‘21) and Revenue / Headcount has grown 11 percent vs FY’21. Performance highl ights • Underlying working profit of $937 mill ion (up 25 per cent on constant currency basis) was driven by higher income and disc ipl ined cost management. Underlying profit before tax of $819 mill ion (up 4 per cent on constant currency bas is) despite higher loan impa irment that is primar ily related to prov is ions for sovere ign downgrades in Ghana & Pakistan. • Underlying operating income of $2,606 mill ion was up 7 per cent (up 14 per cent constant currency) driven by growth in Transaction Banking, Financ ial Markets and Reta il. Income was up 9 per cent (up 15 per cent constant currency) in Middle East, North Africa, & Pakistan and up 3 per cent (up 13 per cent constant currency) in Africa. • Risk-weighted assets (RWA) were 17 per cent lower than December 2021, despite the impact of sovereign downgrades, due to continu ing RWA opt im isat ion activ it ies and de-risk ing in markets with elevated macro-economic risk. • Loans and advances to customers were down 14 per cent (9 per cent down on constant currency basis) and customer accounts were down 8 per cent (3 per cent down on constant currency basis) since 31 December 2021. #### Africa and the Middle East Profit before taxation $819 m 4% underlying basis Risk-weighted assets (RWA) $41 bn $8bn $790 m 5% statutory basis Loans and advances to customers (% of group) Income split by key markets 7 % 24 % 12 % 10 % 54 % UAE Pakistan Kenya Others ![]() 31 Standard Chartered – Annual Report 2022 Strategic report Region overview The Group supports clients in the region through hubs in London, Frankfurt and New York, as well as a presence in several other markets in Europe and Americas. Our expertise in Asia, Africa and the Middle East allows us to offer our clients in the region unique network and product capabil it ies. The region generates sign ificant income for the Group’s Corporate, Commercial and Institut ional Bank ing business. Clients based in Europe and Americas make up around one-third of the Group’s CCIB income, with three-quarters of client income booked in the network generating above- average returns. In addit ion to be ing a key orig inat ion centre for CCIB, the region offers local, on-the-ground expertise and solutions to help internat ionally m inded clients grow across Europe and Americas. The region is home to the Group’s two biggest payment clearing centres and the largest trading floor with more than 90 per cent of the region’s income orig inat ing from Financ ial Markets and Transact ion Banking products. Our European CPBB business focuses on serving clients with links to our footprint markets. Strategic prior it ies • Leverage our network capabil it ies to connect new and exist ing Corporate and Financ ial Inst itut ions cl ients in the west to the fastest-growing and highest-potential economies across our footprint. • Supercharge our Financ ial Inst itut ions (FI) Franch ise. • Grow the business we capture from inbound trade flows from our east to west corridors. • Further develop our sustainable finance product offering and risk management capabil it ies. • Enhance capital effic iency, ma inta in strong r isk oversight, and further improve the quality of our funding base. • Expand assets under management in CPBB and continue to strengthen the franchise. Progress • Strong growth of 20 per cent in global cross-border network business with Europe & Americas CCIB clients across key footprint markets. • FI segment growth of 25 per cent, now accounting for 56 per cent of the CCIB business for European & Americas clients. • Expanded Financ ial Markets Product offer ing in our German subsid iary to enable more inbound trade flow. • Material growth in income from sustainable finance products and expansion of our sustainable product offering. • Sign ificant increase in high-quality liab il it ies d ivers ify ing the region’s funding base. • CPBB cost saving in it iat ives executed, w ith strong progress made in refocusing the Private Banking segment towards Ultra High Net Worth clients together with the successful migrat ion of CPBB cl ients from London to the Jersey booking centre. Performance highl ights • Underlying profit before tax of $863 mill ion improved 34 per cent, driven by higher income and lower impa irments. Pos it ive income to cost jaws of 12 per cent. • Underlying operating income of $2,353 mill ion was up 17 per cent due to a strong performance from Financ ial Markets Macro products, and improvement in cash deposit volumes and margins across CCIB and CPBB. • Expenses increased by 5 per cent or 9 per cent on a constant currency basis largely due to the increased Investment spend and performance-related pay. #### Europe and the Americas Profit before taxation $863 m 34% underlying basis Risk-weighted assets (RWA) $50 bn $840 m 46% statutory basis Income split by key markets Loans and advances to customers (% of group) #### Launching our first #### Green Trade Export #### Letter of Credit programme In August, we launched our first Green Trade Export Letter of Credit programme in Singapore, New York and London, working with food and nutrit ion company ADM (Archer- Daniels-Midland). The $500 mill ion letter of cred it programme will cover ADM’s shipment of commodit ies, includ ing soybeans, oilseeds and cotton from Latin America, the US, and Australia to European markets. Issued under the ‘Sustainable Goods’ pillar of the Bank’s Green and Sustainable Product Framework, the transaction helps advance ADM’s widen ing efforts to expand susta inable farming practices and source sustainably produced goods. 44 % 43 % 13 % US UK Others 17 % ![]() ## Back to growth and improving returns Andy Halford Group Chief Financ ial Officer #### Group Chief Financial #### Officer’s review Strategic report Group Chief Financ ial Officer’s rev iew Standard Chartered – Annual Report 2022 32 ![]() 33 Standard Chartered – Annual Report 2022 Strategic report Summary of financial performance The Group delivered a strong performance in 2022 generating a 120 basis point uplift in underlying return on tangible equity to 8.0 per cent with underlying profit before tax increas ing 15 per cent on a constant currency bas is. Income at $16.3 bill ion, grew 15 per cent on a constant currency basis excluding DVA, and is at its highest level since 2014, with a record performance in Financ ial Markets and strong expansion in the net interest margin. Loans and advances to customers grew an underlying 3 per cent despite the ris ing interest rate environment. Expenses increased 9 per cent at constant currency, due to continued investment in the business, salary inflat ion, and increased performance-related pay on the back of business performance. Credit impa irment charges increased to $838 mill ion includ ing further charges relating to the China commercial real estate sector and the impact of sovereign-related downgrades. However, the loan-loss rate of 21 basis points remains well below our histor ic through-the-cycle loan loss range. The Group remains well capital ised and h ighly liqu id w ith a CET1 ratio of 14.0 per cent at the top end of its target range enabling the Board to announce a 50 per cent increase in the full-year div idend and a further $1 bill ion share buy-back programme to start imm inently. All commentary that follows is on an underlying basis and comparisons are made to the equivalent period in 2021 on a reported currency basis, unless otherwise stated. • Operating income increased 10 per cent, or 15 per cent on a constant currency basis, normalis ing for a $27 m ill ion posit ive movement in DVA. About half of the growth in income was from strong, sustained business momentum, through a combinat ion of balance sheet growth and increased fee and trading income, with the remain ing increase reflecting the benefit of a higher interest rate environment • Net interest income increased 12 per cent or 18 per cent on a constant currency basis. The net interest margin averaged 141 basis points and is 20 basis points higher year-on-year aided by ris ing interest rates despite a 4-basis point negative impact from short-term and structural hedges • Other income increased 9 per cent, with a record performance in Financ ial Markets partly offset by lower Wealth Management income impacted by subdued market condit ions • Operating expenses excluding the UK bank levy increased 4 per cent and were up 7 per cent on a constant currency basis after adjust ing for the increase in performance- related pay driven by the strong business performance. The underlying expense growth reflects the impact of a high-inflat ion env ironment includ ing the impact on salary increases, addit ional investment into transformational dig ital capab il it ies and headcount. The cost-to-income ratio decreased 4 percentage points to 66 per cent excluding DVA and UK bank levy and the Group generated 6 per cent posit ive income-to-cost jaws at constant currency excluding DVA • Credit impa irment was $838 mill ion, an increase of $575 mill ion. The impa irment charge includes $582 mill ion in relation to China commercial real estate sector and $283 mill ion in relation to sovereign downgrades partly offset by releases in the management overlay relating to COVID-19. Total credit impa irment of $838 m ill ion represents a loan-loss rate of 21 basis points, a year-on-year increase of 14 basis points in the cost of risk, but still well below the histor ic through-the-cycle loan loss range of 30 to 35 bas is points. • Other impa irment increased by $24 mill ion to $79 m ill ion. The $300 mill ion impa irment charge recorded in 2021 relating to the Group’s investment in its associate China Bohai Bank (Bohai) has been reclassif ied out of underly ing performance and into goodwill and other impa irments. The remain ing other impa irment pr imar ily relates to the av iat ion leasing portfolio • Profit from associates and jo int ventures decreased 5 per cent to $167 mill ion reflect ing a lower profit share from Bohai • Charges relating to restructuring, other items and goodwill and other impa irment reduced by $373 mill ion to $476 mill ion, w ith $333 mill ion lower restructur ing costs, princ ipally a non-repeat of the pr ior-year retirement programme in Korea. Goodwill and other impa irment of $322 mill ion is $22 mill ion h igher year-on-year following a $14 mill ion wr ite off of the goodwill relating to Bangladesh. Furthermore, there has been a $308 mill ion impa irment relating to Bohai, primar ily a result of industry challenges and uncertaint ies that may impact profitab il ity. • Taxation was $1,384 mill ion on a statutory bas is, with a statutory effective tax rate of 32 per cent. Taxation on underlying profits was at an effective rate of 30 per cent, an increase of 3 percentage points compared to 2021 primar ily driven by lower prior year credits and higher taxes in UK, Pakistan and US. • Underlying return on tangible equity increased 120 basis points to 8.0 per cent due to the increase in profits and lower tangible equity, reflecting shareholder distr ibut ions and adverse movements in reserves due to movements in interest rates and currency translation. The reclassif icat ion of the 2021 Bohai impar iment out from underly ing performance increased the 2021 underlying return on tangible equity by 80 basis points to 6.8 per cent and has made the treatment of Bohai impa irment cons istent across both the 2021 and 2022 computation of underlying return on tangible equity • Underlying basic earnings per share (EPS) increased 18 per cent to 101.1 cents and statutory EPS of 85.9 cents increased by 40 per cent • A final ordinary div idend per share of 14 cents has been proposed taking the full-year total to 18 cents, a 50 per cent increase along with a new share buy-back programme of $1 bill ion, tak ing total shareholder distr ibut ions announced since the start of 2022 to $2.8 bill ion ![]() 34 Standard Chartered – Annual Report 2022 Strategic report Group Chief Financ ial Officer’s rev iew Summary of financial performance 2022 $mill ion 2021 $mill ion Change % Constant currency change¹ % Net interest income 7,599 6,807 12 18 Other income 8,656 7,906 9 14 Underlying operating income 16,255 14,713 10 16 Other operating expenses (10,641) (10,275) (4) (9) UK bank levy (102) (100) (2) (15) Underlying operating expenses (10,743) (10,375) (4) (9) Underlying operating profit before impa irment and taxat ion 5,512 4,338 27 30 Credit impa irment (838) (263) nm³ nm³ Other impa irment 4 (79) (55) (44) (46) Profit from associates and jo int ventures 167 176 (5) (5) Underlying profit before taxation 4,762 4,196 13 15 Restructuring (174) (507) 66 64 Goodwill and Other impa irment 4 (322) (300) (7) (8) Other items 20 (42) 148 148 Statutory profit before taxation 4,286 3,347 28 30 Taxation (1,384) (1,034) (34) (44) Profit for the year 2,902 2,313 25 24 Adjusted net interest margin (%) 2 1.41 1.21 20 Underlying return on tangible equity (%) 2 8.0 6.8 120 Underlying earnings per share (cents) 4 101.1 85.8 18 1 Comparisons presented on the basis of the current period’s transactional currency rate, ensuring like-for-like currency rates between the two periods 2 Change is the basis points (bps) difference between the two periods rather than the percentage change 3 Not meaningful 4 Goodwill and Other impa irment include $308 mill ion impa irment charge relat ing to the Group’s investment in its associate China Bohai Bank (Bohai). The 2021 comparative has been restated for consistency to reclassify the $300 mill ion impa irment from Other impa irment w ith in Underly ing profit to Goodwill and Other impa irment. The 2021 Underly ing earnings per ordinary share (cents) has been correspondingly restated to reflect this reclassif icat ion Statutory financial performance summary 2022 $mill ion 2021 $mill ion Change % Constant currency change¹ % Net interest income 7,593 6,798 12 18 Other income 8,725 7,903 10 15 Statutory operating income 16,318 14,701 11 16 Statutory operating expenses (10,913) (10,924) – (6) Statutory operating profit before impa irment and taxat ion 5,405 3,777 43 46 Credit impa irment (836) (254) nm³ nm³ Goodwill and Other impa irment (439) (372) (18) (19) Profit from associates and jo int ventures 156 196 (20) (20) Statutory profit before taxation 4,286 3,347 28 30 Taxation (1,384) (1,034) (34) (44) Profit for the year 2,902 2,313 25 24 Statutory return on tangible equity (%) 2 6.8 4.8 200 Statutory earnings per share (cents) 85.9 61.3 40 1 Comparisons presented on the basis of the current period’s transactional currency rate, ensuring like-for-like currency rates between the two periods 2 Change is the basis points (bps) difference between the two periods rather than the percentage change 3 Not meaningful ![]() 35 Standard Chartered – Annual Report 2022 Strategic report Operating income by product 2022 $mill ion 2021 (Restated)² $mill ion Change % Constant currency change¹ % Transaction Banking 3,925 2,886 36 42 Trade & Working capital 1,371 1,447 (5) (1) Cash Management 2,554 1,439 77 85 Financ ial Markets 5,728 4,899 17 21 Macro Trading 2,962 2,216 34 40 Credit Markets 1,696 1,790 (5) (3) Credit Trading 506 437 16 18 Financ ing Solut ions & Issuance 1,190 1,353 (12) (9) Structured Finance 408 491 (17) (17) Financ ing & Secur it ies Serv ices 620 387 60 67 DVA 42 15 180 200 Lending & Portfolio Management 562 759 (26) (22) Wealth Management 1,802 2,225 (19) (17) Retail Products 4,068 3,358 21 29 CCPL & other unsecured lending 1,216 1,272 (4) 1 Deposits 2,044 860 138 157 Mortgage & Auto 635 1,036 (39) (35) Other Retail Products 173 190 (9) (4) Treasury 348 698 (50) (47) Other (178) (112) (59) (16) Total underlying operating income 16,255 14,713 10 16 1 Comparisons presented on the basis of the current period’s transactional currency rate, ensuring like-for-like currency rates between the two periods 2 Following a reorganisat ion of certa in clients, there has been a reclassif icat ion of balances across products The operating income by product commentary that follows is on an underlying basis and comparisons are made to the equivalent period in 2021 on a constant currency basis, unless otherwise stated. Transaction Banking income increased 42 per cent. Cash Management income increased 85 per cent reflecting strong pric ing d isc ipl ine to take advantage of a ris ing interest rate environment. Trade & Working Capital decreased 1 per cent, with balance sheet growth offset by margin compression. The margin compression reflects a shift towards investment credit grade clients and a shift in product mix towards lower margin but more RWA-efficient products. Financ ial Markets income increased 21 per cent and was a record performance. Macro trading increased 40 per cent with FX income deliver ing strong double-d ig it growth as macro events led to increased client demand and elevated volatil ity, w iden ing b id-offer spreads. Commodit ies also delivered strong double-dig it growth, includ ing a record first quarter, when it benefited from volatil ity in energy prices, while Rates also provided strong double-dig it increase in income on the back of policy rates increases. Credit Markets income decreased 3 per cent driven by subdued market condit ions in spite of a strong performance in Credit Trading. Structured Finance declined 17 per cent with lower fee income with in Av iat ion F inance. Financ ing & Secur it ies Serv ices income increased 67 per cent, includ ing $184 m ill ion of ga ins on mark-to-market liab il it ies and benefiting from improved margins in Securit ies Serv ices. Lending and Portfolio Management income decreased 22 per cent due to increased cost of funds and the impact of risk-weighted asset optim isat ion actions. Wealth Management income declined 17 per cent as customer sentiment became more risk-averse in volatile market condit ions lead ing to lower transaction volumes. There was a negative impact from COVID-19 restrict ions, in particular in North Asia, resulting in a number of branch closures and lower footfall which negatively impacted face-to-face sales. Managed Investments income was down 39 per cent, there was a 6 per cent decline in Treasury Products income while Bancassurance income declined 6 per cent. Wealth Management secured lending income fell by a third on the back of client deleveraging. Net new sales remained posit ive albe it at a lower level than 2021 but assets under management volumes reduced on the back of negative market movements. Retail Products income increased 29 per cent. Deposit income increased 157 per cent due to active passthrough rate management in a ris ing interest rate environment, partly offset by migrat ion from CASA to t ime deposits. Mortgages & Auto income decreased 35 per cent reflecting margin compression with the major ity of mortgages in Hong Kong reaching the Best Lending Rate cap. Credit Cards & Personal Loans income increased 1 per cent reflecting a growth in credit card balances, particularly in our dig ital banks Mox and Trust Bank. Treasury income declined 47 per cent, reflecting the losses from structural and short-term hedges in a ris ing interest rate environment which offset increased yields on the remainder of the Treasury portfolio. ![]() 36 Standard Chartered – Annual Report 2022 Strategic report Group Chief Financ ial Officer’s rev iew Profit before tax by client segment and geographic region 2022 $mill ion 2021 (Restated) 1, 2 $mill ion Change % Constant currency change² % Corporate, Commercial & Institut ional Bank ing 4,100 3,124 31 35 Consumer Private & Business Banking 1,596 1,226 30 35 Ventures (363) (261) (39) (42) Central & other items (segment) (571) 107 nm³ nm³ Underlying profit before taxation 4,762 4,196 13 15 Asia 3,688 3,416 8 12 Africa & Middle East 819 856 (4) 4 Europe & Americas 863 644 34 33 Central & other items (region) (608) (720) 16 (1) Underlying profit before taxation 4,762 4,196 13 15 1 Following the increased strategic importance and reporting of Ventures to management, this has been established as a separate operating segment from 1 January 2022. Prior period has been restated 2 Comparisons presented on the basis of the current period’s transactional currency rate, ensuring like-for-like currency rates between the two periods 3 Not meaningful As part of the ongoing execution of its refreshed strategy, the Group has expanded and reorganised its reporting structure with the creation of a third client segment, Ventures, effective from 1 January 2022. Ventures is a consolidat ion of SC Ventures and its related entit ies as well as the Group’s two majority-owned d ig ital banks Mox in Hong Kong and Trust Bank in Singapore, reported alongside the current client segments; Corporate, Commercial & Institut ional Bank ing (CCIB) serving larger companies and inst itut ions and Consumer, Private & Business Banking (CPBB) serving ind iv idual and business banking clients. There was no change to the regional reporting structure. Corporate, Commercial & Institut ional Bank ing profit increased 31 per cent as robust Financ ial Markets and Cash Management performance drove 19 per cent income growth excluding posit ive movements in DVA. This was partly offset by a 4 per cent increase in expenses and a $469 mill ion increase in impa irments reflect ing further charges in relation to the China commercial real estate sector and lower releases on the remain ing portfol io. Consumer, Private & Business Banking profit increased 30 per cent and was 35 per cent higher on a constant currency basis. Income grew 10 per cent on a constant currency basis with increased Deposit income partly offset by subdued Wealth Management and the impact of the Best Lending Rate cap on Hong Kong mortgage income. On a constant currency basis, expenses grew 3 per cent and impa irments decreased $10 mill ion. Ventures loss increased to $363 mill ion. Income totalled $29 mill ion for the year, w ith an increas ing customer base at Mox and Trust Bank. Expenses increased by a third reflecting further investment into the segment and increased operational costs to support the sign ificant increase in customer onboarding and transactional volumes with in the new dig ital banks. Other impa irment of $24 m ill ion was taken in relation to the value of one of the Group’s investments with in the Ventures portfol io. Central & other items (segment) recorded a loss of $571 mill ion as income declined 71 per cent reflecting the losses from structural and short-term hedges booked with in Treasury. Expenses increased 26 per cent while credit impa irments were $112 m ill ion h igher as a result of the ratings downgrades of select sovereigns. Asia profits increased 8 per cent on the back of a 7 per cent increase in income. This was partly offset by 1 per cent expense growth and an 82 per cent increase in impa irments reflecting increased charges relating to the China commercial real estate sector. Africa & Middle East profits decreased 4 per cent but grew 4 per cent on a constant currency basis. Income increased 14 per cent while expenses grew 9 per cent, both on a constant currency basis. Impairments went from a net release in the prior year to a $118 mill ion charge, partly due to the sovere ign ratings downgrades of Pakistan and Ghana. Europe & Americas profit increased by a third with a 17 per cent increase in income on the back of a strong Financ ial Markets and Cash Management performance. Expenses increased 5 per cent while the net release in credit impa irment halved to $77 mill ion. Central & other items (region) loss decreased by $112 mill ion to $608 mill ion due to a 30 per cent increase in expenses. Income increased 145 per cent, while impa irments reduced by 16 per cent ![]() 37 Standard Chartered – Annual Report 2022 Strategic report Adjusted net interest income and margin 2022 $mill ion 2021 $mill ion Change¹ % Adjusted net interest income 2 7,976 6,796 17 Average interest-earning assets 565,370 559,408 1 Average interest-bearing liab il it ies 525,351 515,769 2 Gross yield (%) 3 2.70 1.83 87 Rate paid (%) 3 1.38 0.67 71 Net yield (%) 3 1.32 1.16 16 Net interest margin (%) 3,4 1.41 1.21 20 1 Variance is better/(worse) other than assets and liab il it ies wh ich is increase/(decrease) 2 Adjusted net interest income is statutory net interest income excluding funding costs for the trading book and includ ing financial guarantee fees on interest- earning assets 3 Change is the basis points (bps) difference between the two periods rather than the percentage change 4 Adjusted net interest income div ided by average interest-earning assets, annualised Adjusted net interest income increased 17 per cent driven by a 17 per cent increase in the net interest margin, which averaged 141 basis points in the year, a 20 basis points year-on-year uplift benefit ing from a rap id increase in policy interest rates across many of our markets : • Average interest-earning assets grew 1 per cent, or 7 per cent excluding the impact of currency translation and risk-weighted asset optim isat ion actions, reflecting an increase in investment securit ies held by Treasury Markets. Gross y ields increased 87 basis points compared with the average in the prior year • Average interest-bearing liab il it ies increased 2 per cent, or 5 per cent excluding the impact of currency translation, reflecting an increase in customer accounts while the rate paid on liab il it ies increased 71 basis points compared with the average in the prior year Credit risk summary Income Statement 2022 $mill ion 2021 $mill ion Change 1 % Total credit impa irment charge 838 263 219 Of which stage 1 and 2 406 78 421 Of which stage 3 432 185 134 1 Variance is increase/(decrease) comparing current reporting period to prior reporting period Balance sheet 2022 $mill ion 2021 $mill ion Change 1 % Gross loans and advances to customers 2 316,107 304,122 4 Of which stage 1 295,219 279,178 6 Of which stage 2 13,043 16,849 (23) Of which stage 3 7,845 8,095 (3) Expected credit loss provis ions (5,460) (5,654) (3) Of which stage 1 (559) (473) 18 Of which stage 2 (444) (524) (15) Of which stage 3 (4,457) (4,657) (4) Net loans and advances to customers 310,647 298,468 4 Of which stage 1 294,660 278,705 6 Of which stage 2 12,599 16,325 (23) Of which stage 3 3,388 3,438 (1) Cover ratio of stage 3 before/after collateral (%) 3 57/76 58/75 (1)/1 Credit grade 12 accounts ($mill ion) 1,574 1,730 (9) Early alerts ($mill ion) 4,967 5,534 (10) Investment grade corporate exposures (%) 3 76 69 7 1 Variance is increase/(decrease) comparing current reporting period to prior reporting period 2 Includes reverse repurchase agreements and other sim ilar secured lend ing held at amortised cost of $24,498 mill ion at 31 December 2022 and $7,331 m ill ion at 31 December 2021 3 Change is the percentage points difference between the two points rather than the percentage change ![]() 38 Standard Chartered – Annual Report 2022 Strategic report Group Chief Financ ial Officer’s rev iew Asset quality remains stable, despite a year-on-year increase in the impa irment charge, w ith an improvement in a number of underlying credit metrics. However, the Group continues to remain alert to an unpredictable and challenging external environment includ ing pressures in the China commercial real estate sector, commodity price volatil ity and the impact of the Russia/Ukraine war. This war in part contributed to both commodity price volatil ity and the accelerated trajectory of inflat ion and interest rate rises across our footprint, which in turn have contributed to both an increased risk of global recession and the appreciat ion of the US dollar versus the majority of developed and emerg ing market currencies. These factors have contributed to increased sovereign credit stress in a handful of our markets which we continue to monitor closely and undertake mit igat ing actions where appropriate. Credit impa irment totalled $838 m ill ion, an increase of $575 mill ion, represent ing a loan loss rate of 21 basis points, still some way below the histor ic loan loss rate range. Impairment charges relating to the China commercial real estate sector totalled $582 mill ion in the year, includ ing a $78 mill ion increase in the management overlay relating to the China commercial real estate sector, which now totals $173 mill ion. Sr i Lanka and Ghana had their sovereign ratings downgraded into stage 3 , while Pakistan sovereign ratings were downgraded into credit grade 12. These sovereign ratings downgrades incurred a $283 mill ion impa irment charge in the year. The CPBB normalised run-rate charge increased by 9 per cent while recoveries in CCIB declined by a third. The above were partly offset by a $228 mill ion decrease in the COVID-19 related management overlay, which now totals $21 mill ion. Gross stage 3 loans and advances to customers of $7.8 bill ion were 3 per cent lower, primar ily as repayments, cl ient upgrades and write-offs more than offset new inflows, includ ing those relat ing to the sovereign ratings downgrade of Ghana and Sri Lanka and the China commercial real estate sector. Credit-impa ired loans represented 2.5 per cent of gross loans and advances, a decrease of 18 basis points. The stage 3 cover ratio of 57 per cent was lower by 1 percentage point, while the cover ratio post collateral at 76 per cent increased by 1 percentage point. Credit grade 12 balances have decreased by 9 per cent to $1.6 bill ion as the sovere ign ratings downgrade of Pakistan was more than offset by downgrades into stage 3 primar ily as a result of Sri Lanka and Ghana sovereign ratings downgrade. Early Alert accounts of $5.0 bill ion have reduced by 10 per cent, reflecting the net impact of regularisat ions of accounts back into non-high-risk categories, net impact of downgrades into credit grade 12 and exposure reductions partly offset by new inflows. The Group is continu ing to carefully mon itor its exposures in vulnerable sectors and select markets, given the unusual stresses caused by the currently challenging macro- economic environment. The proportion of investment grade corporate exposures has increased by 7 percentage points to 76 per cent, reflecting the increase in reverse repurchase agreements held to collect. The above balance sheet disclosure relates to loans and advances to customers. The movement in high risk assets (gross stage 3 loans and advances, credit grade 12 balances and early alert accounts) does not fully reflect the impact of the sovereign ratings downgrade of Ghana, Pakistan and Sri Lanka as it does not capture the impact of these downgrades on the Group’s investment and securit ies portfol io. Restructuring, goodwill impa irment and other items 2022 2021 Restructuring $mill ion Goodwill and Other impa irment $mill ion Other items $mill ion Restructuring $mill ion Goodwill and Other impa irment 1 $mill ion Other items $mill ion Operating income 43 – 20 (32) – 20 Operating expenses (170) – – (487) – (62) Credit impa irment 2 – – 9 – – Other impa irment (38) (322) – (17) (300) – Profit from associates and jo int ventures (11) – – 20 – – Loss before taxation (174) (322) 20 (507) (300) (42) 1 Goodwill and Other impa irment include $308 mill ion impa irment charge relat ing to the Group’s investment in its associate China Bohai Bank (Bohai). The 2021 comparative has been restated for consistency to reclassify the $300 mill ion impa irment from Other impa irment w ith in Underly ing profit to Goodwill and Other impa irment The Group’s statutory performance is adjusted for profits or losses of a capital nature, amounts consequent to investment transactions driven by strategic intent, other infrequent and/ or exceptional transactions that are sign ificant or mater ial in the context of the Group’s normal business earnings for the period and items which management and investors would ordinar ily ident ify separately when assess ing underlying performance period-by period. A reconcil iat ion of restructuring, goodwill impa irment and other items excluded from underlying results is set out on pages 126 to 130. Restructuring charges of $174 mill ion for 2022 reflects the impact of actions to transform the organisat ion to improve productiv ity, pr imar ily redundancy related charges. Goodwill and other impa irment of $322 m ill ion includes $308 mill ion in relation to a further reduction in the carrying value of the Group‘s investment in its associate China Bohai Bank (Bohai). To ensure consistency, the Group has retrospectively reclassif ied the $300 m ill ion impa irment charge taken in 2021 on its investment in Bohai, from other impa irment included in underlying operating profit, to goodwill and other impa irment wh ich is excluded from underlying operating performance. The remain ing $14 m ill ion goodwill impa irment relates to Bangladesh pr imar ily due to lower economic growth forecasts and higher discount rates. Other items include a $20 mill ion fa ir-value gain relating to the sale of a property in Thailand. The Group has announced that it is exploring strategic alternatives for its Aviat ion F inance business as well as the exit of seven markets in the AME region and will focus solely on the CCIB segment in two more. It is expected that the results from the markets and businesses being exited will be reported in restructuring from 1 January 2023 with prior periods retrospectvely restated. ![]() 39 Standard Chartered – Annual Report 2022 Strategic report Balance sheet and liqu id ity 2022 $mill ion 2021 $mill ion Increase/ (Decrease) $mill ion Increase/ (Decrease) % Assets Loans and advances to banks 39,519 44,383 (4,864) (11) Loans and advances to customers 310,647 298,468 12,179 4 Other assets 469,756 484,967 (15,211) (3) Total assets 819,922 827,818 (7,896) (1) Liab il it ies Deposits by banks 28,789 30,041 (1,252) (4) Customer accounts 461,677 474,570 (12,893) (3) Other liab il it ies 279,440 270,571 8,869 3 Total liab il it ies 769,906 775,182 (5,276) (1) Equity 50,016 52,636 (2,620) (5) Total equity and liab il it ies 819,922 827,818 (7,896) (1) Advances-to-deposits ratio (%)1 57.4% 59.1% Liqu id ity coverage ratio (%) 147% 143% 1 The Group now excludes $20,798 mill ion held w ith central banks (31.12.21: $15,168 mill ion) that has been confirmed as repayable at the po int of stress The Group’s balance sheet remains strong, liqu id and well divers ified. • Loans and advances to customers increased 4 per cent since 31 December 2021 to $311 bill ion. Th is includes a $24 bill ion increase in Treasury and securit ies backed loans held to collect partly offset by a $13 bill ion reduct ion from risk-weighted asset optim isat ion actions undertaken by CCIB and a $8 bill ion reduct ion from currency translation. Excluding the above, there was 3 per cent underlying loan growth, with growth in Trade partly offset by deleveraging in Wealth Management. • Customer accounts of $462 bill ion decreased 3 per cent since 31 December 2021 as a result of currency translation. Excluding the impact of currency translation, customer accounts were broadly flat in the year. • Other assets decreased 3 per cent since 31 December 2021 with a reduction in reverse repurchase agreements designated at fair value through profit or loss partly offset by an increase in investment securit ies held w ith in Treasury Markets and increased derivat ive balances • Other liab il it ies were 3 per cent h igher since 31 December 2021 reflecting an increase in derivat ive balances The advances-to-deposits ratio decreased to 57.4 per cent from 59.1 per cent at 31 December 2021 reflecting a reduction in loans and advances to customers excluding reverse repurchase agreement as a result of risk-weighted asset optim isat ion actions. The point-in-time liqu id ity coverage ratio of 147 per cent increased 4 per cent and remains well above the min imum regulatory requ irement. Risk-weighted assets 2022 $mill ion 2021 $mill ion Change 1 $mill ion Change 1 % By risk type Credit risk 196,855 219,588 (22,733) (10) Operational risk 27,177 27,116 61 – Market risk 20,679 24,529 (3,850) (16) Total RWAs 244,711 271,233 (26,522) (10) 1 Variance is increase/(decrease) comparing current reporting period to prior reporting periods Total risk-weighted assets (RWA) decreased 10 per cent or $26.5 bill ion from 31 December 2021 to $244.7 b ill ion. • Credit risk RWA decreased $22.7 bill ion to $196.9 b ill ion. There was a $13.9 bill ion reduct ion in the CCIB low-returning portfolio targeted for optim isat ion, a $11.1 bill ion decrease from other RWA efficiency act ions and a $9.9 bill ion reduction from currency translation. This was partly offset by a $6.9 bill ion increase from regulatory changes, $3.5 bill ion inflat ion from cred it migrat ion and a $1.9 b ill ion increase from a combinat ion of asset growth and m ix • Market risk RWA decreased by $3.9 bill ion to $20.7 b ill ion primar ily reflect ing reduced standardised specif ic interest rate risk posit ions and changes in value at risk methodology • Operational risk RWA was broadly flat at $27.2 bill ion ![]() 40 Standard Chartered – Annual Report 2022 Strategic report Group Chief Financ ial Officer’s rev iew Capital base and ratios 2022 $mill ion 2021 $mill ion Change 1 $mill ion Change 1 % CET1 capital 34,157 38,362 (4,205) (11) Addit ional T ier 1 capital (AT1) 6,484 6,791 (307) (5) Tier 1 capital 40,641 45,153 (4,512) (10) Tier 2 capital 12,510 12,491 19 – Total capital 53,151 57,644 (4,493) (8) CET1 capital ratio end point (%) 2 14.0 14.1 (0.1) Total capital ratio transit ional (%) 2 21.7 21.3 0.4 Leverage ratio (%) 2 4.8 4.9 (0.1) 1 Variance is increase/(decrease) comparing current reporting period to prior reporting periods 2 Change is percentage points difference between two points rather than percentage change The Group’s CET1 ratio of 14.0 per cent was 19 basis points lower than at 31 December 2021, but approximately 50 basis points above the CET1 ratio at 1 January 2022 when regulatory changes, which reduced the Group’s CET1 ratio, came into force. The underlying 50 basis points increase reflects the impact of RWA optim isat ion actions and profit accretion during the year despite funding $1,258 mill ion of share buy-backs and an increased ordinary div idend. The CET1 rat io is 3.6 percentage points above the Group’s current regulatory min imum of 10.4 per cent and at the top end of the Group’s 13-14 per cent medium-term target range. The regulatory changes which came into force on 1 January 2022 included the cessation of software relief, the impact from the IRB model repair programme and the introduct ion of standardised rules for counterparty credit risk on derivat ives and other instruments (SA-CCR). In aggregate, these regulatory changes resulted in a decrease in the CET1 ratio of approximately 70 basis points by reducing CET1 capital by $1.1 bill ion and increas ing RWAs by $5.7 b ill ion. In the fourth quarter, further regulatory changes includ ing the IRB model repair programme increased RWAs by $1.3 bill ion, reduc ing the CET1 ratio by approximately 10 basis points The CET1 ratio was reduced by approximately 70 basis points from a reduction in reserves mainly relating to a reversal of prior year unrealised gains on debt securit ies as a result of higher market yields and movements in currency translation reducing both the translation reserve and RWAs. Profit accretion increased the CET1 ratio by approximately 110 basis points whilst lower RWAs as a result of effic iency and optim isat ion actions with in CCIB and Treasury, prov ided an approximate 120 basis point uplift to the CET1 ratio. Ordinary shareholder distr ibut ions reduced the CET1 ratio by approximately 65 basis points. The Group spent $1,258 mill ion purchasing 184 mill ion ord inary shares of $0.50 each during the year, representing a volume-weighted average price per share of £5.48. These shares were subsequently cancelled, reducing the total issued share capital by 6 per cent and the CET1 ratio by approxiamtely 45 basis points. The Board has recommended a final div idend of 14 cents per share result ing in a total 2021 ordinary div idend of 18 cents a share or $523 mill ion, reduc ing the CET1 ratio by approximately 20 basis points . Payments due to AT1 and preference shareholders cost approximately 15 basis points. The Board has announced a share buy-back for up to a maximum considerat ion of $1 b ill ion to further reduce the number of ordinary shares in issue by cancelling the repurchased shares. The terms of the buy-back will be announced and the programme will start shortly and is expected to reduce the Group’s CET1 ratio in the first quarter of 2023 by approximately 40 basis points. The Group’s leverage ratio of 4.8 per cent is approximately 10 basis points lower than the 4.9 per cent ratio as at 31 December 2021. This reflects lower Tier 1 capital partly offset by a decrease in leverage exposures largely driven by efficiency and opt im isat ion in it iat ives. The Group’s leverage ratio remains sign ificantly above its current min imum requirement of 3.7 per cent. Outlook Our performance has been strong, and the pace of economic recovery in many of our footprint markets is encouraging. Whilst recessionary and inflat ionary pressures w ill continue to impact many parts of the world, particularly in the first half of 2023, we expect most of the markets in which we operate to continue their recent momentum with GDP growth in the Asian economies at above 5 per cent over the next two years being pivotal to progressive global recovery. The recent opening-up of China and the generally receding impacts of COVID-19 should help in that regard albeit we will continue to monitor closely the sovereign risks in markets that are most exposed to tighten ing l iqu id ity. Overall, the markets in which we operate, the further benefits of ris ing interest rates and the evident ial improvement in many of our operating metrics cause us to be optim ist ic about the period ahead. For 2023 and 2024 our expectations are now: • Income to grow in the 8-10 per cent range excluding DVA and at constant currency • Full year average net interest margin of around 175 basis points in 2023 and above 180 basis points in 2024 • Asset and RWA growth in the low single dig it percentage range • Around 3 percentage point posit ive income-to-cost jaws in 2023 and in 2024, excluding DVA and UK bank levy and at constant currency • Credit impa irment to cont inue to normalise towards the histor ic through the cycle loan-loss rate range of 30-35 basis points • To operate dynamically with in the full 13-14 per cent CET1 target range • RoTE to be approaching 10 per cent in 2023 • RoTE to exceed 11 per cent in 2024, with further growth thereafter Andy Halford Group Chief Financ ial Officer 16 February 2023 ![]() ### Founding signatory of the Sustainable STEEL ### Principles #### In September, we became one of the founding signatories to the Sustainable STEEL Principles, the first cl #### imate-aligned finance agreement for the steel industry. #### The use of metallurgical coal in the manufacturing of steel, means it contributes around 7 per cent of CO 2 #### emissions globally. #### With demand for steel continuing toincrease, it’s critical that we support the sector’s decarbonisat ion. As part of the agreement, signatories measure and disclose their steel-related loan emissions, w #### ith a view to achieving net-zero emissionsin the steel industry. Read more online at www.sc.com/steel 41 Standard Chartered – Annual Report 2022 Strategic report ![]() 42 Standard Chartered – Annual Report 2022 Strategic report Risk overview ### ªResilience despite adverse macroeconomic environment and volatile global marketsº #### Risk overview The macroeconomic environment was challenging throughout the year for a number of markets in which the Group operates. February 2022 saw Russia’s invas ion of Ukraine, impact ing financial markets, commod ity prices and supply chains. We had very lim ited d irect exposure to either country and we proactively managed risks that we faced through ind irect exposure, and second order impacts, such as increased energy and food prices or disrupted gas supplies for our clients and customers, the impact from sanctions on asset values and investments some of our clients have in Russia. We also managed the increase in traded risks following increased volatil ity in other markets, especially credit and commodit ies. Regular stress tests were performed during 2022 to assess the impact of the war across the Group’s portfolio. In China, growth forecasts were revised downwards as it followed its ‘zero-COVID’ stance, exacerbating global supply chain bottlenecks. Pressures in China’s commercial real estate industry remain with the tim ing of recovery st ill uncertain amidst recent government measures to support the sector. In the United States, the Federal Reserve announced consecutive interest rate hikes to counter inflat ionary pressures and hinted at more tapered rate rises in 2023. This poses challenges to some emerging markets, as their currencies weaken relative to the strength of the US dollar, by ris ing commod ity prices, stagflation and tighter liqu id ity. The impact from the war, tighten ing of global financing condit ions and id iosyncrat ic domestic polit ical and pol icy issues, have placed pressure on sovereign credit ratings during 2022. With in the Group’s footpr int, Sri Lanka and Ghana embarked on sovereign debt restructuring operations, while Pakistan has been adversely impacted by flooding and continues to face external financ ing r isks in light of large external payments coming due, while FX reserves have declined. The Country Risk Early Warning System (CREWS) is the princ ipal process for track ing a deteriorat ion in risk ind icators and has worked effect ively during the year. CREWS is a triage system which categorises countries based on a combined assessment of the likel ihood of a downgrade and the financial impact of a potential downgrade. Markets in the highest risk category are subject to enhanced monitor ing of qualitat ive and quant itat ive r isk triggers’ and we have exposure management strategies in place for the highest risk markets. We continue to scan the horizon for topical and emerging risks and collaborate with internal and external partners to mit igate r isks as they are ident ified. Further deta ils on how we manage topical and emerging risks can be found on pages 48 to 51. ![]() 43 Standard Chartered – Annual Report 2022 Strategic report Asset quality has been mainta ined, though we rema in vig ilant in the face of volatile global markets. We continue to demonstrate resil ience as ev idenced by strong capital and liqu id ity metrics. Non-financ ial r isks areas such as Fraud, Data Management, Information and Cyber Security, Third Party, Technology, People and Change Management remain heightened. We continue to enhance our operational resil ience and defences aga inst these risks through vigorous enhancement programmes. We remain vig ilant of sovere ign risks and challenges in the property sector in China and we continue to closely monitor and manage these across the Group. For our Corporate, Commercial and Institut ional Bank ing (CCIB) business, we have ident ified vulnerable sovere igns with triggers and have an action plan for exposure management based on such triggers. We have closely monitored our clients that may face diff icult ies on account of increas ing interest rate, foreign exchange movements, commodity volatil ity or increase in price of essential goods. Stress tests and portfolio reviews are also done to ident ify vulnerable exposures. These exposures are then tracked through our well-established Early Alert monitor ing process. Act ions which may be required if geo-polit ical r isks occur are also tracked so that the Group could act quickly if these events do occur. For our Consumer, Private and Business Banking (CPBB) business, the key focus in 2022 was on the potential wider effects of the deteriorat ing econom ic condit ions across our markets. While CPBB conducts its business mainly in local currency, the continued strength of the US dollar has an impact in our markets across Asia, Africa and the Middle East and we have been monitor ing the potent ial secondary impacts of a decline in sovereign credit quality in some of our markets. For our consumer credit portfolios, we have been monitor ing the impact on customer affordabil ity through interest rate sensit iv ity analysis and tracking consumer price ind ices across our key markets. In our Bus iness Banking portfolios, we have been focused on the risks to our clients associated with vulnerabil ity to commod ity supply chain issues, spikes in input costs and the effect of an overall decline in global demand. For Wealth Lending, which is secured by a largely liqu id collateral pool, we have been proact ively managing the portfolio through the continued market volatil ity and mon itor ing for hor izon risks to the collateral, such as reduced corporate earnings in the event of recession. Where appropriate, we have tightened underwrit ing pol ic ies and collateral acceptance criter ia. An update on our key risk prior it ies 2022 continued to present a challenging risk landscape, however, we faced this from an intr ins ically strong posit ion. Our risk management approach is at the heart of our business and is core to us achiev ing susta inable growth and performance. We have made progress on our key prior it ies, these being: Strengthening the Group’s risk culture and conduct: We remain committed to promoting a healthy risk culture and driv ing the h ighest standards of conduct. Both risk culture and conduct are integral components of our Enterprise Risk Management Framework (ERMF). Our ERMF sets out the guid ing pr inc iples for our colleagues, enabl ing us to have integrated and holist ic r isk conversations across the Group and the three lines of defence. It underpins an enterprise level abil ity to ident ify and assess, openly d iscuss, and take prompt action to address exist ing and emerg ing risks. Senior management across the Group promote a healthy risk culture by rewarding risk-based think ing ( includ ing in remuneration decis ions), challeng ing the status quo, and creating a transparent and safe environment for employees to communicate risk concerns. We strive to uphold the highest standards of conduct through delivery of conduct outcomes, acknowledging that while inc idents cannot be ent irely avoided, the Group has no appetite for wilful or negligent misconduct. More broadly, we are continu ing to focus on strengthening first-line Conduct Risk ownership, drawing enhanced Conduct Risk ins ights through the development of conduct analytics as part of the new Conduct Risk management standard. Furthermore, we have uplifted the Group Conduct Risk Management approach which has been achieved through a combinat ion of prov id ing better tools to enable consistent Conduct Risk oversight, increased engagement with the first and second line and targeted campaigns to improve Conduct Risk awareness across the Group. As Conduct Risk may arise from anywhere in the Group at any time, conduct outcomes should always be considered when material strategic decis ions are made that may impact clients, investors, shareholders, counterparties, employees, markets, competit ion and the env ironment. The Group is also working towards complying with the UK Consumer Duty requirements for in-scope clients; these requirements set higher and clearer standards of consumer protection. ![]() 44 Standard Chartered – Annual Report 2022 Strategic report Risk overview Continuous enhancement of our informat ion and cyber security (ICS) capabil it ies and governance: We have refreshed the Group ICS Risk Strategy by updating our ICS Target Operating Model to increase focus on accountabil ity, risk ownership, change management and executive empowerment. Our Board is regularly engaged on our approach to managing ICS Risks and we have appointed an ICS Risk Special Advisor to the Board. We also perform table-top cyber cris is test ing exercises to ensure a consistent view on how to respond to cyber inc idents. To assess the security of our ICS systems and processes, our ICS capabil it ies include a formal process for internal controls testing, vulnerabil ity assessments and penetrat ion testing (an authorised simulated attack on a computer system, performed to evaluate the security of the system). We continue to deploy the Threat Scenario-led Risk Assessment which enables a more dynamic threat-led ident ification and management of ICS Risk by our businesses. Our ICS polic ies and standards are also aligned to a number of best practice global guidance, and we remain watchful on proposed new guidance. Our ICS train ing programme includes annual mandatory learning and phish ing read iness exercises, along with ongoing thematic campaigns which highl ight the most prevalent threats and risks that colleagues face. We also deliver regular Group Board train ing on ICS r isks. In addit ion to general ICS awareness, colleagues in roles ident ified as cr it ical have addit ional tra in ing l inked to their responsib il it ies. Managing Climate Risk: Managing the risks from climate change is a core element of our strategy and Stands. We have made good progress this year in embedding Climate Risk considerat ions across the impacted Princ ipal R isk Types. By using the results from our scenario analysis, we are build ing a good understanding of the markets and industr ies where the effects of climate change will have the greatest impact. Climate Risk assessments are now considered as part of Reputational and Sustainab il ity transaction reviews for impacted clients in high-carbon sectors, and integrated into the credit applicat ion process for approx imately 70 per cent of our corporate client exposure and the physical risk ident ification of our CPBB mortgage portfol ios in our largest markets. As part of our ongoing academic partnership with Imperial College London, we supported new climate research on the range of opportunit ies that ex ist for private investors in nature related investments and cross-sectoral impl icat ions of electrif icat ion of transport in India. Key focus areas for 2023 include establish ing and clar ify ing the l inkages between net-zero portfolio management across high transit ion r isk sectors and the impact thereof on Credit Risk parameters, build ing and embedd ing our in-house Climate Risk models, train ing and educat ion, and working with our data providers and clients. All of these support the Group’s commitments made as part of Accelerating Zero. More details can be found at sc.com/sustainab il ity and sc.com/tcfd Further details on our overall approach to net zero can be found at sc.com/netzero Managing our environmental, social and governance (ESG) risk: We continue to advance risk management across the organisat ion in both our CCIB and CPBB client segments with end-to-end reviews of inherent risks and controls in line with our internal Environmental and Social Risk Catalogue. In keeping with our sustainable and transit ion finance goals, our risk management approach seeks to ensure that our Green, Sustainable and Transit ion F inance labels reflect the standards set out in our Green and Sustainable Product Framework, Transit ion F inance Framework and Task Force on Climate-related Financ ial D isclosures (TCFD). Managing Financ ial Cr ime Risk: The Group is managing its financial cr ime risk with in acceptable levels as assessed under the Group’s risk assessment measures, includ ing the F inanc ial Crime Risk Type Framework, Risk and Control Self-Assessments and assurance reviews. However, some issues in 2022 have required remedial actions in order to avoid an unacceptable increase in Financ ial Cr ime Risk in certain areas. Russia-related sanctions have continued to escalate and are increas ingly complex in nature to operational ise. Wh ile the Group has lim ited d irect exposure to Russia-related sanctions, we continue to monitor and respond to changing sanction requirements. The Group continues to build and mainta in partnerships with industry, government and the third sector to build consensus on effective efforts to combat financ ial cr ime and the damages it causes. More informat ion about the Group’s comm itment to fight ing financial cr ime can be found at sc.com/fightingfinancialcr ime Technology and Innovation: Our technology capabil it ies are deliver ing our strategy of be ing a dig ital dr iven second-line of defence function, supporting first-line driven risk management processes. We have expanded our Climate Risk reporting capabil it ies and integrated ESG factors to help streamline risk assessment across the client lifecycle. We have automated the model development lifecycle with a dig it ised model inventory and approval workflow, and have deployed a single platform to support standardised model creation, review and validat ion. We have cont inued to expand our Enterprise Governance, Risk and Compliance with automated workflows in Operational Risk, Business Continu ity, Assurance, and BCBS 239 assessments and peer reviews. Policy documentation management has been transit ioned to a new platform and a sign ificantly improved user experience. The Group Risk assessment process has been transit ioned to a B ig Data technology stack that util ises data more effect ively and improves assessment turnaround time. We continue to build more intell igence into our self-service and case management tooling. The ASK Compliance platform serves as a single portal, where the first line of defence and our employees get answers to simple compliance queries using self-service tools, with an enhanced user experience launched in 2022. We will prior it ise integrat ing relevant r isk use cases into the exist ing self-service tools in 2023. Advisor Connect which is a configurable case management framework launched in Q3 2022 provides an auditable, consolidated view of cases and serves as a knowledge repository for the advisory teams. Advisor Connect is planned to be rolled out to prior it ised group and country CFCC teams in 2023. We continuously enhanced the country regulatory obligat ion management to improve the user experience. We continue to explore the applicat ion of emerg ing technologies such as Artif ic ial Intelligence, Machine Learning and Applicat ion bu ild through configuration and rema in focused on streamlin ing the ![]() 45 Standard Chartered – Annual Report 2022 Strategic report ident ification of new regulat ions through horizon scanning, tracking amendments to exist ing regulat ions, and automating the mapping and impact analysis to polic ies and processes. Surveillance platforms are continuously enhanced with supervised model-based monitor ing and vo ice and multil ingual mon itor ing capab il it ies. Dig ital isat ion and technolog ical developments remain key items on the Group’s agenda as we pursue the execution of the Group’s strategy. We continue to ensure that our control frameworks and risk appetite evolve accordingly to keep pace with new business developments and asset classes. Embedding and strengthening Dig ital Asset R isk management capabil it ies: The Group recognises the increas ing prevalence of d ig ital asset act iv ity and assoc iated risks. At present, the Group has very lim ited, and immater ial, direct exposure to dig ital asset related act iv ity. Any potent ial increase in activ ity or exposures w ill be subject to detailed review and enhanced due dil igence in accordance with the Group’s Dig ital Asset R isk Management Approach. Notwithstand ing the l im ited exposure, as a regulated global Bank with dig ital asset capab il it ies, we continue to strengthen our Dig ital Asset R isk management capabil it ies under the ERMF, with considerat ion g iven to learnings from exist ing in it iat ives as well as external market developments. Our risk profile and performance in 2022 The proportion of the Group’s gross loans and advances to customers in stage 1 has remained stable at $295.2 bill ion or 93 per cent (31 December 2021: $279.2 bill ion or 92 per cent) reflecting our continued focus on high-quality orig inat ion. Overall stage 2 gross loans and advances to customers decreased by $3.8 bill ion to $13.0 b ill ion dr iven by CCIB due to exposure reductions and rating upgrades in Transport, telecom and util it ies sectors, $1 bill ion decrease in the Energy sector, offset by increase in stage 2 in China commercial real estate. Stage 3 loans decreased by $0.2 bill ion to $7.9 b ill ion (31 December 2021: $8.1 bill ion) pr imar ily as repayments, cl ient upgrades and write-offs more than offset new inflows, includ ing those relat ing to the sovereign ratings downgrade of Ghana and Sri Lanka and the China commercial real estate sector. The stage 3 cover ratio of 57 per cent was lower by 1 percentage point, while the cover ratio post collateral at 76 per cent increased by 1 percentage point. In 2022, we have seen a 10 per cent decrease in Early Alerts exposure (31 December 2022: $5.0 bill ion, 31 December 2021: $5.5 bill ion), reflect ing the net impact of regularisat ions of accounts back into non-high-risk categories, net impact of downgrades into credit grade 12 and exposure reductions partly offset by new inflows. Credit grade 12 balances decreased to $1.6 bill ion (31 December 2021: $1.7 b ill ion) as the sovereign ratings downgrade of Pakistan was more than offset by downgrades into stage 3 primar ily as a result of Sr i Lanka and Ghana sovereign ratings downgrade. The Group remains vig ilant in view of persistent challenging condit ions in some markets and sectors. The overall CPBB portfolio remains 86 per cent fully secured (31 December 2021: 86 per cent), with average resident ial mortgage loan-to-value (LTV) at 44.7 per cent (31 December 2021: 41.1 per cent). The portfolio has remained resil ient w ith overall 30+ days past due across our programme lending segments at 0.58 per cent, which is consistent with pre- pandemic credit performance. The percentage of investment-grade corporate exposure has also increased to 76 per cent compared with 69 per cent from 31 December 2021, reflecting the increase in reverse repurchase agreements held to collect and some increase in exposures to investment grade clients. Exposure to our top 20 corporate clients as a percentage of Tier 1 capital has increased to 65 per cent (31 December 2021: 61 per cent), driven by increased exposure to investment grade clients. Key ind icators 2022 2021 Group total business 1 316.1 304.1 Stage 1 loans ($ bill ion) 295.2 279.2 Stage 2 loans ($ bill ion) 13.0 16.8 Stage 3 loans, credit-impa ired ($ b ill ion) 7.9 8.1 Stage 3 cover ratio 57% 58% Stage 3 cover ratio (includ ing collateral) 76% 75% Corporate, Commercial & Institut ional Bank ing Investment grade corporate net exposures as a percentage of total corporate net exposures 76% 69% Loans and advances maturing in one year or less as a percentage of total loans and advances to customers 65% 66% Early alert portfolio net exposures ($ bill ion) 5.0 5.5 Credit grade 12 balances ($ bill ion) 1.6 1.7 Aggregate top 20 corporate net exposures as a percentage of Tier 1 capital 2 65% 61% Collateralisat ion of sub- investment grade net exposures maturing in more than one year 53% 49% Consumer, Private & Business Banking Loan-to-value ratio of Consumer, Private & Business Banking mortgages 44.7% 41.1% 1 These numbers represent total gross loans and advances to customers 2 Excludes reverse repurchase agreements ![]() 46 Standard Chartered – Annual Report 2022 Strategic report Risk overview The Group’s ongoing credit impa irment was a net charge of $838 m ill ion (31 December 2021: $263 m ill ion), includ ing a $83 m ill ion charge split across CCIB and Central and other items segments relating to sovereign ratings downgrade of Pakistan into credit grade 12. The impa irment charge includes $582 mill ion in relation to China commercial real estate sector and $283 mill ion in relation to sovereign downgrades, partly offset by releases in the management overlay relating to COVID-19. CCIB stage 1 and 2 impa irments of $148 m ill ion are dr iven by China commercial real estate downgrades, includ ing a $78 m ill ion increase for China commercial real estate overlay and sovereign downgrades in Africa and the Middle East which is offset by a $102 mill ion full release of COVID-19 overlay. Stage 3 impa irment of $279 m ill ion is largely from China commercial real estate downgrades, clients’ rating changes due to the Sri Lanka and Ghana sovereign rating downgrade, offset by releases and repayments of a few notable clients. CPBB charge decreased by $20 mill ion to $262 m ill ion (31 December 2021: $282 m ill ion). Stage 1 and 2 charge increased by $121 mill ion to $150 m ill ion (31 December 2021: $29 m ill ion). Stage 3 charge decreased by $141 m ill ion to $112 m ill ion (31 December 2021: $253 mill ion) as markets returned to normal ised flows following the expiry of the major ity of COVID-19 rel ief schemes in 2021. In 2022, there were increased charges for Korea and Taiwan due to worsening macroeconomic forecasts, as well as China due to portfolio maturity and book growth. This was offset by a net release of $110 mill ion (31 December 2021: $15 m ill ion) in management overlays and a $25 mill ion release from s ign ificant increase in credit risk methodology changes and model updates largely in the Asia region. Ventures impa irment charge increased by $13 mill ion to $16 m ill ion (31 December 2021: $3 m ill ion) due to book growth in Mox Bank and Trust Bank Singapore. Central and other items stage 1 and 2 impa irments of $95 m ill ion were dr iven by the sovereign downgrades in Asia. Stage 3 impa irment charge of $38 m ill ion was dr iven by the sovereign rating downgrade of Ghana and Sri Lanka. Credit impa irment 2022 2021 Stage 1 & 2 $mill ion Stage 3 $mill ion Total $mill ion Stage 1 & 2 $mill ion Stage 3 $mill ion Total¹ $mill ion Ongoing business portfolio Corporate, Commercial & Institut ional Banking 148 279 427 23 (67) (44) Consumer, Private & Business Banking 150 112 262 29 253 282 Ventures 13 3 16 3 – 3 Central & other items 95 38 133 23 (1) 22 Credit impa irment charge/(release) 406 432 838 78 185 263 Restructuring business portfolio Others (2) – (2) (2) (7) (9) Credit impa irment charge/(release) (2) – (2) (2) (7) (9) Total credit impa irment charge/ (release) 404 432 836 76 178 254 1 Following the increased strategic importance and reporting of Ventures to management, this has been established as a separate operating segment from 1 January 2022. Prior period has been restated The average level of total trading and non-trading Value at Risk (VaR) in 2022 was $52.5 mill ion, 4.2 per cent lower than 2021 ($54.8 mill ion). The actual level of total trad ing and non-trading VaR as at the end of the 2022 was $55.8 mill ion, 28.6 per cent higher than 2021 ($43.4 mill ion), due to an increase in market volatil ity in H2 2022, driven by a number of Central Banks increas ing interest rates to curb inflat ion. Our Group liqu id ity coverage ratio (LCR) is 147 per cent (31 December 2021: 143 per cent) with a surplus to both Risk Appetite and regulatory requirements. The Group’s advances-to-deposits ratio has decreased from 59.1 per cent to 57.4 per cent, driven by a reduction of 2 per cent in our customer deposits and 5 per cent in customer loans and advances. Our Common Equity Tier 1 (CET1) ratio is 14.0 per cent (31 December 2021: 14.1 per cent). Further details can be found in the Capital Review section (page 320). Further details of the risk performance for 2022 are set out in the Risk profile section ![]() 47 Standard Chartered – Annual Report 2022 Strategic report An update on our risk management approach Our ERMF outlines how we manage risk across the Group, as well as at branch and subsid iary level 1 . It gives us the structure to manage exist ing r isks effectively in line with our Risk Appetite, as well as allowing for holist ic r isk ident ification. Princ ipal and Integrated R isk Types Princ ipal r isks are risks inherent in our strategy and business model. These are formally defined in our ERMF which provides a structure for monitor ing and controll ing 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 ipal and integrated risks and risk appetite statement. In addit ion to pr inc ipal r isks, the Group has defined a Risk Appetite Statement for Climate Risk. Princ ipal R isk Types Risk Appetite Statement Credit Risk The Group manages its credit exposures following the princ iple of d ivers ification across products, geographies, client segments and industry sectors. Traded Risk The Group should control its financ ial markets act iv it ies to ensure that Traded Risk losses do not cause material damage to the Group’s franchise. Treasury Risk The Group should mainta in sufficient cap ital, liqu id ity and funding to support its operations, and an interest rate profile ensuring that the reductions in earnings or value from movements in interest rates impact ing bank ing book items do not cause material damage to the Group’s franchise. In addit ion, the Group should ensure its Pension plans are adequately funded. Operational and Technology Risk The Group aims to control Operational and Technology Risks to ensure that operational losses (financial or reputat ional), includ ing any related to conduct of bus iness matters, do not cause material damage to the Group’s franchise. Information and Cyber Security (ICS) Risk The Group has zero appetite for very high ICS residual risks and low appetite for high ICS residual risks which result in loss of services, data or funds. The Group will implement an effective ICS control environment and proactively ident ify and respond to emerg ing ICS threats in order to lim it ICS inc idents impact ing the Group’s franch ise. Compliance Risk The Group has no appetite for breaches in laws and regulations related to regulatory non- compliance; recognis ing that wh ile inc idents are unwanted, they cannot be ent irely avoided. Financ ial Cr ime Risk The Group has no appetite for breaches in laws and regulations related to financ ial cr ime, recognis ing that wh ile inc idents are unwanted, they cannot be ent irely avoided. Model Risk The Group has no appetite for material adverse impl icat ions aris ing from m isuse of models or errors in the development or implementat ion of models, wh ile accepting model uncertainty. Reputational and Sustainab il ity Risk The Group aims to protect the franchise from material damage to its reputation by ensuring that any business activ ity is satisfactor ily assessed and managed by the appropr iate level of management and governance oversight. This includes a potential failure to uphold responsible business conduct or lapses in our commitment to do no sign ificant env ironmental and social harm. Integrated Risk Types Risk Appetite Statement Climate Risk The Group aims to measure and manage financ ial and non-financial r isks from climate change, and reduce emiss ions related to our own act iv it ies and those related to the financ ing of cl ients, in alignment with the Paris Agreement. Dig ital Asset R isk This Integrated Risk Type is currently supported by Risk Appetite metrics embedded with in relevant Princ ipal R isk Types. Third-Party Risk This Integrated Risk Type is currently supported by Risk Appetite metrics embedded with in relevant Princ ipal R isk Types. 1 The Group’s Risk Management Framework and System of Internal Control applies only to wholly controlled subsid iar ies of the Group, and not to Associates, Joint Ventures or Structured Entit ies of the Group. ![]() 48 Standard Chartered – Annual Report 2022 Strategic report Risk overview Topical Risks refer to themes that may have emerged but are still evolving rapidly and unpredictably, while Emerging Risks refer to unpredictable and uncontrollable outcomes from certain events which may have the potential to adversely impact our business. As part of our continuous risk ident ification process, we have updated the Group’s Topical and Emerging Risks (TERs) from those disclosed in the 2021 Annual Report. We summarise these below, outlin ing the r isk trend changes since the end of 2021, and the mit igat ing actions we are taking based on our current knowledge and assumptions. This reflects the latest internal assessment as performed by senior management. The TER list is not exhaustive and there may be addit ional risks which could have an adverse effect on the Group. Our mit igat ion approach for these risks may not elim inate them but shows the Group’s awareness and attempt to reduce or manage the risk. As certain risks develop and material ise over time, management will take appropriate steps to mit igate the risk based on its impact on the Group. The key changes to the TERs since the 2021 Annual Report are as follows. • We have added two new TERs: “High inflat ion and US dollar strength” and “Global economic downturn risk”. This reflects that continued inflat ion and consequent rate h ikes will impact global growth, with a chance of global recession in 2023. • “Energy security” has been broadened to “Energy security and shift ing pol it ical all iances” to reflect those practical it ies around energy security, that may reshape some polit ical relationsh ips, w ith a shift in power towards exporters. • “Supply chain dislocat ions” has been renamed as “Extended supply chain issues and key material shortages” due to continu ing supply shortages and restr ict ions of some exports, the impact of Russia-Ukraine war and China-US rivalry, and the push for sustainable alternative supply chains. • “Social unrest” and “Adapting to endemic COVID-19 and a K-shaped recovery” are no longer presented as independent TERs; rather they are now considered as drivers for other overarching themes. Macroeconomic and Geopolit ical Cons iderat ions There is interconnectedness between risks due to the importance of US dollar financ ing cond it ions for global markets, and the global or concentrated nature of key supply chains for energy, food, semi-conductors and rare metals. The Group is exposed directly through investments, or ind irectly through its clients to these risks. While the main risk impacts are financial, other ram if icat ions may exist, for example, reputational, compliance or operational considerat ions. High inflat ion and US dollar strength Inflation is now a global concern and a top policy issue in many countries which are experienc ing the h ighest inflat ion levels in decades. Prices have surged due to a combinat ion of customer demand and supply shortages. The Federal Reserve’s sustained fight against US inflat ion has led to US dollar appreciat ion aga inst many other global currencies. This increases global import costs and debt servic ing costs on US dollar denom inated debt. There have been widespread price corrections for some asset classes. Some markets, especially emerging markets, have lim ited options to defend their currencies without causing other detrimental effects. The operating environment is likely to be testing for the Non Bank Financ ial Inst itut ions (NBFIs) sector; segments w ith in it could find it challenging to manage liqu id ity, credit, refinancing and market r isk. The Archegos collapse of 2021 and the liab il ity-driven investments volatil ity are the most notable recent examples. There are heightened expectations from major regulators with regard to the management of NBFI risks. Price inflat ion for essent ial goods, such as food and fuel has prompted a cost-of-liv ing cr is is across both developed and emerging markets in which the Group operates. This has sparked social unrest in some countries, with a heightened risk in emerging markets which experience disproport ionate effects. However, the impact is felt across a wider bracket, includ ing the vast global m iddle class, which raises the threat of instab il ity, even in tradit ionally less volat ile countries. Global economic downturn risk Continued tighten ing of monetary pol icy to combat inflat ion in developed markets has contributed to the possib il ity of a global recession in 2023. Higher rates could increase debt distress levels across both developed and emerging economies. Global growth slowed to 3.4 per cent in 2022, with the outlook for 2023 growth remain ing muted at 2.9 per cent. Although China’s reopening could lead to a faster than expected recovery, supply chain bottlenecks remain and severe COVID-19 outbreaks could lead to a reversal. Geopolit ical escalation could also lim it the speed of recovery, and supply chain restrict ions may lead to deglobal isat ion and less efficient internat ional trade. The Group is exposed to downturns in China, such as observed turbulence in the property development sector. #### Topical and Emerging Risks ![]() 49 Standard Chartered – Annual Report 2022 Strategic report Expanding array of global tensions The Russia-Ukraine war has catalysed a fundamental shift in power dynamics with a demarcation of underlying polit ical alliances. Pressure is mounting on Russia, which may lead to increas ingly desperate m il itary and pol it ical act ions. Relations between China and other developed markets, particularly in the West, remain fragile, with sanctions being imposed by both sides. Increasing technological restrict ions and potential escalations in relation to Taiwan’s sovereignty are among a number of flashpoints. Economic geopolit ical actions could also escalate distrust, decoupling, and increase ineff ic ient production, potentially generating further inflat ionary pressures. Election wins for extremist parties in a number of countries are adding to increased vulnerabil ity and volat il ity – espec ially as economics is becoming subservient to polit ics. Volat il ity in tradit ionally stable econom ies could cause further disrupt ion. Rivalry between the United States and China may have structural, operational and strategic impacts on business models for companies that straddle both. Emerging markets sovereign risk Emerging markets have been squeezed by escalating oil and food prices, high interest rates and the legacy of COVID-19 on key industr ies such as tour ism. Distress has already been observed across several of the Group’s footprint markets, includ ing defaults in Sri Lanka and Ghana, polit ical instab il ity in Pakistan, high inflat ion in Türkiye, and issues across Africa, particularly economies that are sensit ive to fuel pr ices. For some countries with fragile governance frameworks, there is a heightened risk of failure to manage social demands, which might culminate in increased polit ical vulnerab il ity. Furthermore, food and energy security challenges have the potential to drive other social impacts. Tighten ing of financial cond it ions in developed markets has also led to local currency depreciat ions aga inst the US dollar, increas ing debt serv ic ing costs, and potent ially restrict ing debt re-financing. Fore ign Exchange reserves have already been heightened depleted in some markets, and local monetary policy may undermine already weak growth. Extended supply chain issues and key material shortages Demand and supply imbalances in global supply chains have become persistent as they are increas ingly structural in nature. The main dislocat ions are l inked to conflict and polit ical restrict ions on trade or investment. Repercussions range from companies that are a party in the particular supply chain, to end consumers and sovereigns. Concentrated impacts to specif ic key industr ies such as semi-conductors can have contagion effects. Polit ical wrangling over technological supremacy further increases the risk of market disrupt ion and a retreat from global isat ion. Potential targeted restrict ions on sem iconductors could lead to complete restructuring of global supply chains, impact ing most sectors. This could lead to a shift in supply chains for the future, with increased contingency costs and production potentially moving closer to consumers. This is further compounded by increased scrutiny around the environmental and social impacts of supply chains. Energy security and shift ing pol it ical all iances The Russia-Ukraine war has exacerbated an already strained energy supply model in developed markets, spurring a rapid pivot away from tradit ional supply l ines. This came amid already increased tensions between nations as negotiat ing power shifted towards energy exporters. Ris ing energy pr ices and potential supply shortfalls may cause a rise in social unrest, especially in countries where there is high dependence on energy imports. In the wake of the conflict, a trade-off between pragmatism and environmentalism has material ised, w ith sign ificant divergence as some countries have embraced the renewables opportunity while others have reversed, with rollbacks of green polic ies observed in some markets. Policymakers must balance supply and price pressures with climate goals, with a heightened risk of short term crises divert ing attent ion and resources away from longer term required climate action. Ris ing mater ial costs will also impact renewable energy development, potentially slowing the transit ion. The Group’s plans for sustainable finance business growth could be achieved at a slower than expected pace. How these risks are mit igated/next steps • We conduct thematic 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. • Vulnerable sectors are regularly reviewed and exposures to these sectors are managed as part of Credit Risk reviews. • Sovereign ratings, exposures, outlooks and country risk lim its are regularly monitored, and mit igat ing actions taken as required. • Exposures that may result in material credit impa irment and increased risk-weighted assets are closely monitored and managed. • We util ise Cred it Risk mit igat ion techniques includ ing cred it insurance and collateral. • We track the partic ipat ion of our footprint countries in G20’s Common Framework Agreement and Debt Service Suspension Init iat ive for Debt Treatments and the associated exposure. • We remain vig ilant in monitor ing geopol it ical relat ionsh ips. Increased scrutiny is applied when onboarding clients in sensit ive industr ies and in ensuring compliance with sanctions. ![]() 50 Standard Chartered – Annual Report 2022 Strategic report Risk overview Environmental and Social Considerat ions ESG stakeholder expectations Environmental targets are becoming embedded in global business models, with increased pressure to set ambit ious sustainab il ity goals or apply more restrict ions on financing to sensit ive sectors. There is also an increase in stakeholder expectations around fair and balanced disclosures, includ ing market ing campaigns. Scrutiny around greenwashing has accelerated with various regulatory developments, such as the Financ ial Conduct Authority’s consultation on anti-greenwashing rules. There is fragmentation in the pace and scale of adoption and regulation around the world, which adds complexity in managing a global business. Fragmentation in ESG taxonomies may also lead to unintended consequences, includ ing m isallocat ion of cap ital, polit ical and l it igat ion risks. Human rights concerns are increas ing in focus with scope expanding beyond direct abuses to cover other areas such as data management, technological advancement, and supply chains. There are risks if the Group is required to adapt to new fragmented regulations quickly, as well as meeting publicly stated sustainab il ity goals and helping clients transit ion. How these risks are mit igated/next steps • Increased scrutiny is applied to environmental and social standards when provid ing serv ices to clients. • We monitor regulatory developments in relation to sustainable finance and ESG risk management and provide feedback on consultations bilaterally and through industry groups on emerging topics. • We focus on min im is ing our env ironmental impact and embedding our values through our Posit ion Statements for sensit ive sectors and a l ist of prohib ited act iv it ies that the Group will not finance. • We are integrat ing the management of greenwash ing risks into our Reputational and Sustainab il ity Risk Type Framework, polic ies and standards. Green, Susta inable and Transit ion F inance labels for products, clients and transactions reflect the standards set out in our Green and Sustainable Product Framework, Transit ion F inance Framework and TCFD reporting. We regularly review these frameworks and annually obtain external verif icat ion on the Sustainable Finance asset pool. • The Group is committed to respecting universal human rights and we assess our clients and suppliers against various internat ional pr inc iples, as well as through our soc ial safeguards and supplier charter. More details can be found in our Modern Slavery Statement and Human Rights Posit ion Statement. • Detailed portfolio reviews and stress tests are conducted to test resil ience to cl imate-related risks, in line with applicable regulatory requirements. • Work is under way to embed Climate Risk considerat ions across all relevant Princ ipal R isk Types. This includes stress testing/scenario analysis, integrat ion of cl ient Climate Risk assessments with in the Cred it process, build ing an internal modelling capabil ity and l inkages with our net zero targets to understand the financial r isks and opportunit ies from climate change. Technological Considerat ions Data and Dig ital Regulatory requirements and client expectations relating to data management and quality, includ ing data protect ion and privacy, data sovereignty, the use of Artif ic ial Intelligence (AI) and the ethical use of data are increas ing. Regulat ion is also becoming more fragmented and complex, requir ing more resources to ensure ongoing compliance. Geopolit ical tens ions have added impetus to data sovereignty legislat ion, somet imes extraterritor ial in nature. There can also be conflict ing gu idance with in the same jurisd ict ion. There is heightened focus on economic sanctions and financial cr ime controls, reinforc ing the need for robust control frameworks. Data protection risks are increas ingly dr iven by highly organised and sophist icated threat actors, w ith developments such as ransomware available as a service. Data is becoming more concentrated in the hands of governments and big private companies, with relatively few providers of new technologies such as cloud services. Some third parties are reluctant to disclose AI model details, cit ing intellectual property, which increases model risk. A balance between resil ience and ag il ity is required, as new technologies are onboarded while exist ing systems are mainta ined. Clear ownersh ip, frameworks and oversight of new technologies is also required. How these risks are mit igated/next steps • We monitor regulatory developments in relation to all aspects of data management, taking into account country specif ic requ irements. We take a holist ic v iew across data risks to facil itate an efficient and comprehens ive risk control environment. • We have established a Data Management and Privacy Operations team to assist with compliance with data management regulations. This includes a dedicated AI governance forum which includes review of third party solutions. • We have an infl ight programme of work to dr ive compliance to BCBS 239 requirements on effective risk data aggregation and risk reporting. • We continue to deliver new controls and capabil it ies to increase our abil ity to ident ify, detect, protect and respond to ICS threats. New business structures, channels and competit ion Failure to harness new technologies and new business models would place banks at a competit ive d isadvantage. However, these innovat ions requ ire special ist sk ills, present new vectors for threats to material ise and requ ire robust risk assessment accordingly. Differ ing access to new developments w ill also cause divergence and inequal ity to grow across countr ies and social groups. Dig ital assets are ga in ing adopt ion and linked business models continue to increase in prominence. These present material opportunit ies for bus inesses and consumers, as well as potential risks as the space evolves, as evidenced by the collapse of Futures Exchange (FTX) and other recent events, further exacerbating dig ital asset market volat il ity. Increasing use of partnerships and alliances increases exposure to third-party risk. There is also risk of inadequate risk assessments of new and unfamil iar act iv it ies. ![]() 51 Standard Chartered – Annual Report 2022 Strategic report How these risks are mit igated/next steps • We monitor emerging trends, opportunit ies and r isk developments in technology that may have impl icat ions for the banking sector. • Enhanced dig ital capab il it ies have been rolled out in CPBB, particularly around onboarding, sales, and marketing. • A Dig ital Asset R isk Management Approach and policy has been implemented. This is regularly updated in response to evolving dig ital assets market act iv ity. • Strategic partnerships and alliances are being set up with Fintechs to enhance our competit iveness. People Considerat ions Talent pool of the future The expectations of the workforce, especially skilled workers, are sign ificantly sh ift ing. The COVID-19 pandem ic accelerated changes on how people work, connect and collaborate, with expectations on flexible working now a given. The focus is increas ingly on ‘what’ work people do and ‘how’ they get to deliver it, which are becoming different iators in the war for future skills. There is greater desire to seek meaning and personal fulfilment at work that is aligned to ind iv idual purpose. These trends are even more dist inct among M illenn ials and Gen Zs who make up an increas ing proport ion of the global talent pool, and as dig ital nat ives also possess the attributes and skills we seek to pursue our strategy. With attrit ion increas ing year on year, to susta inably attract, grow and retain talent, we must continue to invest in and further strengthen our Employee Value Proposit ion (EVP), through both firm-wide intervent ions as well as targeted action. How these risks are mit igated/next steps • Our culture and EVP work is designed to address the emerging expectations of the diverse talent we seek. The quarterly Brand and Culture Dashboard monitors our D&I Index and colleagues’ perceptions of our EVP and whether we are liv ing our Valued Behav iours. Local Management teams discuss the dashboard to ident ify act ions, supported by a central library of intervent ions from across the Group. • Our Future Workplace Now programme, which formalises hybrid working where suitable, has been rolled out across 43 markets, and 78 per cent of colleagues in these markets are now on flexi-working arrangements. We continue to monitor for potential people risks, and mit igat ing actions include hybrid learning festivals, watercooler moments toolkits, a social connections platform and people leader guidance. • We are undertaking a multi-year journey of developing future-skills by creating a culture of continuous learning, to balance between ‘build ing’ and ‘ induct ing’ sk ills. We are deploying technology that democratises access to learning content and developmental experiences. • To address our talent pool’s increased expectations of us being purpose-led, we have published our Stands which guide our strategy. ![]() #### In 2022, we created 275 net zero branches in India, China and Hong Kong, and certified 120 sites in Asia and two in Africa as being free of single-use plastic. We are continuing to invest in transitioning our branches to net zero with all new properties built and designed for True Zero Waste and zero emissionsimpact. Our aim is to have all property transitioned to net zero by 2025, including branches. Read more online at www.sc.com/netzero #### Going net zero in 275 branches #### Stakeholders and Sustainability 54 Stakeholders 64 Sustainab il ity 66 Accelerating Zero: Our approach to climate change 76 Reducing our emiss ions 90 Mit igat ing Environmental and Social Risk 113 Governance of our Sustainab il ity Agenda 52 Standard Chartered – Annual Report 2022 Strategic report Stakeholders and Sustainab il ity ![]() Strategic report 53 Standard Chartered – Annual Report 2022 ![]() 54 Standard Chartered – Annual Report 2022 Strategic report Stakeholders This section forms ourSection 172disclosure, describing 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 we engage stakeholders to understand their interests See pages 55 to 63 • How we engage employees and respond to their interests See pages 60 to 63 • How we respond to stakeholder interests through sustainable and responsible business See pages 64 to 113 Detailed informat ion about how the Board engages d irectly with stakeholders and shareholders can be found in the Director’s report on pages 134 to 231. Examples of a selection of the Board’s princ ipal dec is ions are included throughout this section. This section also forms our key non-financ ial d isclosures in relation to sections 414CA and 414CB of the Companies Act 2006. Our non-financial informat ion statement can be found at the end of this section on page 124. #### Stakeholders #### Helping Ismail build skills with Futuremakers In March 2022, Ismail, a graduate with cerebral palsy, became a Futuremaker in our first economic- empowerment project for young people with disab il it ies in Pakistan. The train ing helps learners l ike Ismail build the skills and confidence they need to make smart career choices and enter employment. Ismail completed the train ing and entrepreneursh ip modules and applied his learning to ace an interv iew and land his first paid job at a government agency. #### As an international bank operating in 59 markets, stakeholder engagement is crucial in ensuring we #### understand local, regional and global perspectives and trends which inform how we do business. Our stakeholders Clients Regulators and governments Investors Suppliers Society Employees ![]() Strategic report 55 Standard Chartered – Annual Report 2022 #### Listening and responding to stakeholder priorities and concerns is critical to achieving our Purpose and deliver ing on our brand promise, here for good. We strive to maintain open and constructive relationships with #### a wide range of stakeholders including regulators, lawmakers, clients, investors, civil society and community groups. In 2022, we made improvements to some of our feedback processes, so that client needs could be addressed by relationsh ip managers as they emerged. Our engagement took many forms, includ ing one-to-one sess ions using online channels and calls, virtual roundtables, written responses and targeted surveys. These conversations, and the issues that underpin them, help inform our business strategy and support us to operate as a responsible and sustainable business. Stakeholder feedback, where appropriate, is communicated internally to senior management through the relevant forums and governing committees such as the Sustainab il ity Forum, and to the Board’s Culture and Sustainab il ity Committee (CSC) which oversees the Group’s approach to its main relationsh ips w ith stakeholders. We communicate progress regularly to external stakeholders through channels such as sc.com, established social media platforms and this report. More detailed informat ion on material sustainab il ity topics can be found in our Sustainab il ity section on pages 64 to 124. This was further enabled with self-serve dig ital tools and capabil it ies such as chatbot, our mobile banking app, applicat ion programm ing interface (API) connectiv ity and data analytics, which reduced operating costs and improved client experience. Our agile working practices have also accelerated our speed of decis ion-mak ing and change delivery to meet client needs faster. Refining our processes through cont inuous improvement has enabled us to achieve benefits in revenue and costs savings by creating capacity and reducing client wait ing t imes. As an integrated team, we drove dig ital transformat ion and leveraged networks in service to our clients on our proprietary platforms across 47 markets. We have processes and guidel ines in place, specif ic to each of our cl ient businesses, to understand and respond to issues and promptly resolve complaints. Meanwhile, we continued to engage with our clients to help them expand across borders, using our internat ional network to help them access exist ing and new trade corr idors. Our presence in high-growth markets – and ongoing roll out of dig ital platforms – helps connect our cl ients to the global engines of trade and innovat ion. As part of our aim to reach net zero carbon emiss ions by 2050, our newly-formed transit ion finance team have been work ing closely with our clients in hard-to-abate sectors on their own transit ion plann ing. This is in addit ion to our plan to mob il ise $300 bill ion of Susta inable Finance between 2021 and 2030. Across both CCIB and Consumer, Private and Business Banking (CPBB), we have processes and controls to mit igate greenwashing risks, and to support transparency we publish the details of what constitutes our sustainable investments universe externally. Accelerating adoption of our API offerings We are committed to helping our corporate clients achieve the benefits of real-time treasury operations, so we developed an applicat ion programm ing interface (API) banking platform for foreign exchange transactions, payment in it iat ion, payment status and account balances. Our Premium Banking APIs were awarded the title of ‘Top Performer’ in the FinLync 2022 Power Rankings Report, in recognit ion of our revamped API Marketplace and sandbox for testing APIs. In CPBB, we work closely with third-party ESG data providers to support the development of product ideas, and extensive due dil igence is conducted by our in-house team on our high convict ion su ite of sustainable funds. How we create value We want to deliver easy, everyday banking solutions to our clients in a simple and cost-effective way with a great customer experience. We enable ind iv iduals to grow and protect their wealth; we help businesses trade, transact, invest and expand; and we help a variety of financ ial inst itut ions, includ ing banks, publ ic sector and development organisat ions, w ith their banking needs. How we serve and engage In 2022, Corporate, Commercial and Institut ional Bank ing (CCIB) strengthened its annual feedback process by capturing how clients feel about what we offer, includ ing adv ice, customer service and dig ital channels. CCIB also focused on build ing a cons istent dig ital exper ience and accelerated delivery through Cash, Trade, Financ ial Markets and Data Solutions. Clients ![]() 56 Standard Chartered – Annual Report 2022 Strategic report Stakeholders Clients continued #### Stakeholders continued In CPBB, train ing is provided to frontline staff across our branches, contact centres and dig ital channels to ident ify and support vulnerable clients, and we have also implemented an educational train ing programme for those cl ients who require assistance in navigat ing onl ine and mobile channels. Our push for a best-in-class client experience is underpinned by innovat ive products and d ig ital stra ight-through services. This includes build ing capab il ity to protect our cl ients against evolving risks in the ecosystem like fraud and cyber security and comes with education and increased client communicat ion. In order to act in the best interests of our clients, we use our ins ights gathered from our data alongs ide robust polic ies, procedures and the Group’s risk appetite to design and offer products and services that meet client needs, regulatory requirements and Group performance targets, while contribut ing to a susta inable and resil ient env ironment. Wealth and Personal Banking products have increased sustainable product options for distr ibut ion to our clients. We now offer sustainable deposits in seven markets, green mortgages in six markets, sustainable investments in 16 markets and carbon-neutral cards in 17 markets. All new products are subjected to a comprehensive approvals process. For investment products sold to ind iv iduals, this includes risk scores which aid our assessment of client suitab il ity. We consider each client’s financ ial needs and personal circumstances to assist us in offering suitable product recommendations. We achieve this using a globally consistent methodology that takes into considerat ion local regulatory requ irements to review product risks against the client’s risk appetite, consider ing financial objectives, financial ab il ity, and knowledge. Clients are also provided with clear and simple documentation that outlines key product features and risks prior to executing a transaction. Fees and charges are disclosed to clients in line with regulatory requirements and industry best practice, and where available, benchmarked against competitors. For Personal and Business Banking products, agreed interest rates , fees and other charges as billed to clients are monitored and assessed locally, with global oversight. Triggers for outlier fees and charges are defined and subject to annual review. Complaints are reviewed on an ongoing basis and are one of the factors that are taken into account prior to amendments to annual interest, fees and charges. We also assess our product portfolio for new risks to ensure they remain appropriate for client needs and aligned to emerging regulation. These quantitat ive and qual itat ive assessments, includ ing Per iod ic Product Rev iews, are intended to provide a complete view of whether to continue, enhance, grow or retire products. Throughout 2022, we also mainta ined our sharp focus on improv ing the cl ient experience across the Bank. We engaged with clients to show them the opportunit ies trade corr idors could bring and how using our network could help them flourish. Our focus on partnerships in CPBB is showing results with new partnerships launched in Vietnam, Indonesia and more recently Singapore in addit ion to the partnersh ips we have in China. These partnerships have incrementally acquired 1.2 mill ion cl ients, many of whom have the potential to avail themselves of the full suite of CPBB products. 2022 saw a sign ificant increase in our dig ital wealth capabil it ies with the delivery of Online Equity platforms in Malaysia and the United Arab Emirates and the myWealth Direct service in Hong Kong which offers personalised ins ights and investment ideas directly to clients. In 2023, we will continue to listen and respond to stakeholder prior it ies and concerns, addressing feedback as it emerges, strengthen our dig ital transformat ion and innovat ion capabil it ies, and support our clients as they transit ion to net zero. Their interests • Different iated product and serv ice offering • Dig itally enabled and pos it ive exper ience • Sustainable finance • Access to internat ional markets ![]() Strategic report 57 Standard Chartered – Annual Report 2022 How we create value We engage with public authorit ies to play our part in supporting the effective function ing of the financial system and the broader economy. How we serve and engage We actively engage with governments, regulators and policymakers at a global, regional and national level to share ins ights and support the development of best pract ice, and adoption of consistent approaches, across our markets. In 2022, we engaged with regulators, government offic ials and trade associat ions on a broad range of top ics that included internat ional trade, susta inab il ity, data, cyber security, dig ital adoption, and innovat ion. We also engaged w ith offic ials on the financial serv ices regulatory environment, in particular on prudential, financ ial markets, conduct and financial cr ime frameworks. In support of this, we have a Group Public and Regulatory Affairs team responsible for engagement as well as ident ify ing and analysing relevant polic ies, leg islat ion and regulation. This work is overseen by various governance forums with in the Bank, wh ich comprise senior executives representing business and control functions to support alignment between advocacy and business strategies. For more details on our engagement with regulators and governments, as well as our industry and membership associat ions please see sc.com/polit icalengagement Their interests • Strong capital base and liqu id ity posit ion • Robust standards for conduct and financial cr ime • Healthy economies and competit ive markets • Posit ive susta inable development • Dig ital innovat ion in financ ial serv ices • Operational resil ience • Customer protection Regulators and governments The Group has delivered a strong performance in 2022, with return on tangible equity (RoTE) back above pre-pandemic levels. We are executing well against the five strategic actions we set out earlier in the year while navigat ing through a challenging external environment. Our aim is to accelerate the delivery of our ambit ion of double-d ig it RoTE. Regular and transparent engagement with our investors, and the wider market, helps us understand investors’ needs and tailor our public informat ion accord ingly. In addit ion to direct engagement from our Investor Relations team, we communicate through quarterly, half and full-year results, conferences, roadshows, investor days and media releases. There was continued adoption of virtual mediums during the year, coupled with a growing number of face-to-face interact ions from the very low levels seen in the last two years. We hosted two capital market days, focusing on our Financ ial Markets business and Consumer, Private and Business Banking Affluent Clients in June and November respectively. How we create value We aim to deliver robust returns and long-term sustainable value for our 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, we provide our investors with informat ion about progress against our strategic and financ ial frameworks. Through our footprint and the execution of our sustainab il ity agenda, we provide our investors with exposure to opportunit ies in emerging markets. We believe that our integrated approach to ESG issues, as well as a strong risk and compliance culture, are key different iators. Investors continued Investors Princ ipal Board dec is ion – market entr ies and exits We are accelerating our strategy to deliver effic ienc ies, reduce complexity and drive scale. During 2022, the Board approved a set of actions to focus resources with in the Africa and Middle East (AME) region to those areas where they can have the greatest scale and growth potential, for the benefit of our shareholders, employees and customers. Subject to regulatory approval, we intend to exit onshore operations in seven markets in AME, and in a further two markets to focus solely on our CCIB business. The Group has invested heavily in recent years in the AME region, includ ing fundamentally transform ing its dig ital capabil it ies in its African markets. It has also been expanding its footprint to cover some of the largest and fastest-growing economies, having recently opened its first branch in the Kingdom of Saudi Arabia and obtained prelim inary approval for a bank ing licence in the Arab Republic of Egypt. The seven markets where there will be a full exit of operations are Angola, Cameroon, Gambia, Jordan, Lebanon, Sierra Leone and Zimbabwe. In Tanzania and Cote d’Ivoire, the Consumer, Private and Business Banking businesses will be exited and the focus will turn solely to CCIB. As part of the Board’s decis ion-mak ing, it recognised that there were a number of potential challenges, risks, costs and sign ificantly impacted stakeholders to consider, which management was also aware of. Carefully designed and executed engagement with regulators, governments and employees, as well as with other key stakeholders, continues to be crucial. The Board has received regular updates since the decis ion was made. ![]() 58 Standard Chartered – Annual Report 2022 Strategic report Stakeholders How we create value Through the engagement of suppliers, both locally and globally, we seek to support our business with the provis ion of efficient and susta inable goods and services. How we serve and engage Supplier selection, due dil igence and contract management process is guided by our Third-Party Risk Management Policy and Standards. In 2022, we further strengthened our supplier governance given potential increased risk and regulatory scrutiny. Our Supplier Charter sets out our aspirat ions in relation to ethics, human rights, divers ity and inclus ion (D&I), and environmental performance. All newly onboarded suppliers are expected to agree to adhere with the princ iples set out in our Supplier Charter. We seek to reinforce this through the terms of our standard contract templates, where possible, and we further encourage alignment to this by sending an annual letter to all our active suppliers. This also includes guidance regarding our technology platforms, sustainab il ity aspirat ions, payment processes and other relevant princ iples such as Ant i Bribery and Corruption. We select and work with suppliers whom we believe support us to provide effic ient and value-add ing goods and services to our businesses both globally and locally. For example, during 2022, we partnered closely with our credit/debit card manufacturing supplier Thales, who went the extra mile to accommodate our demand amidst a scarcity of chips. This resulted in the Bank being able to successfully fulfil the spike in demand, due to the very successful launch of our Singapore dig ital-only bank – Trust Bank – secur ing our market posit ion ing and fulfill ing customer expectat ions. In 2022, we continued to make progress on our supply-chain sustainab il ity agenda. In pursuit of our ambit ion of ach iev ing net zero in our operations by 2025, we continued to offset emiss ions from our bus iness flights. In partnership with an independent climate consultancy, we continued refin ing the Scope 3 upstream emiss ions measurement methodology which was used to estimate our supplier emiss ions. Our Stands have served to further embed our supplier D&I approach. In 2022, we started to report and monitor supplier D&I ind icators across our footpr int, and 93 per cent 1 of our core markets now have supplier D&I programmes to help accelerate progress and impact in our local communit ies. So far, more than 1,500 employees have been trained internally to build capabil ity to del iver our supplier D&I aims. In addit ion, we cont inue to partner with multiple local and global non-governmental organisat ions (NGOs) to ident ify and onboard more sustainable and diverse-owned suppliers across our core markets. Suppliers #### Stakeholders continued Key investor feedback, recommendations and requests are considered by the Board, whose members keep abreast of current topics of interest. Standard Chartered PLC’s Annual General Meeting (AGM) in May was open to shareholders to attend either in person or electronically where they were provided a platform to view a live video feed of the meeting. All partic ipants were prov ided with the opportunity to submit their votes and ask the Board questions. Sim ilarly, the Group Cha irman, alongside some members of the Board, hosted a ‘hybrid’ stewardship event for inst itut ional investors in November which provided a platform for shareholders to receive an update on a number of topics, includ ing susta inab il ity, net zero and governance matters. The event included an open question-and-answer session across a range of key issues. An external investor sentiment survey was also conducted on an anonymous basis during the year, seeking ins ight into how the Group was perceived, to ident ify areas of focus for investors and understand how the Group could improve its investor communicat ions. Th is was particularly important given the changes in the external environment and the evolution of the Group’s strategy. The Board discussed key areas which it should focus on to address concerns highl ighted by investors and emerging from the report. We continue to respond to growing interest from a wide range of stakeholders on ESG matters, includ ing investors. We sought shareholder endorsement for our net zero pathway at the AGM, intended as a means by which we will measure progress, engage and gather views. We also work with sustainab il ity analysts and partic ipate in sustainab il ity ind ices that benchmark our performance, includ ing the Carbon Disclosure Product (CDP) Climate Change survey and Workforce Disclosure Init iat ive. In 2023, we will continue to engage with investors on progress against our strategic prior it ies and actions, as well as our financial framework as we progress towards our returns target. Their interests • Safe, strong and sustainable financ ial performance • Facil itat ion of sustainable finance to meet the UN Sustainable Development Goals • Progress on ESG matters, includ ing advanc ing our net zero agenda Investors continued 1 26 out of 28 in-scope markets ![]() Strategic report 59 Standard Chartered – Annual Report 2022 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 il soc iety and internat ional and local NGOs, from those focused on environmental and public policy issues to partners deliver ing our community programmes. To shape our strategy, we aim for constructive dialogue that helps us to understand alternative perspectives and that our approach to doing business is understood. This includes working with NGOs that approach us about a specif ic cl ient, transaction or policy. In 2022, climate change, our net zero pathway, human rights and biod ivers ity continued to underpin many of our conversations. We primar ily rece ived NGO feedback via our public inbox and responded to queries in line with our Reporting & Engagement Standard. For complex issues such as climate change, we held bilateral virtual meetings with NGOs to exchange perspectives in greater depth. In advance of our AGM, we commiss ioned GlobeScan, a lead ing market research provider, to conduct 20 stakeholder interv iews w ith leaders across NGOs, academia, business and specialty research inst itutes from seven countr ies to analyse how our net zero pathway aligns to external expectations. In 2023, we antic ipate mapp ing our NGO relationsh ips to ident ify top ics and geographies where we can strengthen our engagement. We hosted a third edit ion of the Futuremakers Forum, br ing ing together over 1,700 clients, employers, NGOs, employees and project partic ipants from 61 markets to bu ild partnerships and create economic opportunit ies focused on young people. Through the two-day virtual event, we deepened our understanding of financ ial products and serv ices young people want and need to unleash their full potential. To increase employee engagement, we launched Mentors Den for almost 400 colleagues across 12 markets to provide career advice and support to over 650 Futuremakers partic ipants. In 2022, Futuremakers reached 335,386 young people with education, employabil ity and entrepreneursh ip opportunit ies. Their interests • Climate change and decarbonisat ion • Biod ivers ity and animal welfare • Human rights • Financ ial inclus ion • Social impact Society In Kenya we work with An-Nisa Taxi Lim ited, who prov ide self-employed female-driven taxi services to the Bank. This provides women employees and clients in Kenya with the option to work and travel in a safe environment. An-Nisa’s overall vis ion is to increase employment opportunit ies for women in what is currently a male-dominated sector. Working with An-Nisa means Standard Chartered can directly contribute to posit ively impact ing the l ife of the women who own and drive the taxis. In 2023, supply chain sustainab il ity will continue to be a primary focus. We intend to progress integrat ion of environmental and social risks into our Third-Party Risk Management Framework. Also, we plan to roll out new in it iat ives to help create soc ial impact and further reduce carbon emiss ions w ith in our own operat ions and supply chain. Our Supplier Charter can be viewed at sc.com/suppliercharter Read more about our supplier divers ity standard: sc.com/supplierd ivers ity Their interests • Sustainab il ity and divers ity • Open, transparent and consistent tendering process • Will ingness to adopt suppl ier-driven innovat ions • Accurate and on-time payments ![]() 60 Standard Chartered – Annual Report 2022 Strategic report Stakeholders How we create value We recognise that our workforce is key to driv ing our performance and productiv ity and that the d ivers ity of our people, cultures and network 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 an inclus ive, innovat ive and cl ient-centric culture that drives ambit ion, action and accountabil ity. How we serve and engage By engaging employees and fostering a posit ive exper ience for them, we can better serve our clients and deliver on our Purpose and Stands. A culture of inclus ion and amb it ion enables us to unlock innovat ion, make better dec is ions, del iver our business strategy, live our valued behaviours and embody our brand promise: here for good. We proactively assess and manage people-related risks, for example, organisat ion, capabil ity and culture, as part of our Group r isk management framework. Our People Strategy, which was approved by the Board in mid- 2019, stays relevant and future-focused, with the pandemic having accelerated many of the future of work trends which informed our approach. Their interests Translating our here for good brand promise and Purpose of ‘Driv ing commerce and prosper ity through our unique divers ity’ into our colleagues’ day-to-day experience is crit ical to us remain ing an employer of cho ice across our footprint. The research we have on our Employee Value Proposit ion (EVP) tells us that our employees, or potential employees, want to: have interest ing and impactful jobs; innovate with in a unique set of markets and clients; cultivate a brand that sustainably drives commerce and offers enrich ing careers and development; and be supported by great people leaders. They want these elements to be anchored in competit ive rewards and a posit ive work–l ife balance. The employment proposit ion is a key input to our People Strategy which supports the delivery of our business strategy. Listen ing to employees Frequent feedback from employee surveys helps us ident ify and close gaps between colleagues’ expectations and their experience. In addit ion to our annual survey, we use continuous-listen ing mechan isms that capture colleague sentiment more frequently, through a rolling culture survey and through surveys at key moments for our employees, such as when they join us, when they leave, and when they return to work after parental leave. In 2022, our annual My Voice survey was conducted in May and June: 87 per cent of our employees (65,988) and 44 per cent of elig ible agency workers (1,797) part ic ipated in the survey. Key measures of employee satisfact ion have stayed stable in 2022, with an increase in our employee Net Promoter Score (NPS) (which measures whether employees would recommend working for us) and a slight drop in our employee engagement index. We are encouraged to see that 96 per cent of employees feel committed to doing what is required to help the Group succeed, 88 per cent feel proud about working for the Group, and 83 per cent say that the Group meets or exceeds their expectations. The scores ind icate that we have continued to improve as a place to work. In addit ion to leverag ing inputs from employee surveys, the Board and Management Team also engage with and listen to the views of colleagues through interact ive sess ions. More informat ion on the Board’s engagement w ith the workforce can be found on page 162 in the Directors’ Report. Externally, our Glassdoor rating (out of five) has increased from 3.7 in 2019 to 3.9 in 2022, and 79 per cent would recommend working with us to friends. We also continue to be recognised as an employer of choice, in 2022, we ranked as one of the World’s Best Employers in Forbes for the second time; ranked as a Divers ity Leader for the th ird consecutive year in the Financ ial T imes report on Divers ity and Inclus ion in Europe; ranked for the second time with in the Top 100 organisat ions in the Refin it iv Divers ity and Inclus ion Index; and were also recognised in the Bloomberg Gender-Equality Index for the seventh consecutive year. All of this is ind icat ive of our progress in further strengthening our employee value proposit ion to attract, reta in and grow the skills and talent that are crit ical to del iver ing our strategy and outcomes for clients. Employees #### Stakeholders continued Group KPI: Employee engagement eNPS measures the number of promoters (who would recommend the Group as a great place to work) compared with detractors on a scale from -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 eNPS has increased year-on-year from 2021 and sign ificantly increased since 2016 (2.44 in 2016) when we started our culture transformation. Employee net promoter score (eNPS) +4.1 % 17.55 2022 2021 2020 2019 12.94 17.51 11.51 ![]() Strategic report 61 Standard Chartered – Annual Report 2022 The health, safety, and resil ience of our colleagues ( includ ing in worsening pandemic condit ions in some markets or other cris is s ituat ions) cont inues to be a key prior ity. We are m indful that the levels of stress felt by employees increased in the 2022 My Voice survey from previous years. At the same time, the survey data also ind icated that they felt more supported on their wellbeing needs, especially around their mental and physical health. Globally, we offer colleagues access to a mental health app, a physical wellbeing online platform, an employee assistance programme, wellbeing toolkits, learning programmes on resil ience as well as an expand ing network of trained Mental Health First Aiders. We also continue to aim to mit igate the causes of work-related stress, encourage focus on supportive behaviours with in ex ist ing processes and decis ion-mak ing, and seek to insert wellbeing skills-build ing across learning intervent ions. Adapting to a hybrid world of work 2022 saw renewed optim ism as pandem ic-related restrict ions eased in many of our markets, creating opportunit ies for employees to increas ingly engage w ith clients, colleagues and communit ies in person. We continue to implement the flexi- working model that we in it iated in 2021, combin ing flex ib il ity in working patterns and locations. The model has now been rolled out in 43 of our markets, with 78 per cent of employees in these markets on agreed flexi-working arrangements. This has been a sign ificant step towards bu ild ing on the pos it ive lessons learnt from the pandemic around productiv ity and employee experience. Our model is enabling us to be more inclus ive of the d iverse needs of our workforce and support their wellbeing and at the same time consciously balance ind iv idual choice and flexib il ity with business prior it ies and client needs. Hybrid workers have expressed greater satisfact ion w ith overall employee experience and work- life balance in the 2022 My Voice survey in comparison to employees working fully remotely or fully in the office. As employees have started to experience their agreed hybrid working arrangements with the easing of pandemic-related restrict ions, they have also been requ ired to explore and adopt ways of working in a ‘new normal’ that balances the benefits of remote working with face-to-face interact ions. Toolkits and guidance have been provided to ind iv iduals and leaders to help navigate hybrid working, includ ing support on how to organise team and ind iv idual work in ways that maxim ise product iv ity and wellbe ing; on leading in key moments such as onboarding new team members, returning from parental leave and during performance conversations; and on recreating ‘water cooler’ moments in hybrid work environments. We continue to re-imag ine our phys ical workspaces with the relevant infrastructure and technology to provide hubs for teamwork, collaboration and learning. Read more about our approach to hybrid working at sc.com/hybridwork ing Strengthening our culture of high-performance As the Group transforms to achieve our strategic ambit ions, we have refreshed the way we manage, recognise and reward performance (launched as myPerformance in 2022). We aim to build a strong culture of ambit ion, act ion and accountabil ity by focus ing on continuous feedback, coaching, and balanced two-way performance and development conversations. As we place even greater emphasis on recognis ing outperformance that is driven by collaboration and innovat ion, and encourage more flex ib il ity and aspirat ion during goal-setting, we have removed ind iv idual performance ratings for all employees. Behavioural changes are already vis ible and we w ill further embed the cultural shift through a multi-year journey. In 2022, over 291,000 pieces of feedback were exchanged among colleagues (which is 1.5 times the amount of feedback that was exchanged in the previous year). More than half of our people leaders received feedback from their direct reports, through our ‘always on’ feedback tool available to all colleagues as well as through the 360-degree feedback tool that has been launched for mid-to-senior people leaders. We believe that the increase in upward feedback ind icates a greater sense of psychological safety in the organisat ion. The feedback is also provid ing useful input for further build ing leadership capabil it ies across the Group. Strengthening leadership capabil ity, spec if ically in our people leaders who are most directly responsible for the development of their teams, is a key enabler of our performance and culture. People leaders stepped up throughout the pandemic and we saw manager NPS continue to increase to 33.07 in 2022 (+ 3.35 points year-on-year). As the expectations that employees have of their people leaders continue to grow and evolve, we are also re-imag in ing how we embed leadership deep into the organisat ion. Our Leadersh ip Agreement forms the foundation for a modernised leadership development offering that all people leaders will complete over the next three years. We are also encouraging leadership capabil ity build ing across all employees through the Leadersh ip Academy on our online learning platform diSCover, during our annual Global Learning Week, and through a 60-day Leadership Health journey of regular micro-learning activ it ies. Read our Leadership Agreement at sc.com/leadershipagreement Employees continued Build ing leaders that Asp ire, Inspire and Execute Exceptional performance requires exceptional leadership. With inputs from our colleagues, we have captured in our Leadership Agreement what we believe it takes to lead at Standard Chartered. We are asking each colleague to Aspire, Inspire and Execute to take us from where we are today to where we have committed to be, and to deliver on our Purpose. In 2022, over 7,900 colleagues have voluntarily signed up to this agreement. We are embedding this standard of leadership into how we induct, develop, measure and recognise our leaders. ![]() 62 Standard Chartered – Annual Report 2022 Strategic report Stakeholders Developing skills of future strategic value The rapid changes in the world of work demand that our employees strengthen a combinat ion of human and techn ical skills to keep pace. We are build ing a culture of cont inuous learning that empowers employees to grow and follow their aspirat ions. We are help ing them to build the skills needed for high performance today, to reskill and upskill for tomorrow and to be global cit izens who understand the changing nature of the world in which we operate. Since 2020, the average hours invested by employees in personal development has increased by 23.8 per cent to 26.8 hours in 2022. We have continued to balance learning in classrooms with learning through our online learning platform diSCover, which is also accessible via a mobile app. Over 77,000 colleagues actively used the platform in 2022 and 32,000 colleagues have used one or more of our Future Skills Academies which include the Data & Analytics, Dig ital, Cyber, Cl ient Advisory, Sustainable Finance and Leadership Academies. Employees also have the opportunity to learn and practise new skills on the job through projects (often cross-functional and cross- location) and mentoring made available through our AI- enabled Talent MarketPlace platform. Since the launch of the platform, employees have signed up for over 1,200 projects, unlocking close to $4 mill ion in terms of productiv ity. We have further scaled the design and deployment of targeted upskill ing and resk ill ing programmes d irected towards crit ical ‘future’ roles where our strateg ic workforce planning analysis has predicted the increas ing need for talent, includ ing un iversal bankers, data translators, cloud security engineers and cyber security analysts. This approach has united our recruitment, talent management and learning efforts to target, upskill and deploy employees into new roles. We are strengthening and scaling our work on sustainab il ity, innovat ion, performance, d ig ital and leadersh ip skills-build ing, both across and with in roles. Creating an inclus ive workplace We believe that inclus ion is how we will enable our diverse talent to truly deliver impact. Our progress in this space is reflected in our annual My Voice survey, where 83.1 per cent of employees reported posit ive sent iments around our culture of inclus ion, wh ich is higher than last year. This has been enabled by increas ing awareness around d ivers ity and inclus ion pr inc iples, unconsc ious bias and micro behaviours as well as emphasis ing the importance of creating an inclus ive environment – aspects that are covered in the ‘When we’re all included’ learning programme which had been completed by over 28,000 colleagues by the end of 2022. Colleagues are also encouraged to join employee resource groups aligned to shared characterist ics or l ife experiences (includ ing gender, ethn ic ity and nat ional ity, generat ions, sexual orientat ion, and d isab il ity). ERGs across our markets provide addit ional learn ing, development and networking opportunit ies, espec ially for underrepresented populations, and are a valuable source for better understanding the lived experience of our workforce. This has already resulted in improvement through actions - such as the expansion of more accessible and assist ive technology to support better access to necessary tools for work, the launch of our SC Pride Charter to cultivate a respectful and safe work environment, and the release of an inclus ive language gu ide to promote psychological safety and review business terms to be more inclus ive. Read our inclus ive language gu ide at sc.com/inclus ivelanguagegu ide Our gender divers ity cont inues to grow with more women leaders moving up to senior roles. Women currently represent 43 per cent of the Board, 16 of our CEOs are women, and representation of women in senior leadership roles increased to 32.1 per cent at the end of 2022. We are committed to continuous improvement in this area and aspire to have 35 per cent representation of women at a senior level by 2025. This aspirat ion is further supported by programmes such as our IGNITE Coaching programme, which develops our women talent in preparation for future roles. We remain focused on build ing a workforce that is truly representative of our client base and footprint. As of 2022, 21 per cent of our Board ident ifies as be ing from a minor ity ethnic background, and we have committed to the aspirat ion of reaching a min imum of 30 per cent. Further, 22.9 per cent of our Global Management Team and their direct reports ident ify as Black, As ian or minor ity ethn ic. In the United Kingdom, Black representation in senior leadership is 2.5 per cent and Black, Asian and minor ity ethn ic in senior leadership is 18.1 per cent. In the United States, Black/African American representation in senior leadership is 3.1 per cent and Hispan ic/Lat inx in senior leadership is 9.4 per cent. We continue to develop strategic partnerships and extend our Futuremakers RISE programme to increase the divers ity of our talent pipel ines. As we work towards ach iev ing our 2025 UK and US ethnic ity sen ior leadership aspirat ions, we are also focusing on nurturing local talent in markets across Asia, Africa and the Middle East. We provide employees, where legally permiss ible, the ab il ity to self- ident ify ethn ic ity data through our online systems, and are increas ing awareness Employees continued #### Stakeholders continued Build ing a d isab il ity confident organisat ion Removing barriers and increas ing access ib il ity have been key focus areas. We build on the results from our internal Disab il ity Confident Assessment, conducted in more than 40 markets to date, to take directed action. We continue to enhance the accessib il ity of our technology, includ ing provid ing s ign language functional ity in e-learning programmes. Our continued partnership with the Purple Tuesday in it iat ive across more than 35 markets is increas ing the vis ib il ity of role models and careers for those w ith disab il it ies. It is also build ing capab il it ies to break down myths and stereotypes when engaging with clients and colleagues with disab il it ies. We’re encouraged that, in 2022, a greater number of colleagues disclosed about having a disab il ity and the annual My Voice survey highl ighted improvements in their experience. ![]() Strategic report 63 Standard Chartered – Annual Report 2022 Employees continued Female representation Female 43 % (2021: 31%) Board 2021 2022 Female 32.8 % (2021: 28.4%) Management Team and their direct reports 2021 2022 Female 6 Male 8 Female 43 Male 88 Senior leadership (Managing directors and band 4) 2021 2022 Female 45.3 % (2021: 45.5%) All employees 2021 2022 Female 32.1 % (2021: 30.7%) Female 1,420 Male 2,989 Undisclosed 13 Female 37,688 Male 44,734 Undisclosed 844 on the value and purpose of collecting this informat ion. As we encourage and expect increased partic ipat ion and self- declaration of ethnic ity, we a im for it to provide addit ional ins ights towards bu ild ing an even more representat ive workforce. We recognise six key D&I dates\* across the year and use these as focal points to facil itate open d ialogue on inclus ion internally and externally. Through these global campaigns we engage and strengthen relationsh ips w ith clients and external stakeholders, collectively rais ing awareness, promot ing best practices and committ ing to take pract ical steps to advance the D&I agenda in the community. \* International Day Against Homophobia, Transphobia and Biphob ia, International Day of Persons with Disab il it ies, Internat ional Men’s Day, International Women’s Day, and World Day for Cultural Divers ity for D ialogue and Development, World Mental Health Day Equal pay – Gender and Ethnic ity Pay Gaps To better understand the strengths and gaps of the organisat ion, and develop act ion plans to tap into the potential of a truly diverse and inclus ive workforce, we have been analysing and publish ing our gender pay gap stat ist ics for our five hub locations (UK, US, Hong Kong, Singapore, and UAE). The gender pay gap is calculated based on the approach by the UK government and compares the average pay of men and women without accounting for some of the key factors which influence pay, includ ing d ifferent roles, skills, senior ity and market pay rates. Compared with last year, our mean bonus pay gaps have decreased in every market while our mean hourly pay gaps have remained mostly flat, with reductions seen in Singapore, Hong Kong, and UAE. While our gender pay gaps have steadily improved since our first disclosure for 2017, they remain at a level that sign ifies proport ionally more male than female colleagues in senior roles and/or roles with higher market rates of pay. To complement the legislat ive approach in the UK, we also calculate an adjusted pay gap, which compares women and men at the same hierarchy level and in the same business area. Mirror ing prev ious years, the narrow margins for the adjusted pay gap analysis ind icate that our female and male colleagues in the same business areas and at the same levels of senior ity are pa id sim ilarly. Equal pay is a key commitment in our Fair Pay Charter and we carry out checks during hir ing, promotion and year-end review in all markets to challenge potential bias and ensure there is equal pay for equal work. In addit ion to the gender pay gap analys is, this year we have also prepared for the first time an ethnic ity pay d isclosure for the UK and the US. These two markets are our regional hubs where we have set ethnic ity targets for sen ior management representation. Further details of our ethnic ity pay and gender pay analys is can be found in our Fair Pay Report at sc.com/fairpayreport 2022 Gender pay gap UK Hong Kong Singapore UAE US Mean hourly pay gap 1 29% 20% 30% 30% 25% Mean bonus pay gap 2 49% 39% 41% 57% 44% 1 The hourly pay gap is calculated by taking the difference between the mean female and male hourly pay, expressed as a percentage of the male amount 2 The Bonus pay gap is calculated by taking the difference between the mean female and male bonus payments received in the 12 months prior to 5 April, expressed as a percentage of the male amount ![]() 64 Standard Chartered – Annual Report 2022 Strategic report Sustainab il ity #### Driving a Sustainable Future Including our response to the recommendations and recommended disclosures of the Task Force on Climate-related Financ ial D isclosures (TCFD) Our approach to ESG Reporting We adopt an integrated approach to corporate reporting, embedding non-financ ial informat ion throughout th is annual report. In line with our ‘comply or explain’ obligat ion under the UK’s Financ ial Conduct Author ity’s List ing Rules, we can confirm that we have made disclosures consistent with the TCFD recommendations and recommended disclosures in this annual report, except for one area: we do not fully disclose Scope 3 greenhouse gas emiss ions as we are in the process of conducting the detailed analysis of our portfolio starting with the sectors which are most carbon intens ive. Consequently, in relation to financed emiss ions, in this 2022 Annual Report, we disclose our Scope 3 greenhouse gas emiss ions (GHG) for e ight sectors. For FY23, we plan to disclose our Scope 3 financed emiss ions for four addit ional sectors. Beyond that, we a im to incrementally improve the portfolio coverage as market data on emiss ions becomes more w idely available. Further informat ion is available on pages 76 to 83. In line with the current UK List ing Rules requ irements, our TCFD disclosures also take into account the implementat ion guidance included in the TCFD 2021 Annex. Our disclosures are also guided by core standards, frameworks and princ iples to the extent relevant to our business, as envisaged under the voluntary Global Reporting Init iat ive (GRI), SASB Standards, and the World Economic Forum (WEF) Stakeholder Capital ism Metr ics framework, Equator Princ iples (EP) and UN Pr inc iples for Responsible Banking. See pages 68 to 72 for a summary of our TCFD disclosures. This integrat ion is intended to promote transparency, build trust and provide our investors with a better understanding of the impl icat ions of climate-related risks and opportunit ies for our bus inesses, strategy, financial plann ing, governance and risk management. Report/Disclosure Descript ion Location ESG Data Pack • Granular breakdown of quantitat ive ESG informat ion. sc.com/esgdatapack ESG Reporting Index (to be published by end Q1 2023) • Alignment index tables to our prior ity reporting frameworks, includ ing GRI, SASB Standards, WEF, EP and UN PRB. sc.com/esgreport Modern Slavery Statement • This report sets out the steps we have taken to assess and manage the risk of modern slavery and human trafficking in our operations and supply chain. sc.com/modernslavery Sustainable Finance Impact Report • We present the impact of our Sustainable Finance assets on a portfolio basis, covering the whole range of our $13.5bn worth of assets. sc.com/SFimpactreport CDP Climate Change • We partic ipate in the CDP Climate questionna ire, scor ing an A- in 2022. sc.com/ESGratings Workforce Disclosure Init iat ive (WDI) • We continued our partic ipat ion in the WDI in 2022, winn ing the award for most transparent disclosures, and the Contingent Workforce Data Award. We achieved an overall disclosures score of 99% in the most recent assessment. The following pages set out our approach and progress relating to sustainab il ity and its content is subject to the statements included in (i) the ‘Forward- Looking Statements’ section; and (i i) the ‘Bas is of Preparation and Caution Regarding Data Lim itat ions’ section provided under ‘Important Notices’ at page 498. Addit ional informat ion can be accessed through our suite of supporting sustainab il ity reports and disclosures at sc.com/sustainab il ity hub or via the links below: ![]() 65 Standard Chartered – Annual Report 2022 Strategic report #### Achieving economic, social and environmental sustainability is one of the greatest challenges #### of our generation and a priority for the Group. In 1987, the United Nations Brundtland #### Commission defined sustainability as“meeting the needs of the present without compromising the abil #### ity of future generations to meet their own needs”.Here at Standard Chartered we are considering what sustainabil #### ity means to us, and how it can be translated into implementable investments and actions across the Group. Our Purpose is to drive commerce and prosperity through our unique divers ity. Through our valued behav iours to never settle, be better together, and do the right thing, we intend to truly live our brand promise to be here for good. However, there are a number of global challenges ahead. We are faced with worsening climate impacts, stark inequal ity, and unfair aspects of globalisat ion. Nowhere is this felt more keenly than in our core markets of Asia, Africa and the Middle East. We are taking a stand to combat these challenges and setting long-term ambit ions to help address the most press ing issues we face today when seeking to deliver sustainable social and economic development across our business, operations and communit ies. In 2021, we formally recogn ised Sustainab il ity as a core component of our strategy, elevating it to a pillar of our Group Strategy (see page 23). In July 2022, we took this a step further and appointed Marisa Drew as our Chief Sustainab il ity Officer (CSO), to help drive our sustainab il ity agenda and bring together our exist ing Susta inable Finance, Net Zero Programme Management and Sustainab il ity Strategy Teams. The dedicated CSO office harmonises our exist ing efforts in sustainab il ity and is responsible for creating and executing the Group-wide sustainab il ity strategy, includ ing del ivery against our net zero pathway. With a presence in parts of the world where sustainable finance can have the greatest impact, and a wealth of experience across the Sustainable Finance (SF) and Environmental and Social Risk Management (ESRM) teams, our CSO office is well placed to support our clients in their transit ion to net zero, mob il ise cap ital at scale and help develop solutions. We want to help make the world a better, cleaner and safer place. We also want to contribute towards facil itat ing a just transit ion – one where cl imate object ives are met w ithout depriv ing emerg ing markets of their opportunity to grow and prosper. For more informat ion on our susta inab il ity governance see pages 113 to 116 . Measuring what matters most – understanding our material ity Since 2016, our approach to striv ing towards a susta inable and responsible business has been underpinned by our suite of Sustainab il ity Aspirat ions. These set out how we a im to promote social and economic development and deliver sustainable outcomes in the areas in which we believe we can make the most material contribut ion to the del ivery of the UN Sustainable Development Goals (UN SDGs). We measure progress against the targets set out in our Sustainab il ity Aspirat ions and incorporate selected Aspirat ions into the Group Scorecard to ensure consistent measurement, drive widespread awareness and subsequently support delivery. As a signatory of the UN Princ iples of Respons ible Banking (PRB), we util ise the gu idance and tools provided as an input to validat ing the areas of our greatest impact. 'Material ity' is considered to be the threshold for sign ificance of reporting ESG issues for users of financ ial statements: investors and other stakeholders. We take into considerat ion the guidance as provided by the IFRS Foundation Standards, understanding that material issues are those which could reasonably be expected to influence decis ions of those users. We also note that material ity for ESG cons iders both quantitat ive aspects as well as qual itat ive informat ion, includ ing a regard for susta inable social and economic development. This will evolve over time and we plan to continue to assess our approach and reporting based on relevance to our users. #### Creating our inaugural #### Chief Sustainability Office 85.7 % 82.9 % +2.8% Group KPI: Deliver ing Susta inab il ity Aspirat ions % 1 2022 2021 78.4 % 2020 1 Each Aspirat ion conta ins one 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 reporting period. Further details on each Aspirat ion can be found between pages 485 and 487 . ![]() 66 Standard Chartered – Annual Report 2022 Strategic report Sustainab il ity Accelerating zero: #### Our approach to climate change We believe that climate change is one of the greatest challenges facing the world today and that its impact will hit hardest in the markets where we operate, namely Asia, the Middle East and Africa. Many of these markets are currently reliant on carbon- intens ive industr ies for the ir continued economic growth. Facil itat ing a just transit ion – one where cl imate object ives are met without depriv ing develop ing countries of their opportunity to grow and prosper – will require care, capital and special ised support. We are well placed to help by direct ing cap ital to emerging markets that have both the greatest opportunity to adopt low-carbon technology and some of the toughest transit ion financing and cl imate challenges. In recognit ion of the important role we can play in the transit ion, and in line with our Stand to Accelerate Zero, in October 2021, we announced our plan to reach net zero across our operations, supply chain and financed emiss ions by 2050, as well as our plan to set amb it ious inter im targets to substant ially reduce our financed emiss ions by 2030. As a UK headquartered bank, our pathway takes into considerat ion the UK’s comm itment under the Paris Agreement to reduce GHG emiss ions by at least 100 per cent of 1990 levels by 2050, and to reduce economy-wide GHG emiss ions by at least 68 per cent by 2030. However, we are applying these targets and ambit ions across our global footpr int, despite a number of our footprint markets not having a commitment in place to reach net zero with in th is timel ine at the t ime of our net zero pathway publicat ion in October 2021. In May 2022, our Board sought an ordinary resolution on our net zero pathway at our Annual General Meeting (AGM). Company and its shareholders as a whole. The Board reviewed the pathway before its publicat ion and supported the Group’s strategic approach. In advance of the AGM and as part of the Board’s process, the Group undertook extensive engagement with investors, proxy voting agencies, NGOs and other stakeholders to gather feedback on our net zero pathway. A summary of feedback was provided to the Board once these engagements had concluded and was carefully reviewed. Engagement included: • Engagement facil itated by Investor Forum, a not-for-profit investor-funded engagement platform, with investors to understand their perspectives on our net zero pathway. • Bilateral engagement by the Group, led by the Group Chairman and relevant Board members, with investors and proxy voting agencies to exchange perspectives on our net zero pathway. • A roundtable hosted by Investor Forum, and with partic ipat ion of the Group Chairman to gather further feedback on the Group’s net zero pathway. • Bilateral engagement, which included the Group Chairman, with Market Forces and Friends Provident Foundation to exchange perspectives on the transit ion to net zero. Although we sought to reconcile our perspectives in one jo int resolut ion, we were ultimately unable to do so. • Commiss ion ing a market research firm to interv iew leaders from NGOs, academia, business and specialty research inst itutes from seven countr ies to analyse how our net zero pathway aligns against external expectations. In line with the Board’s recommendation, the advisory resolution was endorsed with 83 per cent of shareholder support at the 2022 AGM, and the requis it ioned resolution did not pass. The Board is aware that the transit ion to net zero is an ongoing process that requires continued review and challenge to assess its appropriateness. The Board oversees the Group’s sustainab il ity strategy with input from the Culture and Sustainab il ity Committee. It is regularly apprised of the progress we are making against the ambit ions in the net zero pathway and continues to be actively involved. Princ ipal board dec is ion – Shareholder advisory vote on net zero pathway In October 2021, we announced our plan to reach net zero in our financed emiss ions by 2050 and proposed this as a shareholder advisory resolution at the Company’s 2022 AGM. Market Forces and Friends Provident Foundation filed a resolution outlin ing a different climate approach. Notwithstand ing the fact that all parties are highly committed to contribut ing to the transit ion to net zero, the Board unan imously recommended that shareholders vote for our advisory resolution and against the requis it ioned resolution, consider ing th is to be in the best interests of the See sc.com/netzerowhitepaper for more informat ion. ![]() 67 Standard Chartered – Annual Report 2022 Strategic report #### Catalyse sustainable finance and partnerships #### Mitigate the financial and non-financial risks Our net zero plan #### Our net zero plan aims to faciliate solutions to reduce our emissions, catalyse sustainable #### finance and partnerships, and mitigate the financial and non-financial risks we may face associated with climate change. In 2022, we mobil ised $23.4 b ill ion through our susta inable financing act iv it ies, bring ing our cumulat ive sustainable finance total to $48 bill ion s ince 2021. We continue to focus on reducing the most harmful activ it ies, by seeking to reduce absolute financed thermal coal min ing em iss ions by 85 per cent by 2030, from the 2020 baseline, alongside our long standing commitment to not provide any direct financing to coal-power projects. We have further invest igated opt ions and provided financed emiss ions basel ines and targets for eight sectors: Oil and gas, Power, Coal min ing, Steel, Other Metals and min ing, Av iat ion, Automot ive manufacturers, and Shipp ing, covering approximately 61 per cent of the emiss ions w ith in our CCIB portfolio. This work will continue through 2023 with four further sector deep dives in the Alumin ium, Cement, Commercial Real Estate (accelerated from 2024 to 2023) and Resident ial Mortgages sectors. As introduced on page 68, this year we have integrated our TCFD disclosures in this Annual Report. The major ity of th is informat ion can be found in the following section, with supplementary informat ion found, for example, w ith in the Risk overview (pages 42 to 51), Corporate Governance (pages 146 to 183) and the Group Chief Financ ial Officer's review (pages 32 to 40). #### Reduce our emissions See page 74 See page 88 See page 84 ![]() 68 Standard Chartered – Annual Report 2022 Strategic report Sustainab il ity TCFD summary and alignment index The following table sets out the TCFD recommendations and recommended disclosures and summarises where addit ional informat ion can be found. Where we have not included climate-related financ ial d isclosures consistent with all of the TCFD recommendations and recommended disclosures, further informat ion is provided on pages 64 and 77. Recommendation Response Disclosure location Governance a) Describe the Board’s oversight of climate-related risks and opportunit ies Process and frequency of communicat ion to Board • The Board and its supporting committees, includ ing the Board R isk Committee and Culture and Sustainab il ity Committee, are responsible for the oversight of climate- related risks and opportunit ies. They rece ive regular Climate Risk updates to guide them when review ing and mak ing strategic decis ions. Governance of our Sustainab il ity Agenda – page 113 Incorporation of climate- related issues into Board and Board Committee planning and decis ions Climate Risk was considered as part of our formal annual corporate strategy and financ ial planning process. • In 2022 we developed management scenarios with an aim to strengthen business strategy and financial plann ing to support the Group’s net zero ambit ion. • The Board reviewed and approved our approach to reach net zero financed emiss ions by 2050. • Regional and client-segment Chief Risk Officers review revenue reliance from clients in high-carbon sectors and/or locations in regions most exposed to Physical Risk. Governance of our Sustainab il ity Agenda – page 113 Qualitat ive rev iew of climate risks and opportunit ies in annual business strategy and financial plann ing – page 95 Investing in Climate Research – page 87 Board oversight of climate-related goals and targets • The Board oversees the Group’s overall net zero plan, and in 2022 reviewed progress on delivery against the Group’s net zero plan and approved the Group Climate Risk Appetite Statement and related Board-level metrics. Governance committees and steering groups with committees – page 114 Sustainable Finance Governance Committee – page 116 b) Describe management’s role in assessing and managing climate-related risks and opportunit ies Roles and responsib il it ies for climate-related risks and opportunit ies • Specif ic roles and respons ib il it ies for the overs ight of climate change have been delegated to management. These are defined with in the ‘Governance comm ittees and steering groups with responsib il ity for climate-related issues’ section. Climate-related agenda frequency and inputs are also set out for these bodies. • The Chief Sustainab il ity Office as led by the CSO is responsible for creating and executing the Group-wide sustainab il ity strategy, includ ing del ivery against our net zero pathway. • Responsib il ity for ident ify ing and managing financ ial r isks from climate change sits with the Group Chief Risk Officer (Group CRO) as the appropriate Senior Management Function (SMF) under the Senior Managers Regime (SMR). • The Group CRO is supported by the Global Head, Enterprise Risk Management who has day-to-day oversight and central responsib il ity for the Group’s second line of defence against Climate Risk. • The organisat ion structure assoc iated with climate change has also been set out in the ‘Governance of our Sustainab il ity Agenda’ chapter of our annual report. Governance of our Sustainab il ity Agenda – page 113 Governance committees and steering groups with committees – page 114 A descript ion of the associated organisat ional structures and their monitor ing of cl imate- related issues • Several committees with in the Group support the Board and Management Team on the management and monitor ing of cl imate change and its associated impacts. • The organisat ion structure assoc iated with climate change has also been set out in the ‘Governance of our Sustainab il ity Agenda’ chapter of our annual report. Governance of our Sustainab il ity Agenda – page 113 Assessing and managing climate risk – page 117 Processes used to inform management • Management is informed by several committees and forums, with climate-related informat ion commun icated via channels includ ing our Group CRO and Cl imate Risk Information Reports. Governance committees and steering groups – page 114 ![]() 69 Standard Chartered – Annual Report 2022 Strategic report Recommendation Response Disclosure location Strategy a) Describe the climate-related risks and opportunit ies the organ isat ion has ident ified over the short, med ium and long term Relevant short-, medium-, and long-term time horizons • In our strategic business planning, we consider ‘short-term’ to be less than two years, ‘medium-term’ to be two to five years and ‘long-term’ to be beyond this. For climate scenario analysis we can run 30-year scenarios for both Physical and Transit ion R isk. Some elements of our Physical Risk scenario analysis can also extend to 2100. Our net zero timel ine – page 73 Scenario analysis – page 90 Processes used to determine material risks and opportunit ies • We util ise a range of tools and methodolog ies, to assess Transit ion and Phys ical Climate Risk, which we apply to our clients, portfolios and our own operations. These includes: scenario analysis, location-based hazard and risk scores, temperature alignment scores and Munich Re's NATHAN tool (acute physical risk impact assessments). • In addit ion, we engage w ith our corporate clients to understand their transit ion and physical risks, as well as their plans to prepare for climate change. • In 2022, we continued to enhance our understanding of climate-related risks, and sign ificantly strengthened our stress test ing and scenario analysis abil it ies for a range of management scenarios that are more plausible. Scenario analysis – page 90 Overview of our Climate Risk toolkit and applicat ion – page 99 Climate-related risk and opportunit ies ident ified • We have assessed the impact of Climate Risk to the banking book using scenario analysis over a 30-year time horizon, which has enabled us to ident ify and m it igate climate risks which may manifest. • In addit ion, susta inab il ity and climate change have moved from being predominantly risk-based in it iat ives to becom ing a value driver. This gives us an opportunity to deploy our market and industry knowledge to advise our clients on their ind iv idual sustainab il ity journeys. • Sustainable finance is an opportunity to both defend our exist ing bus iness from Transit ion R isk, and to fund our clients' transit ion from a h igh-carbon present to a low carbon future. Through supporting clients on their net zero journeys, and provid ing further finance to clients as they adapt to be less carbon intens ive and em itt ing over time, we help mit igate the ir, and our, Transit ion R isk. Our aim to achieve Sustainable Finance income of $1 bill ion by 2025 and to mob il ise $300 b ill ion of Susta inable Finance by 2030 are measures of this success. • We do not fully disclose impacts on financ ial plann ing and performance (includ ing proportions of income, costs and balance sheet related to climate-related opportunit ies), deta iled Climate Risk exposures for all sectors and geographies or physical risk metrics. Data lim itat ions, and our plans to mit igate these, are d iscussed in greater detail in the report. Note 1 sign ificant judgement and estimates – page 348 Sustainable Finance mobil ised – page 84 Sign ificant concentrat ions of credit exposure to carbon-related assets • We have disclosed our exposures to high-carbon sectors which includes the expected credit losses on these balances as well as the maturity profiles associated with them. Our exposure to high-carbon sectors makes up 14.4% of our CCIB loan balances. • We aim to become net zero in our financed emiss ions by 2050, w ith inter im 2030 targets for our highest emitt ing sectors. • In 2022, we made progress towards this goal, and set out to measure, manage and reduce emiss ions start ing with our most carbon-intens ive sectors, in line with our net zero roadmap. Exposure to high carbon sectors – page 78 Reducing our emiss ions – page 74 b) Describe the impact of climate-related risks and opportunit ies on the organ isat ion’s bus inesses, strategy and financ ial plann ing Impact of climate-related risks and opportunit ies on business areas The specif ic areas impacted by climate issues include: Operations • We have measured and reduced our greenhouse gas (GHG) emiss ions s ince 2008 and since 2018 we have been actively targeting a reduction in our Scope 1 and 2 emiss ions towards a well-below two degrees Celsius scenario. • We intend to optim ise our office and branch network, cont inually maxim is ing effic iency while leveraging clean and renewable power where appropriate, in line with our commitment to the global corporate renewable in it iat ive, RE100, and to help us meet our own challenging targets. Suppliers • Through our Supplier Charter, we encourage our suppliers to support and promote standards in environmental protection and to manage and mit igate env ironmental risks. • In 2022, we launched a global project to define strategies to address emiss ions related to Scope 3 Category 1, 2, 4 and 6. Our internal targets cover reducing our emiss ions related to Upstream transportation and distr ibut ion and Business travel by 28 per cent against 2019 levels over the next seven years. Simultaneously, for Purchased goods and services and Capital goods categories, we plan to engage our suppliers (covering circa 67 per cent of spend) to set science-based targets in the next five years. Products and services • We have set targets to achieve $1 bill ion of Susta inable Finance income by 2025, to mobil ise $300 b ill ion of Susta inable Finance by 2030, and to launch and grow green mortgages in key markets across our footprint. • In 2022, we made progress against these targets, reporting $0.5 bill ion Susta inable Finance income, mobil is ing $23.4 bill ion through our Susta inable Finance activ it ies, and launching green mortgages in three new markets. Investment in research and development • Our four-year partnership with Imperial College London covers long-term research on Climate Risk, advisory on shorter-term, internally focused projects to enhance Climate Risk capabil it ies and train ing of our colleagues, Management Team and Board. Reducing emiss ions in our operations – page 74 Our suppliers – reducing Scope 3 upstream emiss ions – page 75 Catalysing finance and partnerships for transit ion – page 84 ![]() 70 Standard Chartered – Annual Report 2022 Strategic report Sustainab il ity Recommendation Response Disclosure location Incorporating climate- related inputs into the financial plann ing process • In 2022, Climate Risk was considered as part of our formal annual corporate strategy and financial plann ing process. In addit ion, we developed management scenar ios with an aim to strengthen business strategy and financ ial plann ing to support the Group’s net zero journey. • In addit ion to th is, from a capital perspective, Climate Risk considerat ions have been part of our Internal Capital Adequacy Assessment Process (ICAAP) submiss ions. Qualitat ive rev iew of climate risks and opportunit ies in financial plann ing – page 95 Processes for managing Climate Risk – page 113 Note 1 sign ificant judgement and estimates – page 348 c) Describe the resil ience of the organ isat ion’s strategy, tak ing into considerat ion d ifferent climate-related scenarios, includ ing a 2°C or lower scenar io Approach to scenario analysis • Over recent years, we have progressively strengthened our scenario analysis capabil it ies and developed our infrastructure and capabil it ies to incorporate Climate Risk into data, modelling, and analysis. • Our work to date, using current assumptions and proxies, ind icates that our bus iness is resil ient to all Network of Central Banks and Superv isors for Greening the Financ ial System (NGFS) and International Energy Agency (IEA) scenarios that were explored. • In 2021, we recognised Sustainab il ity as a core component of our strategy, elevating it to a pillar of our Group Strategy. In July 2022, we formalised this further and appointed our inaugural Chief Sustainab il ity Officer (CSO), to help drive our sustainab il ity agenda and bring together our exist ing Susta inable Finance, Sustainab il ity Strategy, and Net Zero Programme Management, teams. Creating our inaugural Chief Sustainab il ity Office – page 65 Scenario analysis – page 90 Scenarios used • In 2022 we engaged a third-party vendor to begin development of bespoke internal modelling capabil it ies to provide greater transparency. • In 2022, we assessed the impact on our CCIB corporate client portfolio based on three IEA scenarios and three Phase 2 scenarios from the NGFS. • We also assessed the impact of sea-level rises under various Intergovernmental Panel on Climate Change (IPCC) Representative Concentration Pathways (RCP) scenarios to explore the Physical Risk impact on the CPBB resident ial mortgage portfol io over short- and long-term time horizons for internal risk management purposes. Scenario analysis – page 90 Impact of climate-related risks and opportunit ies on business strategy • We are working to reduce our exposure to high carbon emitt ing act iv it ies and are supporting clients in these industr ies to trans it ion to lower carbon technolog ies. • Our sustainable finance prior it ies, includ ing new emerg ing products such as sustainable deposits, carbon trading and ESG Advisory, and dedicated transit ion frameworks, are a robust response to transit ion r isks in the short term, strengthening our resil ience towards a 2°C or lower transit ion scenar io. Qualitat ive rev iew of climate risks and opportunit ies in annual business strategy and financial plann ing – page 95 Catalysing finance and partnerships for transit ion – page 84 Risk Management a) Describe the organisat ion’s processes for ident ify ing and assessing climate-related risks Processes for ident ify ing and assessing risk • To support the management and monitor ing of Phys ical and Transit ion r isks, we continue to conduct case level reviews for enhanced due dil igence on h igh ‘Climate Credit’ and ‘Climate and Reputational and Sustainab il ity Risk’ for our corporate clients. • The toolkits are used to ident ify and assess: – Physical Risk: current-day and longer-term time horizons (2050, 2100) representative concentration pathway (RCP) scenarios 2.6, 4.5 and 8.5, for acute weather events (e.g. storms, floods or earthquakes) and chronic sea-level rise. – Transit ion R isk: translates Orderly, Disorderly and ‘Hot-House’ world transit ion scenario variables from NGFS and Net Zero Emiss ions by 2050, and Susta inable Development and Announced Pledges scenario variables from IEA to financ ial impact at a client level. Further informat ion on cl ient level assessments can be found on page 102 and the lim itat ions of our methodology on page 94. – Temperature alignment: provides a temperature score to ind icate cl ient- and portfolio-level global warming potential up to 2030. – We define Climate Risk as the potential for financ ial loss and non-financial detriments aris ing from cl imate change and society’s response to it. With in th is, we assess and define sub-risk types in the form of a climate risk taxonomy which includes: – Physical Risk: Risk aris ing from increas ing sever ity and frequency of climate and weather-related events. – Transit ion R isk: Risks aris ing from the adjustment towards a carbon-neutral economy, which will require sign ificant structural changes to the economy. Overview of our Climate Risk toolkit and applicat ion – page 98 Climate Risk Taxonomy table – page 96 TCFD summary and alignment index continued ![]() 71 Standard Chartered – Annual Report 2022 Strategic report Recommendation Response Disclosure location Exist ing and emerg ing regulatory requirements related to climate change • We have established a process for tracking various Climate Risk-related regulatory developments and obligat ions set by both financial and non-financial serv ice regulators at Group and regional/country level, with roles and responsib il it ies set out in the Climate Risk Policy. • Regulatory requirements or enhancements needed are recorded through workplans across various teams. The workplans are coordinated and monitored through various working groups by having the relevant accountable executives partic ipate in the relevant forums. Processes for managing Climate Risk – page 113 Characteris ing cl imate- related risks in the context of tradit ional bank ing industry risk categories • We have ident ified seven Pr inc iple R isk Types (PRT) that are most materially impacted by potential climate risks and describe transmiss ion channels for Cl imate Risk manifest ing as financial and non-financial r isk. Exist ing r isk classif icat ion and climate-risk transmiss ion channels – page 97 Overview of our Climate Risk toolkit and applicat ion – page 99 b) Describe the organisat ion’s processes for manag ing climate-related risks Processes for managing and mit igat ing risks • We manage Climate Risk according to the characterist ics of these PRTs and are embedding climate-risk considerat ions into the relevant frameworks and processes as well as setting risk appetites for each. • Our Climate Risk Appetite Statement (RAS) is approved annually by the Board and is supported by Board and Management Team level risk appetite metrics across Credit – CCIB and CPBB, Reputational and Sustainab il ity Risk (RSR), Traded Risk and Country Risk. • We regularly review the scope and coverage of our risk appetite metrics for enhanced risk ident ification and management. Add it ional metr ics to address our public targets across key sectors and a stress loss metric built on scenario outcomes have been ident ified and are be ing monitored for inclus ion in risk appetite reporting in 2023. • We have toolkits to quantitat ively measure cl imate-related Physical and Transit ion Risks to determine if they should be prior it ised for risk management purposes. Mit igat ing environmental and social risk – page 88 Sustainable Finance mobil ised – page 84 c) Describe how processes for ident ify ing, assessing and managing climate-related risks are integrated into the organisat ion’s overall r isk management Integration into Enterprise Risk Management Framework • Climate Risk is recognised in the Group Enterprise Risk Management Framework (ERMF) as an integrated risk type, i.e. it manifests through exist ing r isk types and is managed in line with the impacted risk type frameworks. We manage Climate Risk according to the characterist ics of these PRTs and are embedd ing climate-risk considerat ions into the relevant frameworks and processes for each. In 2022, we have continued to build Climate Risk into exist ing r isk-management processes, focusing on ident ify ing, assessing, and monitor ing across r isk types. Integrating climate- related risks into overall risk management – page 100 Metrics and Targets a) Disclose the metrics used by the organisat ion to assess cl imate-related risk and opportunit ies in line with its strategy and risk management processes Key metrics used to measure and manage climate-related risks and opportunit ies as well as metrics used to assess the impact of (transit ion and physical) climate-related risks on their lending and other financial intermed iary bus iness activ it ies We disclose the following metrics in order to measure and manage climate-related risks and opportunit ies: GHG emiss ions: • Absolute Scope 1, Scope 2, and Scope 3; financed emiss ions intens ity Climate-related transit ion r isks: • Temperature Alignment score • Client-level Climate Risk assessment scores by region • Projected potential average minor notch credit grade downgrade by 2050 • Exposure to high-emitt ing sectors • Increase in Counterparty Credit Risk (CCR) stress exposures from physical climate event Climate-related physical risks: • Location-based hazard and risk scores • Outstanding exposure at very high gross Physical Risk % • Outstanding exposure subject to very high gross Flood Risk • Market Risk stress loss from physical climate event Climate-related opportunit ies: • Green and social assets • Sustainable finance income Capital deployment: • $300 bill ion mob il isat ion progress Reducing our emiss ions – page 74 Overview of our Climate Risk toolkit and applicat ion – page 99 Exposure to high- carbon sectors – page 78 Sustainable Finance mobil ised – page 84 Green and Social Assets – page 86 ![]() 72 Standard Chartered – Annual Report 2022 Strategic report Sustainab il ity Recommendation Response Disclosure location Climate-related incent ive structures • Selected sustainab il ity targets, includ ing those w ith a climate change dimens ion, are incorporated into our annual Group Scorecard which informs variable remuneration for all colleagues under our Target Total Variable Compensation plan, includ ing execut ive directors and Group Management Team. Sustainab il ity has also been included in the 2022–2024 Long-Term Incentive Plan performance measures. Annual percentage change in remuneration of directors and employees – page 210 Incentive Structure – page 119 b) Disclose Scope 1, Scope 2 and, if appropriate, Scope 3 greenhouse gas emiss ions and the related r isks Our own operations • Despite only a 5 per cent reduction in our measured real estate, we reduced our Scope 1 and 2 emiss ions by more than 42 per cent to 49,434 tonnes dur ing 2022. This has been possible through a consumption reduction of 3 per cent to 177.3 GWh through energy-efficient investment, plus a 12 per cent increase in renewable energy across the portfolio. Reducing our emiss ions – page 74 In our supply chain • In partnership with an independent climate consultancy, we continued improv ing the accuracy of our methodology and estimated our supplier emiss ions. • The process for Scope 3 upstream vendor emiss ions measurement is being embedded into our wider annual reporting process and is expected to be executed in the first quarter of each year based on the previous year’s vendor spend. Reducing our emiss ions – page 74 Measuring our financed emiss ions • Analysing our exposure to high-carbon sectors (i.e. sectors that are responsible for the majority of the GHG em iss ions in the atmosphere) is the starting point of our financed emiss ion calculat ions. • We built on our progress in 2021 where we baselined our emiss ions for five of our high-emitt ing sectors namely O il and gas, Power, Coal min ing, Steel and other Metals and min ing to include three addit ional transport sectors in 2022 being Automotive manufacturers, Aviat ion and Sh ipp ing. Supporting our Corporate, Commercial and Institut ional Banking (CCIB) clients with the transit ion – page 77 c) Describe the targets used by the organisat ion to manage cl imate-related risks and opportunit ies and performance aga inst targets Details of targets set and whether they are absolute or intens ity based • The targets we have set for climate-related risks are primar ily our net zero, across Scopes 1, 2 and specif ically 3 financed em iss ions, start ing in 2030, with thermal coal targets in the shorter term from 2024. Our progress is set out in the Financed emiss ion section. • On climate-related opportunit ies, we have a $1 b ill ion of Susta inable Finance income and $300 bill ion mob il isat ion of Sustainable Finance targets to 2025 and 2030 respectively. • During the year, we revised the measurement of our Oil and gas sector emiss ions from an income-based carbon intens ity to absolute financed em iss ions to better reflect the sector emiss ion profile, effect ively creating a carbon budget for the sector which is intended to decrease over time. • In 2022, we continued to expand the coverage of our financed emiss ions calculat ions and this report announces three further sectoral targets covering transportation. By 2030, we aim to reduce emiss ions in the transportation sector: – 34% in aviat ion (product ion intens ity) – Reduce our alignment delta in shipp ing from +2.6% to 0% – 49% in automotive manufacturers (production intens ity). Measurement and progress of our financed emiss ions – page 79 A descript ion of the methodologies used to calculate targets and measures. • The methodologies used to calculate baseline emiss ions are set out in the Our Clients – reducing our financed emiss ions sect ion. Measurement and progress of our financed emiss ions – page 79 Other key performance ind icators used • In 2021, we set our Sustainab il ity Aspirat ions to include an inter im target to a im to reach net zero in our operations by 2030 and in our financed emiss ions by 2050. In 2022, we updated our target for reaching net zero in our operations by 2030 and brought it forward to 2025. Sustainab il ity Aspirat ions – page 493 TCFD summary and alignment index continued ![]() 73 Standard Chartered – Annual Report 2022 Strategic report #### Our net zero timeline To help us remain on track, we have set short- to medium-term quantif iable targets to manage our progress and disclose our data on an annual basis. Details of our targets in this area, as well as progress towards these, are set out throughout this section of the report. In our strategic business planning, we consider ‘short-term’ to be less than two years, ‘medium-term’ to be two to five years and ‘long-term’ to be beyond this. For climate scenario analysis we can run 30-year scenarios for both Physical and Transit ion R isk. Some elements of our Physical Risk scenario analysis can also extend to 2100 (see page 92). 2021 Launched our pathway to net zero by 2050, includ ing inter im targets and a supporting methodology Announced plans to mobil ise $300 b ill ion in Sustainable Finance Published a Transit ion F inance Framework 2022 • Developed 2030 emiss ions basel ine and targets for Aviat ion, Sh ipp ing and Automot ive Manufacturers • Joined Partnership for Carbon Accounting Financ ials (PCAF) • Developed capabil it ies for and commenced quarterly external reporting against key sustainab il ity measures 2023 Develop 2030 emiss ions basel ine and targets for Cement, Mortgages, Commercial Real Estate (CRE) and Alumin ium, planned to be communicated in our 2023 TCFD report in Q1 2024 Announce timeframe for enhanced Oil & Gas absolute emiss ions target by our 2023 AGM Expand our coverage to facil itated em iss ions, aim ing to adopt the PCAF standards (expected to be published in H1 2023) 2024 • Develop 2030 emiss ions basel ine and targets for Agriculture, planned to be communicated in our 2024 TCFD report in Q1 2025 2025 • Aim to double our share of sustainable invest ing assets under management and integrate ESG considerat ions into our advisory activ it ies in our wealth management business • Aim to be net zero in our own operations (brought forward from 2030) 2030 Aim to only provide financ ial serv ices to clients who are less than 5% dependant on revenue from thermal coal Aim to meet financed-emiss ions targets in our most carbon-intens ive sectors 2032 • Targeted end date for legacy direct coal financing globally 2050 #### Aim to become net zero in our financed emissions • • • • • • • • ![]() 74 Standard Chartered – Annual Report 2022 Strategic report Sustainab il ity Since 2018 we have been working on align ing our operational and financed emiss ions to the Paris Agreement's goal of well below two degrees Celsius of global warming by the end of the century. #### We focus on three areas within our strategy to reduce direct and financed greenhouse gas #### (GHG) emissions: our operations, those associated with our supply chain (indirect #### impacts in value chain) and our financed emissions associated with our clients. Our operations – reducing our environmental footprint We are mindful of the direct environmental impact of our branches and offices and are determined to reduce their impact. We have measured and reduced our GHG emiss ions s ince 2008, and since 2018 we have been actively targeting a reduction in our Scope 1 and 2 emiss ions in line with a well- below two degrees celsius scenario. In 2021, we enhanced this ambit ion, sett ing out targets to achieve net zero in our operations by 2025. Our approach is simple. We intend to optim ise our office and branch network, retir ing unused and ineffect ive space to retain a working environment in line with modern requirements for home- and hybrid-working solutions. In partnership with our long-term strategic real estate suppliers such as CBRE and JLL, we are working to maxim ise efficiency wh ile leveraging clean and renewable power where appropriate, in line with our commitment to the global corporate renewable energy in it iat ive, RE100, and to help us meet our own challenging targets. Despite only a 5 per cent reduction in our measured real estate, we reduced our Scope 1 and 2 emiss ions by more than 42 per cent to 49,434 tonnes during 2022. This has been possible through a consumption reduction of 3 per cent to 177.3 GWh through energy-efficient investment, plus a 12 per cent increase in renewable energy (being through direct power purchase agreements, green util it ies and renewable energy certif icates) and across the portfol io. While new ways of working have led to a direct reduction in our property requirements and associated emiss ions, we recognise that these emiss ions have s imply been shifted. Throughout 2022, we have begun measuring addit ional categories of Scope 3 emiss ions includ ing waste, employee commuting and downstream leased assets. See page 75. Read the princ iples and methodology for measur ing our environment data at sc.com/environmentcriter ia For further details on our environmental performance see page 489 and our ESG data pack at sc.com/esgdatapack Read the independent environmental assurance at sc.com/environmentalassurance We are also committed to reducing waste. In 2022, we reduced our overall waste by 37 per cent, and our waste per employee by 39 per cent to 19.2kg, achiev ing our target to reduce waste to 40kg per employee per year three years ahead of schedule. This was primar ily due to new ways of working reducing employee presence in our build ings. #### Improving our office efficiency We have created a rolling asset replacement strategy for light ing in our offices. We now aim to only install LED and circad ian l ight ing, and any new fit-out or project, small churn-related changes or upgrades always include improved light ing. #### Reducing our emissions 1 Standard Chartered measures greenhouse gas emiss ions us ing the Greenhouse Gas Protocol 2 Source: The Group’s aviat ion portfol io which it leases to airl ines has been added in our Supply Chain Scope 3 (Cat. 13 as per the GHG protocol) For more informat ion on our own operations refer to page 75 For more details on our own financed emiss ions refer to page 76 Shipp ing Steel Other Metals and Min ing Coal Min ing Automotive Manufacturers Commercial Real Estate Power Alumin ium Resident ial Mortgages Business travel Employee travel Electric ity Cooling Heating Purchased goods and services Waste management Emiss ions 1 Scope 1&2: SCB’s own emiss ions 0.08% (0.05 MtCO 2 e) 2 Scope 3: Indirect impacts in value chain Cat 1 to 14 3.65% (2.22 MtCO 2 e) 2 Scope 3: CCIB Corporates Financed Emiss ions 96.26% (58.50 MtCO 2 e) 60.8 Mt CO 2 e Aviat ion Cement Oil & Gas Agriculture Other F i n a n c e d E m i s s i o n s O p e ra t i o n s a n d S u p p l y C h a i n ![]() 75 Standard Chartered – Annual Report 2022 Strategic report Water availab il ity is a growing challenge in many of our markets. Although we did not face any issues sourcing potable water in 2022, we continue to take a responsible approach to managing water across the Group. We continue to work towards our target to recycle 90 per cent of our waste by 2025. We have commenced the True Zero Waste programme across our top 20 build ings by s ize and expect to see the first results next year. During 2023, we will continue to accelerate our True Zero Waste certif icat ion programme across more offices. This certif ies 90 per cent of waste d iverted from landfill or inc inerat ion and will require further investment and education in waste management and avoidance. Addit ionally, we w ill certify more single-use-plastic free build ings and promote more sustainable practices. Our suppliers – reducing Scope 3 upstream With approximately 11,700 suppliers, we recognise our contribut ion to cl imate impacts through the goods and services we procure and understand that severe weather events could result in material disrupt ions to our supply cha in that may potentially impact our abil ity to serve our cl ients. From 1 April 2022 all new and renewing material third-party corporate services arrangements in-scope for Business Continu ity Management controls are subject to cl imate risk assessment as part of third-party continu ity plans. Through our Supplier Charter, we encourage our suppliers to support and promote standards in environmental protection and to manage and mit igate env ironmental risks. In 2022, we continued to make progress against our supply chain sustainab il ity agenda. We saw an approximately 58 per cent decrease in our flight emiss ions in the period from October 2021 to September 2022, against our target to achieve and mainta in fl ight emiss ions at 28 per cent lower than our October 2018 to September 2019 baseline, and continued to offset these. In partnership with an independent climate consultancy, we continued improv ing the accuracy of our methodology and estimated our supplier emiss ions. Due to a l im ited number of suppliers able to report emiss ion figures to the Group, our methodology relies primar ily on em iss ion factors comb ined with an increas ing volume of data reported by suppl iers via the CDP climate change survey and emiss ion figures reported by suppliers to the Group. We expect that both supplier emiss ion calculat ions and our methodology will continue to evolve over time. Using these ins ights, we ident ified and engaged our key highest-emitt ing suppl iers to better understand and align on sustainab il ity actions, metrics and goals. The process for Scope 3 upstream supplier emiss ions measurement has been developed and embedded into our wider annual reporting process, with emiss ions prov ided for Purchased goods and services, Capital Goods, Upstream transport and Other Business Travel. These emiss ions are based on the previous year's actual spend, hence a one year time lag: 2022 emiss ions relate to 2021 expend iture. Furthermore, we launched a global project to define strategies to address emiss ions related to Scope 3 Categor ies 1 (Purchased goods and services), 2 (Capital goods), 4 (Upstream transportation and distr ibut ion) and 6 (Business travel). Our targets cover reducing our emiss ions related to Upstream transportation and distr ibut ion and Business travel by 28 per cent against 2019 levels by 2023. Simultaneously, for Purchased goods and services and Capital goods categories, we plan to engage our suppliers (covering circa 67 per cent of spend) to set science-based targets in the next five years. In 2022, to build internal understanding of our supply chain sustainab il ity aspirat ions and dr ive united engagement for our net zero goals, we delivered train ing and awareness sessions which were attended by approximately 450 partic ipants from across the organ isat ion. Scope of emiss ions 2022 (tCO 2 e) 2021 (tCO 2 e) 2020 (tCO 2 e) Scope 1 direct emiss ions (combustion of fuel) 2,071 2,902 3,988 Scope 2 energy ind irect em iss ions (purchase of electric ity) 47,363 82,761 113,870 Total Scope 1 and 2 1 49,434 85,662 117,858 Scope 3 other ind irect emiss ions Purchased goods and services (other) 2 380,732 330,244 – Purchased goods and services (global data centres) 3 706 43,132 29,562 Capital goods 2 34,496 47,217 – Upstream transportation and distr ibut ion 2 20,300 20,949 – Waste generated in operations 4 498 – – Business travel (air travel) 39,107 3,654 33,930 Business travel (miscellaneous other than flights) 2 2,654 4,994 – Employee commuting 3 61,917 – – Downstream leased assets (corporate real estate) 4 8,594 – – Downstream leased assets (leased aircraft) 4 1,671,867 – – Investments 2, 5 58,500,000 45,200,000 – Total Scope 3 emiss ions 60,720,871 45,650,190 63,492 Total emiss ions 60,770,305 45,735,852 181,350 1 We use an independent third-party assurance provider to verify our greenhouse gas (GHG) emiss ions. In 2022, our measured Scope 1 and Scope 2 emiss ions, as well as waste and water consumpt ion, were assured by Global Documentation Ltd, ensuring the accuracy and credib il ity of our reporting. 2 The reporting period for carbon emiss ions is 1 October to 30 September. This only differs for category 1: Purchased Goods, category 2: Capital Goods, category 4: Upstream Transportation and Distr ibut ion, Category 6: Miscellaneous travel and category 15: Investments where the period 1 Jan to 31 December on a one year lag is used. 3 The decrease in emiss ions from data centres was due to the offset of REC's (Renewable Energy Certif icate) aga inst the total energy consumption. REC's are a type of Energy Attribute Certif icate that represents the env ironmental attributes of the generation of a one-megawatt hour (MWh) of energy produced by renewable sources ie the proportion of power sourced from a national grid that is produced using renewable energy sources. 4 Emiss ions for Category 5: Waste generated in operations, Category 7: Employee Commuting and Category 13: Downstream Leased Assets was measured and reported for the first time in 2022. 5 These are financed emiss ions of our CCIB lend ing portfolio. For further details on our Scope 3 vendor emiss ions see our ESG data pack at sc.com/esgdatapack Read our Supplier Charter at sc.com/suppliercharter ![]() 76 Standard Chartered – Annual Report 2022 Strategic report Sustainab il ity Our clients – reducing our financed emiss ions We aim to support our clients in their own transit ions to net zero and see our role in supporting this alignment to the Paris Agreement's goal as a crit ical part of our cl imate response plans. We aim to become net zero in our financed emiss ions by 2050, with inter im 2030 targets for our h ighest-emitt ing sectors. In 2022, we made progress towards this goal, and set out to measure, manage and reduce operational and financed emiss ions v ia the implementat ion of our net zero pathway. In 2021, we announced that we expect all clients (beginn ing w ith those in high-carbon sectors) to have a strategy to transit ion to a low-carbon business model. Since then, we have focused on assessing clients in sectors where we have set 2030 net zero targets (Oil and gas, Metals and min ing and Power). We have also developed an in it ial methodology for assessing the credib il ity of client transit ion plans. We expect th is area to evolve, and will look to adapt our methodology accordingly. Our methodology draws on informat ion gathered from our client Climate Risk Assessments (see page 88) and considers the guidance on Credible Transit ion Plans by the Glasgow Financ ial All iance for Net Zero (GFANZ) and the UK’s Transit ion Plan Taskforce. In 2022, we tracked the ex istence of a transit ion plan for our corporate cl ients, and by the end of 2023 intend to have a view of credib il ity of those transit ion plans for our largest exposures. We acknowledge that targeting net zero will not be a linear pathway, especially for a bank which operates primar ily in the emerging markets and recognises its role in helping to support a just transit ion. As such, in the shorter term, our financed emiss ions may increase as we focus on funding our clients' transit ion journeys toward reaching net zero emiss ions. #### Standard Chartered joins PCAF During 2022 the Group jo ined the Partnersh ip for Carbon Accounting Financ ials (PCAF). Jo in ing PCAF w ill help us to take a consistent approach to assessing and reporting emiss ions for its financed and facil itated transact ions. PCAF is a global partnership of financ ial inst itut ions to develop and implement a harmonised approach for assessing and disclos ing the greenhouse gas (GHG) emiss ions of the ir loans and investments and is becoming the market standard approach. PCAF has developed GHG accounting methodologies that can be applied by financ ial inst itut ions who have exposure to listed equity and corporate bonds, business loans and unlisted equity, project finance, mortgages, commercial real estate and motor vehicle loans. PCAF currently represents financ ial inst itut ions with total financ ial assets in lending and investments in excess of $40 trill ion dollars. Calculating financed emiss ions PCAF define financed emiss ions as the GHG em iss ions from loans and investments provided by financ ial inst itut ions to their clients i.e. the proportion of our clients' emiss ions we finance. To calculate our basel ine projections, we measure three types of financed emiss ions us ing three methodologies: • Revenue-based carbon intens ity: a measurement of the quantity of GHG emitted by our clients per USD of their revenue. • Absolute financed emiss ions: a measurement of our attributed share of clients’ GHG emiss ions. • Production-based intens ity: a measurement of the quantity of GHG emitted by our clients per USD of their production capacity. Our methodology is based on global standards, includ ing those set by the Science Based Target in it iat ive (SBT i), the Net Zero Banking Alliance (NZBA) and PCAF. Absolute financed emiss ions = Client exposure Client EVIC Client emiss ions x ( ) Revenue based intens ity = Client exposure Client EVIC Client exposure Client EVIC Client emiss ions Client revenues x ( ( ) ) x Production- based intens ity = Client exposure Client EVIC Client per unit of production Client emiss ions x ( ) EVIC stands for economic value includ ing cash and is the sum of the client's debt plus equity. If the client is listed, that equity is the client's market capital isat ion. The numerical value of the clients EVIC will impact the measurement of all three financed emiss ion methodologies. If, for example, the market capital isat ion of a listed client increases (through the client's share price increas ing), the financed em iss ions w ill decrease on an absolute financed emiss ion, revenue based intens ity and production based intens ity bas is. Further, for revenue based intens ity, when cl ient revenues increase (for example, commodity based clients experienc ing h igher commodity prices) the revenue based emiss ions intens ity w ill decrease. It is noted that there is a one-year lag on data used for financed emiss ions. Th is is a result of the time taken for our clients to report their financ ial and carbon em iss ion informat ion. Therefore, the Group's basel ine as released in 2021 util ised the 2020 year-end balance sheet date for client exposures, financ ial and carbon informat ion, and the 2022 updated financed emiss ions ut il ises the 2021 year-end balances. We still refer to these as the 2022 and 2021 updates. ![]() 77 Standard Chartered – Annual Report 2022 Strategic report Supporting our Corporate, Commercial and Institut ional Bank ing (CCIB) clients with the transit ion In our net zero whitepaper, released in 2021, we provided details of our financed emiss ions for the 2021 year, us ing the 2020 balance sheet. Our first baseline emiss ions measured 45.2 MtCO 2 e (covering 77 per cent of the CCIB exposure portfolio for which the Group could source financ ial informat ion), and set out our approach to ach ieve emiss ions reduction by 2030 in our most carbon-intens ive sectors of: • 63 per cent in Power (Scopes 1 and 2 intens ity) • 33 per cent in Steel (Scopes 1 and 2 intens ity) • 33 per cent in Other metals and min ing (ex. Coal M in ing) (Scopes 1 and 2 intens ity) • 30 per cent in Oil and Gas (Scopes 1, 2 and 3 intens ity) • 85 per cent in Coal Min ing (Scopes 1, 2 and 3 absolute) Percentage of financed emiss ions covered % Included in analysis 2021 2022 2023 2024 and later 61 % 39 % Coal Min ing Steel Automotive Manufacturers Power Other Metals and Min ing Oil & Gas Commercial Real Estate Remain ing Sectors Agriculture Resident ial Mortgages (CPBB) Alumin ium Shipp ing Aviat ion Cement % of financed emiss ions covered Exposure The following section sets out our progress made against these targets during 2022, and builds on this foundation with the announcement of three further sectoral baselines and targets being Automobile Manufacturers, Aviat ion, and Shipp ing. W ith the addit ion of these further three sectors, we have set targets for eight sectors in total. The emiss ions of the CCIB lending book across all counterparties in all sectors is estimated to be 58.5MtCO 2 e. These total emiss ions are where the Group is able to obtain client financ ial informat ion, be ing the clients' EVIC. In 2022, the Group was able to source client data for 87 per cent of the CCIB lending portfolio to calculate the 58.5MtCO 2 e. Of these emiss ions, 61 per cent is due to the emiss ions of the counterpart ies in the eight high-carbon sectors for which the Group has set targets. These eight sectors represent 14.4 per cent of the CCIB lending book as of 30 September 2022. In 2023, we plan to add a further four sectors into our analysis, and beyond that to incrementally improve the portfolio coverage as market data on emiss ions becomes more widely available. Analysing our exposure to high-carbon sectors (i.e. sectors that are responsible for the major ity of the GHG emiss ions in the atmosphere) is the starting point of our financed emiss ion calculat ions. In order to ident ify wh ich of our lending is to high-carbon sectors, we use the Task Force on Climate-related Financ ial D isclosures (TCFD) sector categorisat ion, namely: energy; transportat ion; materials and build ings; and agr iculture, food and forest products. The most material sub-sectors to the Group for which baselined targets have been set are presented below. Emiss ions coverage Completed Not completed ![]() 78 Standard Chartered – Annual Report 2022 Strategic report Sustainab il ity Loans and advances and undrawn balances to high-carbon sectors ² Sector Loans and advances (drawn funding) $m Undrawn commitments and financial guarantees $m 2022 1 2021 3 2022 1 2021 3 Automotive manufacturers 3,439 3,168 3,036 3,675 Aviat ion 2,497 2,846 1,276 1,114 Coal min ing 69 133 8 10 Steel 1,681 1,838 1,007 837 Other Metals and min ing 2,847 2,021 3,237 3,729 Oil and gas 6,641 7,077 13,926 14,750 Power 4,918 4,916 3,843 5,594 Shipp ing 5,456 5,596 1,510 1,491 Total balance 27,548 27,595 27,843 31,200 Maturity and expected credit losses of exposure to high-carbon sectors² Sector 2022 1 $m Maturity buckets 2022 1 $m Loans and advances (drawn funding) Less than 1 year More than 1 to 5 years More than 5 years Expected credit loss Automotive manufacturers 3,439 2,855 534 50 – Aviat ion 2,497 120 916 1,461 65 Coal min ing 69 5 31 32 12 Steel 1,681 1,456 216 8 38 Other Metals and min ing 2,847 2,330 312 205 45 Oil and gas 6,641 2,506 2,203 1,931 276 Power 4,918 1,495 1,434 1,988 117 Shipp ing 5,456 801 2,988 1,668 51 Total balance 27,548 11,567 8,635 7,344 603 1 This is as at 30 September 2022 2 The ISIC codes used by the Group above are as follows: Automotive manufacturers (Manufacture of motor vehicles and Motor Finance); Aviat ion (Passenger air transport), Coal (Coal Min ing), Steel (Iron and Steel basis Industries and casting of iron and steel), Other Metals and Min ing (Iron Ore Min ing, Gold and Prec ious Metals, Copper & Zinc, Stone quarrying clay and sand pits, Min ing & Quarry ing NEC; Support activ it ies for other min ing and quarry ing, Casting of non-ferrous metals, Alumin ium, Non-ferrous metal bas is industr ies, Metal products services, Manufacture of fabricated metals); Oil & Gas (Extraction of Oil, Oil rig operators, Support activ it ies for petroleum and natural gas extraction, Extraction of natural gas, Petroleum refiner ies, Manufacture and repa ir of min ing, O ilf ield & gasfield and related mach inery and equipment); Power (Electric ity generation and distr ibut ion, Water Supply & distr ibut ion, Collection of non-hazardous waste); Shipp ing (Sea and coastal freight water transport, Support services to water transport/NEC, Sea and coastal passenger water transport, Gas Manufacture & distr ibut ion) 3 2021 balances are as at 31 December We have extended our financed emiss ions analys is and disclosure on our exposure to high-carbon sectors. Sectors are ident ified and grouped as per the Internat ional Standard Industrial Classif icat ion (ISIC) system and exposure numbers have been updated to include all in-scope ISIC codes used for target setting among the seven high-carbon sectors. 2 The maximum exposures shown in the table include Loans and Advances to Customers at Amortised cost, Fair Value through profit or loss, and committed facil it ies available as per IFRS 9 – Financ ial Instruments in $mill ion. Green and other sustainable finance loans which support the transit ion to the net zero economy are also included. The full exposure does not provide an ind icat ion of how many clients have net zero pathways in alignment with our own, and hence can be banked through the transit ion of the ir businesses from a higher-carbon present to a lower-carbon future. As reporting efforts harmonise around green, sustainable and transit ion taxonomies, we will evolve our reporting accordingly. High-carbon sectors as a % of total CCIB lending 14.4 % Shipp ing Steel Other Metals and Min ing Oil & Gas Power Aviat ion Coal Min ing Automotive Manufacturers ![]() 79 Standard Chartered – Annual Report 2022 Strategic report Measurement Measurement and progress of our financed emiss ions: sectoral deep d ives Sector Absolute Financed Emiss ions MtCO 2 e Intensity Financed Emiss ions kgCO 2 e Change YTD 22 vs YTD 21 2030 target Target based on 2022 1 2021 8 2022 1 2021 8 Standard Chartered Group 58.5 7 45.2 Oil and gas 10.2 13.7 2.8 3.0 -8.3% -30% Revenue Emiss ions Intens ity Power 6.3 7.7 2.1 3.7 -43.6% -63% Revenue Emiss ions Intens ity Coal min ing 2.3 3.3 -30.3% -85% Absolute Emiss ions Metals and min ing 0.4 0.4 0.9 1.0 -7.4% -33% Revenue Emiss ions Intens ity Steel 2.7 2.7 1.9 2.2 -12.0% -33% Revenue Emiss ions Intens ity Transport 13.9 2.7 – – 415% Auto Manufacturers² 4.3 160g CO 2 e/Vkm NA -49% Production Emiss ions intens ity⁵ Aviat ion³ 2.2 1,152g CO 2 e/ Rtk -34% Production Emiss ions intens ity⁵ Shipp ing⁴ 7.4 +2.6% delta 0% Production Emiss ions intens ity⁵ Other 6 22.7 14.7 NA 1 2022 financed emiss ions are calculated based on 31 December 2021 data 2 Vkm means vehicle per km 3 Rtk means per revenue tonnes km 4 An alignment delta is an asset by asset plot against a set curve, either below (being negative which means less CO 2 per asset than the curve) or above (being posit ive wh ich means more CO 2 per asset than the curve). In this instance the assets are ships and how they plot against the International Marit ime Organ isat ion curve 5 Sector specif ic intens ity be ing CO 2 per distance traveled 6 'Other' includes manufacturing, wholesale and retailers, commercial real estate, alumin ium and cement sectors 7 The exposure to clients is from the Group’s systems, however, the abil ity to find counterparty EVIC’s and carbon disclosed is evolving and currently relies on third party inputs and ind iv idual searches for financ ial informat ion. EVIC informat ion is usually found via external aggregators, internal risk systems and ind iv idual financ ial informat ion searches. For em iss ions, th is is done through external aggregators and where not available; regression analysis and proxy informat ion is used 8 2021 financed emiss ions are calculated based on 31 December 2020 data Standard Chartered Group total Our total financed emiss ions in 2022 are 58.5 MtCO 2 e, up from 45.2 MtCO 2 e in 2021. This represents an increase of 29 per cent. This increase is not unexpected and reflects a combinat ion of: sector deep d ives, which capture full sector value chain emiss ions; methodolog ical improvements based on evolving industry best practice; and expanded coverage of our emiss ions footpr int based on increas ing data ava ilab il ity. These factors contribut ing to the 2022 reported group emiss ions figure are therefore not a reflect ion of an inherent increase in our clients' underlying emiss ions footpr ints. Over time, we will seek to capture and report on emiss ions reductions versus those attributed to methodology changes and expanded coverage of sector emiss ions. • Expansion in scope – prior to conducting our sector deep dives as articulated in our net zero pathway, we took a top-down corporate level approach in calculating the baseline. In particular, for the transport sector, our corporate level approach accounted for only Scope 1 and 2 emiss ions (e.g. solely the emiss ions from the ir direct manufacturing and admin istrat ive activ it ies). Through the transport sector deep dives we were able to do a full mapping of the sector value chain from a bottom up perspective, which included the underlying asset level emiss ions. Therefore, em iss ions have been counted for each underlying vehicle produced, aircraft flown and ship sailed, in addit ion to the manufacturing and admin istrat ive activ it ies. This sign ificantly increased our baseline emiss ions in 2022 from 2.7 to 13.9 MtCO 2 e. • Increased data coverage – we continue to improve our data coverage. In 2022, our client coverage of financ ial (EVIC) informat ion increased YoY from 77 per cent to 87 per cent. This increased data availab il ity also increased our baseline emiss ions. • Financ ial volat il ity – offsetting the prior two factors, increases in commodity prices increased profitab il ity and resulted in higher share prices in these sectors, both of which increased EVICs, therefore decreasing absolute financed emiss ions for the Group. Further, for revenue emiss ions intens ity (as appl icable to the Oil and gas, Power, Steel and Other metals and min ing sectors), this increased profitab il ity decreased revenue-based carbon intens ity (as the rat io of emiss ions to revenue earned decreased). In 2023, we will be moving to production-based intens ity metr ics for these sectors which will reduce the impact of market volatil ity on our em iss ions profile. We acknowledge that our ambit ion to ach ieve net zero in our financed emiss ions by 2050 w ill not be a linear decreasing pathway given the above factors. Indiv idual h igh-carbon sectors We measured progress against our emiss ion targets in three forms: absolute financed emiss ion (Coal min ing and a baseline for Oil and gas), revenue-based carbon intens ity (Oil and gas, Power and Metals and min ing), and production- based intens ity (Auto manufacturers, Aviat ion and Sh ipp ing). • Oil and gas has shown movement in revenue-based intens ity as well as the absolute financed em iss ion basel ine. There was a decrease in absolute emiss ions, due to increas ing EVICs and a port ion of the 2021 population (Gas- related ships) moving to the Shipp ing transport sector. • Coal min ing exposure decreased to less than $100 m ill ion; this is a run-down book with no new coal min ing loans made in the year. • Steel financed emiss ions rema in widely flat across 2021– 2022, decarbonisat ion of steel w ill be a long-term journey with lim ited short-term impact. • Power on an economic intens ity bas is saw a sign ificant decrease, primar ily attr ibuted to macroeconomic factors of increased commodity prices passed onto customers with resulting higher revenues. The Power portfolio does however have approximately 25 per cent of its exposure to renewable energy counterparties, which is also bring ing th is intens ity metr ic down. We continue to refine our approach to measuring production targets. In 2023, noting the shortcoming of economic intens ity, these sectors will be measured using production-based intens ity metr ics (CO 2 per KWh or tonne of steel produced). ![]() 80 Standard Chartered – Annual Report 2022 Strategic report Sustainab il ity Power Generation The Power sector sits at the forefront of the energy transit ion, w ith many industr ies rely ing on electrif icat ion to achieve net zero by 2050. However, this will not be possible without a suffic ient supply of low-carbon electr ic ity. The private sector is well-established as the leading source of finance for power generation in most economies around the world. Oil and gas The decarbonisat ion of th is sector is central to global efforts to reach net zero, and is particularly relevant with in the markets in which we operate as around half of the sector’s global emiss ions or ig inate in Asia, Africa and the Middle East. Oil and gas represents the single biggest contributor to our total absolute financed emiss ions, representing 17 per cent of the total. Oil and gas value chain in scope Our portfolio Balance $bn 2022 financed emiss ions Target Target type 6.3 10.2 MtCO 2 e –30% (2020–2030) Revenue emiss ion intens ity Power Generation value chain in scope Other Oil & Gas companies Service companies Oil & Gas Companies Scope 1, 2 and 3 Scope 1, 2 Scope 1, 2 Scope 1, 2 Our portfolio Balance $bn 2022 carbon intens ity Target Target type 4.0 2.07 KgCO 2 e –63% (2020–2030) Revenue emiss ion intens ity Other util ity providers Power distr ibutors Generators Coal Gas Renewables Scope 1, 2 Scope 1, 2 Progress In our net zero whitepaper, we targeted an emiss ions reduction in the Oil and gas sector of 30 per cent (Scopes 1, 2 and 3 intens ity) by 2030. During 2022, we revised the measurement of our Oil and gas sector emiss ions from a revenue-based carbon intens ity to absolute financed em iss ions. Th is better reflects the sector emiss ion profile and prov ides alignment with the emerging consensus of peer banks as to the best way in which to measure and set targets for the sector. This effectively creates a carbon budget which is intended to decrease over time, which further helps meet the expectations of our key stakeholders. Our new absolute baseline is 10.2MtCO 2 e and we will disclose targets for this baseline by the Group's 2023 Annual General Meeting. In 2022, using the exist ing intens ity target, we ach ieved an 8 per cent reduction year-on-year. This reduction was primar ily due to macroeconom ic factors, includ ing an increase in clients’ underlying corporate value (EVIC) due to increases in commodity prices linked to the war in Ukraine and ris ing energy pr ices. This has resulted in a proportionate reduction in our share of financed emiss ion contribut ions. Calculation methodology/Science-based scenario selected For the Oil and gas sector, our calculations are based on the International Energy Agency (IEA) Net Zero Emiss ion by 2050 (NZE) and the Current Polic ies Scenar io (CPS). In the NZE scenario, the share of fossil fuels in global energy falls from around 80 per cent in 2020 to 20 per cent in 2050, and the residual usage of fossil fuels by 2050 is primar ily related to goods where carbon is embedded (e.g. plastics), or production facil it ies fitted with CCUS (Carbon capture, util isat ion and storage). Any remain ing usage of foss il fuels is lim ited to sectors where low-em iss ions technology options are scarce. Scope 2 emiss ions are projected us ing the power generation emiss ions pathway. Scope 3 downstream emiss ions make up around 90 per cent of total em iss ions in the Oil and gas sector and have been calculated assuming that all fuel is burnt and there is no impact from CCUS. Changes in baseline method For 2022, we have updated the Oil and gas sector emiss ion measurement from revenue-based carbon intens ity to absolute financed emiss ion to better reflect sector em iss ion profile. Progress We have set ourselves the target to reduce emiss ions in the Power Generation sector by 63 per cent (Scopes 1 and 2 intens ity) by 2030. In 2022, we ach ieved a 44 per cent reduction, primar ily dr iven by increases in commodity prices which are passed onto customers by power producers, thereby increas ing the revenue earned by the producer. Increases in the producer’s revenue and EVICs decreases our proportion of financed emiss ions, both on an absolute and economic intens ity bas is. Absolute reductions in emiss ions are therefore pr imar ily because of macroeconomic factors. As a caveat, the Group continues to grow our financing prov ided to renewable power producers, which now represents approximately 25 per cent of the power portfolio and contributes towards this intens ity decrease. Calculation methodology Scope 1 is the most material component of the Power sector’s emiss ions. By contrast, Scope 2 is ins ign if icant and relates to energy used to operate power plants which cannot be isolated from the overall industry electric ity consumption. Scope 3 is not included as there is no agreed approach to its quantif icat ion in this sector. Changes in baseline method We intend to update our measurement basis of the power sector from a revenue-based intens ity measure to a production-based measure in 2023. We believe this will provide a more accurate measure of our counterparty CO 2 emiss ions, wh ich will be per unit of power produced (KWh). Scope 1, 2 ![]() 81 Standard Chartered – Annual Report 2022 Strategic report Metals and min ing The Metals and Min ing sector prov ides raw materials that support much of the global economy. The sector contributes around 12 per cent of global CO 2 emiss ions (Scope 1 and 2), of which Asia, Africa and the Middle East contribute more than 75 per cent. Our net zero whitepaper detailed our targets to achieve an emiss ions reduct ion of 33 per cent for Steel (Scopes 1 and 2 intens ity); 33 per cent for Other Metals and M in ing (ex. Coal min ing) (Scopes 1 and 2 intens ity); and 85 per cent for Coal min ing (Scopes 1, 2 and 3 absolute). Thermal coal We will only provide financ ial serv ices to clients who: Progress In 2022, we achieved a 30 per cent reduction in the absolute emiss ions assoc iated with our Coal min ing portfolio, from 3.3 to 2.3 MtCO 2 e. This has been achieved by allowing the period ic run-down of our loan book in this sector. For Steel and Other Metals and Min ing, we ach ieved a 11 per cent reduction in the revenue intens ity target. Th is decrease was primar ily due to increases in commodity prices reducing our proportion of the client’s emiss ions. Price increases resulted in an increase in client revenue which therefore reduced our share of emiss ions. Calculation methodology Min ing projections We have used a Baringa scenario to calculate Scope 1 emiss ions from coal min ing. The Power sector has been followed for Scope 2 emiss ions and Scope 3 em iss ions have been based on coal production adapted from the IEA’s Net Zero Emiss ions scenar io. Steel producer projections Emiss ions for the steel sector are often quoted or publ ished in a way that partially includes Scope 2 and/or Scope 3. In our methodology, we different iate Scope 1 from Scopes 2 and 3 to support clearer, more precise calculations. Scope 3 emiss ions are not currently calculated due to lim ited data ava ilab il ity; however, we continue to engage our clients and standard setters to develop a suitable approach to calculating Scope 3 emiss ions for steel. Changes in baseline method We intend to update our measurement basis of the Metals and min ing sector from revenue-based intens ity measures to a production-based measure in 2023. We believe this will provide a more accurate measure of our counterparty CO 2 emiss ions which will be provided by unit of metal produced (e.g. tonne of steel). Metals and min ing value cha in in scope By 2024 are 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) Our portfolio Sector Balance $bn 2022 financed emiss ions Target Target type Steel 1.4 1.9 -33% Revenue emiss ions intens ity Other Metals and Min ing 0.7 0.9 -33% Revenue emiss ions intens ity Coal Min ing <0.1 2.3 -85% Absolute financed emiss ion Other metals Steel production Coal min ing Scope 1, 2 and 3 Scope 1, 2 Scope 1, 2 Progress In October 2021, we enhanced our Power Generation and Extractive Industries Posit ion Statements to test our clients’ dependency on thermal coal at client entity level and at group level (tested at group level previously). Since then, we ident ified 37 cl ient entit ies that der ive 100% of their revenue from thermal coal. Of these, 14 entit ies have been fully exited in 2022 with the remainder in progress, subject to contractual commitments. All our criter ia on thermal coal is tested on an annual basis via our Environmental and Social Risk Assessments. Where a client triggers a threshold but approaches us to provide Transit ion F inance we will consider our involvement on a case-by-case basis, includ ing instances where a client is reducing greenhouse gas emiss ions through the early retirement of coal power assets. Expanding our financed emiss ions coverage In line with our aim to measure, manage and reduce our financed emiss ions, in 2022, we continued to expand the coverage of our calculations and are pleased to announce three further sectoral targets covering transportation. By 2030, we aim to reduce emiss ions in the transportation sector: • 34 per cent in Aviat ion (product ion intens ity)² • Reduce our alignment delta in Shipp ing from +2.6 per cent to 0 per cent 1 • 49 per cent in Automotive manufacturers (production intens ity)² 1 Alignment with the International Marit ime Organ isat ion (IMO) em iss ions trajectory curve 2 Sector specif ic intens ity be ing CO 2 per Km distance traveled ![]() 82 Standard Chartered – Annual Report 2022 Strategic report Sustainab il ity Aviat ion The aviat ion sector includes all activ it ies related to domestic and internat ional a ir travel. It is responsible for over 2 per cent of global energy-related CO 2 emiss ions, as per the IEA Tracking report 2022. Our 2022 portfolio emiss ions basel ine is 1152 gCO 2 e/Rtk (revenue tonne kilometre). Reaching net zero in this sector will be challenging; however, we believe we can make progress towards net zero by leveraging new fleet technology, sustainable aviat ion fuels (SAF) and engag ing ambit ious counterpart ies. We have set ourselves the target to achieve a 34 per cent reduction in production intens ity², from our basel ine. Shipp ing The shipp ing sector cons ists of moving goods or passengers by water and is responsible for 2.9 per cent of global emiss ions. 1 Our shipp ing portfol io has a baseline ‘alignment delta’ of +2.6 per cent in 2022. Achiev ing the current Internat ional Marit ime Organ isat ion (IMO) target of zero delta is feasible and future regulations are likely to drive the industry to net zero. Key levers for the sector include: • Support transit ion through investment in retrofit, alternative fuels and greener vessels (e.g. young and dual fuel vessels). • Deepen relationsh ips w ith ambit ious counterpart ies and engage others. Calculation methodology The emiss ions are calculated based on M iss ion Poss ible Partnership (MPP) Prudence (1.5C scenario) by counting aviat ion fuel burn by each a ircraft to which asset-backed finance has been provided. The calculation uses a well-to-wake formula which includes all emiss ions from the po int of oil extraction to being burnt by the aircraft engines. Therefore, Scopes 1, 2 (for the corporate) and 3 (emiss ions for each aircraft) are included for each counterparty funded. For each aircraft, we receive total km travelled, estimate total fuel burnt on a well-to-wake basis (based on total distance travel and aircraft engine type) and add onto this a load (weight) factor of specif ic a ircraft to calculate Revenue Tonnes per Kilometre. Calculation methodology Shipp ing em iss ions are calculated by count ing fuel oil burn for each ship to which asset-backed finance has been provided. Each owner or lessee is required to report to a regulator the distance its ships have travelled during the year, as well as fuel consumed per vessel. Some vessels consume more energy based on their type of cargo. IMO conversion factors are used to convert fuel burnt to CO 2 emiss ions, w ith these emiss ions d iv ided by d istance travelled and Dead Weight Tonnage (the loaded weight of a ship) to provide the gCO 2 e/Vkm (vehicle kilometre). The IMO also has a 2050 trajectory. This is not yet 1.5 degree compliant, however the Poseidon Princ iples, wh ich are shipp ing specif ic, requ ires that banks measure and report their ‘alignment delta’ and provide a trajectory for each type of vessel in a different weight category to that trajectory. 1 IMO, 2020. Fourth IMO GHG Study. https://www.imo.org/en/OurWork/Environment/Pages/Fourth-IMO-Greenhouse-Gas-Study-2020.aspx 2 Sector specif ic intens ity be ing CO2 per Km distance travelled Momentum case (aggressive) Momentum case (conservative) Net Zero reference scenario (MPP Prudence) Baseline Emission intensity (gCO 2 e/RTK) 1,450 1,400 1,350 1,433 1,152 1,222 -760 Emissions reduction required to meet target 1,300 1,250 1,200 1,150 1,100 1,050 1,000 950 900 850 800 750 700 650 600 19 21 20 22 23 24 25 26 27 28 29 2030 -34% Momentum based on IMO compliance SCB 2021 Baseline Alignment delta (calculated against current IMO trajectory) 35% 30% 25% 2.6% 0% 20% 15% 10% 5% 0 -5% -10% -15% -20% -25% 2021 22 23 24 25 26 27 28 29 2030 Fully aligning to IMO trajectory means achieving 0% delta alignment ![]() 83 Standard Chartered – Annual Report 2022 Strategic report Automotive manufacturers Automotive manufacturers includes industr ies associated with the production, wholesaling, retail ing and maintenance of motor vehicles. The sector is responsible for 17 per cent of global emiss ions. Our portfolio emiss ions basel ine was 160 gCO 2 e/Vkm in 2022. A focus on financing the growth of the electr ic vehicle industry is key to success in this sector. We have set ourselves the target to achieve a 49 per cent reduction in production intens ity, 1 from our baseline. Calculation methodology There is currently no automotive sector-specif ic target. Therefore, the target is based upon the IEA net zero 1.5C scenario. The total emiss ions calculated are the Scope 1 and 2 em iss ions of the orig inal equ ipment manufacturers (OEM), being the manufacturing carbon cost)+ Scope 3, being the lifet ime ta ilp ipe emiss ions x veh icles produced + OEM emiss ions from supply cha in. This is div ided by the total k ilometres travelled of vehicles produced to calculate gCO 2 e/Vkm. What comes next As a member of the NZBA, we are committed to measure and set targets against all our high-carbon sectors with in three years. Activ ity Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Alumin ium Data collection Cement Data collection Mortgage (CPBB) Commercial Real Estate Data collection Agriculture Remain ing Sectors Enhancements: Targets to be set in the future 39 % M Commercial Real Estate Remain ing Sectors Agriculture Resident ial Mortgages (CPBB) Alumin ium Cement Enhancements to exist ing targets We have made, or will be making, the following changes to the way we set targets. This is to better reflect our progress against reductions without these being impacted by changes in commodity prices influenc ing revenue intens it ies. Oil & Gas Metals & Min ing Power 202320232023 Absolute emiss ions Revenue intens ity $ Production intens ity Revenue intens ity $ Production intens ity Revenue intens ity $ CPBB mortgage emiss ions With in our CPBB segment, we set a target to measure and report mortgage em iss ions w ith a view to setting targets by December 2023. During 2022 we completed baseline emiss ions measurement for S ingapore, Hong Kong and Korea, covering more than 80 per cent of the consumer mortgage portfolio. 1 Sector specif ic intens ity be ing CO 2 per Km distance travelled Net zero reference scenario (IEA NZE – rebaselined 1 ) Baseline (Historic and current, as at 2021) 1. Augmented to be new light duty vehicles only, CO 2 to CO 2 e, scope 3 TTW to scope 1-3 excl. WTT Emission intensity (gCO 2 e/vkm) 210 200 190 171 165 160 82 Emissions reduction required to meet target 180 170 160 150 140 130 120 110 100 90 80 70 60 50 40 30 20 10 0 19 21 20 22 23 24 25 26 27 28 29 2030 49% ![]() 84 Standard Chartered – Annual Report 2022 Strategic report Sustainab il ity 1 Mobil isat ion of Sustainable Finance is defined as any investment or financ ial service provided to clients which supports: (i) the preservation, and/or improvement of biod ivers ity, nature or the environment; (i i) the long-term avoidance/decrease of CO 2 emiss ions, includ ing the al ignment of client’s business and operations with a 1.5 degree trajectory (known as transit ion finance); and (i i i) a social purpose. 2 Lending transactions are measured as per the loan commitment/ underwritten amount provided to the counterparty. This lending meets the requirements of the Group’s Green and Sustainable Product Framework. #### In recent years, sustainability has moved from a predominantly risk-based initiative #### to become a value driver for many banks as they seek opportunities to mitigage climate #### change and its effects, and tackle social issues through the provision of finance. Our Opportunity 2030 report ( www.sc.com/opportunity2030 , published in 2020) ident ified a $10 tr ill ion investment opportunity in contribut ing to the SDGs, includ ing clean energy. It is this opportunity which we are targetting through our low-carbon products and services. With our strong emerging markets footprint, we recognise the role we have to play in facil itat ing a just transit ion, d irect ing capital and special ised support to the reg ions that need it most to support sustainable economic growth. More than 90 per cent of our sustainable financ ing is directed at communit ies w ith in the As ia, Africa and the Middle East region (see sc.com/SFImpactReport for more detail). We have focused on strengthening our capabil it ies in transit ion finance throughout 2022, includ ing deploy ing a dedicated Transit ion Accelerat ion Team with in the CSO organisat ion to support cl ients in high-carbon sectors. This team includes special ists w ith industry knowledge to advise our clients in their ind iv idual sustainable finance journeys. #### We have set ourselves targets to achieve Sustainable Finance income of $1 billion by 2025, and mobilise #### $300 billion of Sustainable Finance between 2021 and 2030. We have set ourselves a target to mobil ise $300 b ill ion of Sustainable Finance by 2030. This includes the facil itat ion of green and social bond rais ing, prov is ion of fund ing commitments to green and social causes as outlined below, advisory services to support our clients on their own journeys to net zero and facil itat ion of Sustainab il ity Linked Loans. In 2022, we mobil ised $23.4 b ill ion through our susta inable financing act iv it ies, bring ing our cumulat ive sustainable finance total towards this target to $48 bill ion s ince 2021. This target update covers the time period from 1 January 2021 to 30 September 2022. Note the decline in our capital markets activ ity is consistent with the overall market for green, social and sustainable issuances in 2022. Further our Project Export Finance (PEF) portfolio was impacted by supply chain issues and market sentiment. Sustainable Finance mobil ised¹ 2021 $24.6bn 2022 $23.4bn 2021–2030 $300bn Product 2022 $mn 2021 $mn Cumulative progress $m Balance-sheet related transactions provided² Green/Transit ion Project Export Finance (PEF) lending 985 1,647 2,632 Social/Sustainable PEF lending 872 1,290 2,162 Financ ing Solut ion (FS) and Leveraged and Acquis it ion Finance (LAF) lending 2,599 2,427 5,026 Sustainable linked loans (SLL)³ 5,201 8,544 13,745 Transit ion finance 144 144 Green mortgages⁴ 3,500 3,500 Business banking Small and Medium Enterprise (SME) lending⁵ 535 499 1,034 Micro finance 778 618 1,396 Capital Market/Advisory⁶ Green/Transit ion bonds 2,899 3,961 6,860 Social/Sustainable bonds 3,593 4,688 8,281 Mergers & Acquis it ion (M&A)/ Advisory⁷ 2,279 905 3,184 Total sustainable finance mobil ised 8 23,385 24,578 47,964 Of the above CCIB 18,572 23,461 CPBB 4,813 1,117 23,385 24,578 3 SLLs are measured as the committed/underwritten amount as provided to the counterparty. SLLs provide funding to counterparties with KPIs linked to either green or social targets, and if those targets are met the interest rate charged is reduced by a certain percent and increases if the targets are not met. SLLs are not specif ic use of proceed instruments and the funding raised may not be used for green and/or social purposes but rather for general business purposes. 4 Green mortgages are lending from Consumer, Private and Business Banking (CPBB) that meets a specif ic energy rat ing. During the year, these mortgages were reviewed and ident ified by CPBB as meet ing the requirements of the Group’s Green and Sustainable Product framework. 5 Business banking; SME and Microf inance lend ing which is the provis ion of finance to the Development Assistance Committee (DAC) lower- and middle-lower-income countries as per the Organisat ion for Econom ic Co-operation and Development (OECD). The inclus ion of bus iness banking is linked to the Access to Finance sub-theme with in the Group's Green and Sustainable Product Framework incorporating Employment generation, and programmes designed to prevent and/or alleviate unemployment, includ ing through the potential effect of SME financ ing and m icrof inance. W ith the inclus ion of bus iness banking, the Entrepreneur (Lending to SMEs and Microf inance) asp irat ions would be double counted and these asp irat ions have therefore been retired. 6 Capital market bonds are measured by the proportional bookrunner share of facil itated act iv it ies as determined by third-party league table rankings based on the level of services provided. 7 M&A/Advisory represents sole financ ial adv iser, measured by the total deal size div ided by the number of adv isers on the deal. 8 Mobil ised $23.4bn of Susta inable Finance is for YTD Sept 2022 and $48bn delivered between 2021-2022 includes full year 2021 and YTD Sept 2022. #### Catalysing finance and partnerships for transition ![]() 85 Standard Chartered – Annual Report 2022 Strategic report Our Sustainable Finance Frameworks Our Green and Sustainable Product Framework governs our Sustainable Deposits products and suite of Sustainable Trade Products, and sets out what qualif ies as ‘green’, ‘social’ or ‘sustainable’. The Sustainab il ity Bond Framework governs our debt products, provid ing transparency and gu idance on the use of proceeds and the impact of the green, social and sustainable bonds issued by the Group. We have outlined our approach to defin ing Trans it ion Finance in our Transit ion F inance Framework 4 . This Framework is informed by the IEA NZE 2050 scenario. In pursuit of this, throughout 2022 we continued to expand and develop our suite of sustainable products in line with our Sustainable Finance product frameworks. These frameworks, developed in collaboration with Sustainalyt ics, a lead ing provider of ESG and corporate governance research, are reviewed annually. Following the launch of our new Transit ion F inance Framework in 2021, we updated our Green and Sustainable Product Framework and expanded the list of elig ible act iv it ies. In CCIB, new product launches included Sustainable Fiduc iary Deposits, sustainab il ity-linked sale and leaseback for aviat ion finance, and ESG structured products with rates underlying. With in CPBB, we connected reta il clients with access to sustainable finance offerings, launching new products includ ing structured notes, susta inable deposits and Green Mortgages. Throughout 2022, we increased the number of markets where we offer Green Mortgages to six, through successful product launches in Vietnam, South Korea and Malaysia. In total, we now have 31 sustainable finance products spanning both our CCIB and CPBB client segments. By review ing the income potential from this growing suite of Sustainable Finance products and services, alongside our client base and the estimated scale of the opportunity, we believe that we are on track towards our target of achiev ing $1 bill ion of Susta inable Finance income 1 by 2025. In 2022, we reported $0.5 bill ion Susta inable Finance related income against this target, and increased our Sustainable Finance asset base by 45 per cent to $13.5 bill ion between July 2021 and September 2022. This increase was largely due to the ident ification and tagg ing of $3.8 bill ion in Green Mortgages, primar ily w ith in the Hong Kong market. The majority of our Susta inable Finance asset base ($10.2 bill ion of the $13.5 b ill ion) has been extended to a var iety of green projects which help lower carbon emiss ions, such as renewable energy projects, commercial real estate and funding for the development of rail projects. Our social lending makes up the remain ing $3.3 b ill ion of our total Sustainable Finance asset pool and encompasses categories such as healthcare, education and access to finance. Sustainable Finance income Product 1 ($m) 2022 3,4 2021 YOY 2 Transaction Banking 80 32 150% Trade & Working capital 60 25 140% Cash Management 20 7 186% Financ ial Markets 326 241 35% Macro Trading 54 21 157% Credit Markets 268 217 24% Financ ing & Secur it ies Serv ices 4 3 33% Lending & Portfolio Management 102 88 16% 508 361 41% 1 SF income is defined as a portion of the Groups income, generated by products and services as approved by the Sustainable Finance Governance Committee. This includes, interest and margin earned on assets as disclosured in the Green and Sustainable assets, and fees from advisory and hedging activ it ies for clients' ESG products. 2 YoY = year-on-year variance which is better/(worse) comparing 2022 to 2021. 3 CPBB income will be added to this product suite in subsequent reporting periods. 4 Our Transit ion F inance Framework can be found at: https://av.sc.com/corp-en/content/docs/Standard-Chartered-Bank-Transit ion-F inance-Framework.pdf. ![]() 86 Standard Chartered – Annual Report 2022 Strategic report Sustainab il ity Green Assets 1 Theme ($m) Sept'22 $m June'22 $m June'21 $m SDG Clean Transport 541 532 527 Energy Efficiency 507 164 – Manufacture of components for renewable energy technology 393 42 – Energy-efficiency technology 84 122 – Transport 30 – – Green Build ing 7,014 6,326 3,436 Green Build ing 3,216 2,826 3,436 Mortgage Portfolio HK 3,785 3,491 Mortgage Portfolio SG 13 8 Pollution Prevention and Control 102 110 – Renewable Energy 2,122 2,425 1,526 Grid expansion 59 63 104 Hybrid Wind & Solar 154 237 174 Hydropower 25 27 20 Manufacture of components for renewable energy technology 274 450 481 Solar 785 976 269 Waste to Energy 111 94 51 Wind 714 577 414 Sustainable Water and Wastewater Management 10 29 13 10,295 9,585 5,502 Social Assets 1 Theme ($m) Sept'22 $m June'22 $m June'21 $m SDG Access to Water 42 36 32 COVID-19 39 37 197 Crit ical Care Equ ipment 21 4 197 Healthcare Facil it ies 3 15 Hygiene Products 6 9 Pharma and Medical Goods 4 4 Protective Equipment 4 4 Healthcare infrastructure 105 152 140 Hospital 101 147 140 Hospital Equipment 4 5 Road Infrastructure 57 46 105 Access to Finance 2,930 3,013 3,122 Business Banking 2,587 2,640 2,618 Micro Finance 341 373 465 Fund finance – – 165 SME loans 2 – – 3,173 3,284 3,760 Total Sustainable Finance Assets 13,468 12,869 9,262 Sustainable liab il it ies 1 Sept'22 $m June'22 $m June'21 $m Total bond issuances 2,083 1,983 1,095 Total sustainable deposits (CCIB) 3,154 3,056 1,943 Total sustainable CASA (CCIB) 335 182 – Total sustainable CASA and deposits (CPBB) 217 118 10 5,789 5,339 3,048 1 Amounts included in the table are as at September 2022, June 2022 and June 2021 from left to right and have been taken from the Sustainable Finance Impact Report (sc.com/SFImpactreport). September 2022 has been prepared under the same basis as the Impact Report and reviewed by Sustainalyt ics. See sc.com/SFimpactreport for more highl ights from our Susta inable Finance portfolio in 2022 ![]() 87 Standard Chartered – Annual Report 2022 Strategic report A shared ambit ion – work ing in partnership We have ident ified several opportun it ies for the Group to play an active role in shaping global standards ranging from net zero to carbon markets. Along these lines, we are actively involved in the leadership of several standard-setting or standard-influenc ing efforts. For instance, we are active partic ipants of the Glasgow Financ ial All iance for Net Zero (GFANZ) Princ iples Group, an ambit ious programme to generate the comm itment, investment and alignment needed to drive forward the transit ion to net zero. Together w ith the CEO of Macquarie Group, our CEO is the Co-Chair of the GFANZ Working Group on Capital Mobil isat ion to Emerging Markets and Developing Economies, and throughout 2022, our Group Head, Conduct and Financ ial Cr ime and Compliance has chaired the Net Zero Banking Alliance (NZBA) – the industry-led banking element of GFANZ. Our Group Chairman has co-chaired the United Nations’ Global Investors for Sustainable Development (GISD) Alliance, which has set ambit ious objectives to scale up long-term finance and investment in sustainable development; and our Global Head, Sustainable Finance has continued to hold the posit ion of Cha ir of the Equator Princ iples Assoc iat ion. In 2023, we intend to support the Equator Princ iples Steer ing Committee as our term as Chair comes to an end. We are also join ing the Roundtable on Sustainable Palm Oil as a member of the Board of Governors. In addit ion, we are members of the Un ited Nations Environment Programme Finance Init iat ive and the Climate Bonds Init iat ive, as well as one of the in it ial members of the Task Force on Climate-related Financ ial D isclosures (TCFD) and signator ies of the Pose idon Princ iples, a global framework for assessing and disclos ing the cl imate alignment of financial inst itut ions’ shipp ing portfol ios.Our Global Head of Sustainab il ity Strategy and Net Zero represents the Group on SBTi's Financ ial Net-Zero Expert Adv isory Group (EAG). Our Head of Carbon Markets Development is a Board member of the Integrity Council for the Voluntary Carbon Markets (IC-VCM), which is focused on developing a high- quality internat ional carbon market. The IC-VCM carr ied out a consultation on its Core Carbon Princ iples over the summer, receiv ing over 350 responses and 5,000 ind iv idual comments. Our Group CEO sits on the Dist ingu ished Advisory Group of the IC-VCM and will aim to be involved in the development and trading of carbon markets around the world. Meanwhile, we increased our representation at COP27 and the G20 and were actively involved in the launch of several groundbreaking in it iat ives on the marg ins of each; these include the launch of the Africa Carbon Markets Init iat ive (ACMI) and Egypt's Nexus for Water, Food & Energy (NWFE) at COP27, the $20 bill ion comm itment to advance Indonesia's Just Energy Transit ion Partnersh ip (JETP) at the G20, and the $15.5 bill ion comm itment to the Vietnam JETP. The Group partic ipates in various industry in it iat ives, forums and roundtables, includ ing the Cl imate Financ ial R isk Forum (CFRF) and Global Associat ion of R isk Professionals (GARP) roundtable, to ensure we benchmark our risk management capabil it ies and stay abreast of changes. Sim ilarly, we are engaged at local and reg ional levels to share ins ights, comment on regulatory consultat ions, and better understand the regulatory landscape and practices across our footprint. Investing in Climate Research Our four-year partnership with Imperial College London covers long-term research on Climate Risk, advisory on shorter-term, internally focused projects to enhance Climate Risk capabil it ies and train ing of our colleagues, Management Team and Board. In 2022, we sponsored a research project on ‘Investing in Nature to Tackle Biod ivers ity Loss and Enhance Food Security’, which explored the risks and opportunit ies fac ing the global agricultural sector from climate change. • Part 1 expanded on the known risks of climate change on the agriculture sector by examin ing the fa il ings of major climate models, as well as the immed iacy of the s ign ificant impacts of climate change on the agriculture sector. • Part 2 explored the potential for nature-based solutions to tackle the interl inkages between agr iculture, land-use, and climate change. • Part 3 focused on the financial opportun it ies surround ing natural assets and sustainable agriculture. In addit ion, we worked w ith Imperial College London on three advisory projects during 2022, to develop a methodology to assess the impact of Climate Risk on sovereign ratings; develop Physical Risk report cards for sovereigns; and enhance the energy consumption calculation methodology and emiss ion factor database for mortgage portfol ios in our key markets. ![]() 88 Standard Chartered – Annual Report 2022 Strategic report Sustainab il ity #### While transitioning to a net zero economy creates clear opportunity, it also comes with risk. #### But before we can manage the risk, first we must be able to identify, assessits size and monitor it. In the front line, our Environmental and Social Risk Management team with in the Ch ief Sustainab il ity Office aims to drive growth while managing the environmental and social (E&S) risks associated with financ ing related to our CCIB clients. Our approach is embedded directly into our credit approval process and supports us to work with our stakeholders to ident ify, manage, m it igate and mon itor the potential impacts that stem from our financ ing dec is ions. Our Posit ion Statements, approved by the Group Responsib il ity and Reputational Risk Committee (GRRRC), outline the standards we apply to assess whether to provide financial serv ices to our clients, and help us to ident ify and assess E&S risks related to our CCIB clients. We use these statements – which draw on International Finance Corporation (IFC) Performance Standards, the Equator Princ iples (EP) and global best pract ice – to assess whether to provide financ ial serv ices to clients operating in sensit ive ( includ ing h igh-carbon) business sectors. In addit ion, we have spec if ic gu idance for clients operating in sectors with a high potential environmental or social impact. Our list of prohib ited act iv it ies can be found at sc.com/prohib itedact iv it ies . In 2022, we reviewed 1,170 clients and 550 transactions that presented potential E&S risks. If we find a material E&S issue, we take steps to proactively engage the client to mit igate ident ified r isks and impacts, and support and guide our clients to improve their E&S performance over time. In relation to climate, we encourage all clients in the Power generation, Metals and min ing, and O il and gas sectors to have a strategy to transit ion the ir business, in line with the goals of the Paris Agreement. We review a client’s approach to transit ion us ing the output from our client Climate Risk assessments. In particular, we util ise a cl ient’s Transit ion R isk mit igat ion score, which considers both quantitat ive inputs (e.g. emiss ions measurement data and reduct ion targets), and qualitat ive overlays through d irect client conversations to assess management focus and commitment. We aim to support and guide our clients to a low-carbon pathway and offer them sustainable financ ing as the ma in levers to help us achieve our net zero targets. We will also be assessing our exposure to emiss ions- intens ive cl ients and/or assets and will seek to replace these over time by adding new low-carbon-intens ity cl ients and/or assets to our portfolio. This does not mean walking away from our exist ing cl ients, but instead working with them to finance investment in low-carbon methods and technologies, particularly across Asia, Africa and the Middle East where investment could have the biggest impact. However, for clients who do not align with our Posit ion Statements, we may look to w ithdraw financ ial services and exit the relationsh ip if we cannot work with them to align over time. We recognise how important it is to get this right, so in support of our Sustainab il ity Aspirat ions, we updated our E&S R isk Management Framework based on our 2021 Posit ion Statement refresh, and we expanded our capacity, establish ing a team w ith in our Global Bus iness Service centre in Warsaw to conduct enhanced E&S due dil igence on cl ients. In addit ion, all relat ionsh ip managers and cred it officers are offered train ing in assessing E&S risk, as well as having access to detailed online resources. 4,944 colleagues received E&S related train ing in 2022. In 2022, we prior it ised our approach to biod ivers ity by undertaking a pilot biod ivers ity risk assessment. This included a loan book analysis to ident ify impacts and dependencies from biod ivers ity-related risks at a sector, country and financial serv ices level. We are continu ing to develop our approach to biod ivers ity, expanding on the review conducted this year to gain a clearer view of the biod ivers ity risk associated with the Group’s activ it ies. In 2023, we plan to update our Posit ion Statements cover ing all sensit ive sectors, w ith the requirements to become effective the following year. Read more about our Posit ion Statements at sc.com/posit ionstatements Read more about our prohib ited act iv it ies at sc.com/prohib itedact iv it ies Read more about our reporting against the Equator Princ iples at sc.com/equatorprinc iples #### Mitigating Environmental and Social Risk Group Climate Risk Appetite Statement #### “The Group aims to measure and manage financial and non-financial risks from climate change, and reduce the emissions #### related to our own activities and those related to the financing of clients in order to support alignment with #### the Paris Agreement” ![]() 89 Standard Chartered – Annual Report 2022 Strategic report Climate Risk appetite metrics Risk Type Metrics Reported Climate Risks Reported Credit Risk – CPBB Concentration of consumer mortgage exposure with high gross physical (flood) risk across the Group’s seven key markets Physical risks: flood risk Credit Risk – CCIB Net nominal exposure concentration to clients with High Transit ion and Phys ical Risk, and Low Readiness Physical Risk and Transit ion R isk Traded Risk Climate risk is incorporated with in Traded R isk Stress Risk Appetite Physical Risk Reputational & Sustainab il ity Risk Net nominal exposure concentration to clients with High Temperature Alignment and Low Transit ion Readiness to monitor misal ignment to Par is Agreement Temperature alignment – the degree of projected warming up to 2030 under an orderly scenario Country Risk Concentration of Gross Country Risk (GCR) exposure for countries exposed to extreme transit ion and physical risks Physical and Transit ion R isk based on internal country Climate Risk index Supporting our frontline teams, we have a dedicated second- line Climate Risk team. Our Climate Risk Appetite Statement (RAS) is approved annually by the Board, and is supported by Board and Management Team level risk appetite metrics across Credit – CCIB and CPBB, Reputational and Sustainab il ity Risk (RSR), Traded Risk and Country Risk. The metrics are approved by the Group Risk Committee (GRC) (for Management Team level risk appetite metrics) and the Board (for Board level risk appetite metrics) annually. Monitor ing of adherence to r isk appetite metrics commenced in January 2022 and any breaches are reported to the GRC and Board Risk Committee (BRC). We are expanding the scope and coverage of our risk appetite metrics for enhanced risk ident ification and management. Addit ional metr ics to address our public targets across key sectors and a stress loss metric built on scenario outcomes have been ident ified and are be ing monitored for inclus ion in risk appetite reporting in 2023. The focus for 2023 will be to increase the coverage of exist ing metrics and introduce new risk appetite metrics. The uncertaint ies surround ing how and when Physical and Transit ion R isk will impact mean that no tool or methodology is perfectly able to estimate risks from climate change now or in the future. However, we need to move quickly so we are developing methodologies, engaging with clients and integrat ing Cl imate Risk into our mainstream risk management activ it ies and assessments. We will seek to adapt our approach as the impact from Climate Risk becomes clearer and the tools and methodologies to gather reliable data mature. We have toolkits to quantitat ively measure cl imate-related Physical and Transit ion R isk and in 2022, we continued to enhance our understanding of climate-related risks, and sign ificantly strengthened our stress test ing and scenario analysis capabil it ies for a range of management scenarios that are more plausible. We continue to engage with our corporate clients to understand their Transit ion and Phys ical Risks, as well as their plans to prepare for climate change. The data we captured helped us develop our own client-level climate-risk assessments for both exist ing and new cl ients, improve our internal climate modelling capabil it ies and strengthen the risk measurement and monitor ing of the portfolios. Despite sign ificantly advanc ing in these areas, quality and availab il ity of data is a pervasive issue. While we are focusing on improv ing the data qual ity, improvements are likely to take several years. In view of the paucity of data and little to no transit ion or phys ical risk related histor ic data for model testing, several assumptions and lim itat ions must be made while build ing these models. The l im itat ions and challenges continue to exist which are discussed throughout our disclosures. For more details on how we apply scenario analyses and consider time horizons, please see pages 90 to 95. For more detail on how we recognise Climate Risk with in our ERMF, the risks ident ified, as well as the processes and toolk its used to do this, see pages 96 to 112 . ![]() 90 Standard Chartered – Annual Report 2022 Strategic report Sustainab il ity To assess climate-related risks and opportunit ies in the short-, medium-, and long-term we use scenario analysis to consider how risks and opportunit ies may evolve under different situat ions. Over recent years, we have progressively strengthened our scenario analysis capabil it ies and developed our infrastructure and capabil it ies to incorporate Climate Risk into data, modelling, and analysis. Despite sign ificantly advancing scenario analysis capabil it ies over the past three years, the modelling of Climate Risk impact over a 30-year period has been expectedly challenging across multiple dimens ions, includ ing scenar io data and pathways, availab il ity of client-specif ic data, and modell ing lim itat ions. Notwithstand ing these challenges, our work to date, using certain assumptions and proxies, ind icates that our business is resil ient to all Network of Central Banks and Supervisors for Greening the Financ ial System (NGFS) and International Energy Agency (IEA) scenarios that were explored. For more details on the lim itat ions pertain ing to the scenar io analysis, please see page 94. With the aim to enhance our internal scenario analysis capabil it ies in line with our Risk Appetite Statement, in 2022 we assessed the impact of Transit ion R isk on our CCIB corporate client portfolio based on three IEA scenarios and three Phase 2 scenarios from the NGFS, and partic ipated in the Monetary Authority of Singapore Industry-Wide Stress Test. We also assessed the impact of sea-level rises under various Intergovernmental Panel on Climate Change (IPCC) Representative Concentration Pathways (RCP) scenarios to explore the Physical Risk impact on the Consumer, Private and Business Banking (CPBB) resident ial mortgage portfol io over short- and long-term time horizons for internal risk management purposes. The results of these analyses are being used to further inform strategy and business planning, set Risk Appetite, ident ify portfol ios with elevated risk concentration, and establish linkages to enhanced credit risk assessments. While we have continued to use external models to support scenario expansion and modelling of Transit ion and Physical Risks, in 2022 we built on this foundation and developed internal model-build ing capab il it ies supported by an external vendor. The outputs of these models will be used to support IFRS9 impact analysis, stress testing runs and various risk management processes. Our aim is that these internal models will provide greater transparency when compared to vendor models and enable us to run various scenarios and calibrate the models as required. We aim to continuously improve these models throughout 2023 to cater for shorter, more plausible scenarios that can inform our business strategy and financ ial plann ing. The following section describes the scenarios we use, their inputs, assumptions, lim itat ions and key ins ights. Scenarios used at Standard Chartered Transit ion R isk scenarios In 2022, we adapted the following scenarios to our CCIB clients: IEA Scenarios: • Net Zero Emiss ions by 2050 scenario, which sets out a narrow but achievable pathway for the global energy sector to achieve net zero CO 2 emiss ions by 2050. • Sustainable Development scenario, which specif ies a pathway to ensure universal access to affordable, reliable, sustainable energy by 2030 (SDG 7.1); substantial reduction in air pollution (SDG 3.9) and effective action to combat climate change (SDG 13). • Announced Pledges scenario, which assumes that all climate commitments made by governments around the world, includ ing Nat ionally Determined Contribut ions (NDCs) and longer-term net zero targets, will be met in full and on time. NGFS Phase 2 framework: This maps scenarios in three different worlds with two scenarios produced under each category: • 'Hot House' world scenarios, also noted as ‘No Addit ional Polic ies’, include only currently implemented or pledged polic ies, wh ich at a global level are insuff ic ient to halt sign ificant global warm ing resulting in severe Physical Risk. • Orderly scenarios assume climate polic ies are introduced early and become increas ingly str ingent, with both physical and transit ion r isks relatively subdued. • Disorderly scenarios explore higher Transit ion R isk due to polic ies be ing delayed or being divergent across countries and sectors. Each of the three IEA and NGFS scenarios are characterised by different levels of Transit ion R isk, driven by various features in each scenario. #### Assessing the resilience of our strategy using scenario analysis ![]() 91 Standard Chartered – Annual Report 2022 Strategic report Features of the IEA and NGFS scenarios used in Standard Chartered scenario analysis IEA NGFS Net Zero Emiss ions by 2050 Sustainable Development Announced Pledges Orderly Transit ion Disorderly Transit ion No Addit ional Polic ies Transit ional R isks 1 High High Moderate Lim ited High Lim ited Scenario object ive To show what is needed to achieve net zero energy-related and industr ial CO 2 emiss ions by 2050 Explores pathway to achieve universal energy access and meet goals to combat climate change Show where current NDCs get world towards 1.5⁰C target – highl ights ambit ion gap against Paris Agreement Early and orderly transit ion towards a low-carbon future Delayed and disorderly transit ion w ith global action commencing only in 2031 Physical risk is high as no new climate polic ies are introduced beyond those implemented by end-2021. Severe flood event assumed in first half of 2022 Temperature rise 2 1.5°C 1.7°C 2.1°C 1.6°C 1.8°C 3.0°C Carbon price 3 in 2050 109 95 71 725 670 4 Oil price increase (2050 vs 2021, %) -62% -29% -9% -13% -9% 76% Gas price increase (2050 vs 2021, %) -49% -48% -48% -76% -87% -76% ¹ http://www.unepfi.org/wordpress/wp-content/uploads/2018/04/EXTENDING-OUR-HORIZONS.pdf ² http://www.unepfi.org/wordpress/wp-content/uploads/2018/07/NAVIGATING-A-NEW-CLIMATE.pdf ³ https://av.sc.com/corp-en/content/docs/emiss ions-wh itepaper.pdf Low High Transit ion R isks Physical Risks High Low NGFS Disorderly Transit ion NGFS Orderly Transit ion IEA Net Zero Emiss ions IEA Sustainable Develop- ment IEA Announced Pledges NGFS Hot House World Scenarios used in Standard Chartered Scenario Analysis NGFS IEA International Energy Agency (IEA) Network of Central Banks and Supervisors for Greening the Financ ial System (NGFS) The size of the bubble is ind icat ive of the gross expected losses assessed for 53% of our corporate portfolio. ![]() 92 Standard Chartered – Annual Report 2022 Strategic report Sustainab il ity Physical Risk Scenarios Our Physical Risk tool, provided by Munich Re’s Location Risk Intelligence platform, uses standardised scenarios and set time horizons to assess future risk from acute and chronic physical risks. The forward-looking risk ind ices are der ived based on the RCP scenarios published by the IPCC. Given the academic challenges with forward-looking Physical Risk scenarios, it is not possible at this point to customise these as we have done for Transit ion R isk scenarios. Forward-looking physical risks, scenarios and time horizons used in our Physical Risk assessments NATHAN climate hazard ind ices Descript ion of current and projected cl imate hazard scores RCP Scenario Time horizon Tropical Cyclone (TC) Tropical Cyclone zones 4.5, 8.5 2050, 2100 River Flood River Flood zones 4.5, 8.5 2050, 2100 Sea-Level Rise Sea-Level Rise zones 2.6, 4.5, 8.5 2100 Heat Stress Heat Stress Index based on range of high-temperature ind icators 2.6, 4.5, 8.5 2050, 2100 Precip itat ion Stress Precip itat ion Stress Index based on heavy precip itat ion ind icators 2.6, 4.5, 8.5 2050, 2100 Fire Weather Stress Climatolog ical index for wildf ire hazard 2.6, 4.5, 8.5 2050, 2100 Drought Stress Drought Stress Index based on Standardised Precip itat ion- Evapotranspirat ion Index (SPEI) 2.6, 4.5, 8.5 2050, 2100 Key scenario parameters that inform Group scenarios Global carbon price In the NGFS orderly transit ion scenar io, the global carbon price rises progressively to above ~$700 by 2050 as the transit ion progresses. By contrast, in the NGFS Disorderly Transit ion scenar io, the global carbon price is very low throughout the 2030s, and then rises steeply in line with the extreme decarbonisat ion effort requ ired in the late 2030s onwards. In the IEA scenarios, the global carbon price is sign ificantly lower compared to NGFS scenar ios and rises to ~$100 by 2050 only in the Net Zero Emiss ions scenar io. Carbon prices can vary sign ificantly across reg ions. In the Middle East and North Africa, and Oceania and Asia Pacif ic, the trend of carbon prices in an orderly scenario is gradual over the 30-year horizon, peaking at around $650. North America and Europe on the other hand experience a more rapid pick up in carbon prices between 2020 and 2025 to approximately $250, after which they gradually increase to reach a price of just under $900 by 2050. 0 100 200 300 400 500 600 700 800 USD2015/tCO 2 2022 2026 2030 2034 2038 2042 2046 2050 NGFS – Orderly Transition NGFS – Orderly Transition NGFS – Hot House World IEA – Net Zero Emissions IEA – Sustainable Development IEA – Announced Pledges Global carbon price used in the NGFS and IEA scenarios and applied at Standard Chartered 0 100 200 300 400 500 600 700 800 900 1000 USD2015/tCO 2 2022 2026 2030 2034 2038 2042 2046 2050 Europe Middle East & North Africa North America Oceania Asia Pacific Regional carbon price used in the NGFS orderly transition scenario and applied at Standard Chartered ![]() 93 Standard Chartered – Annual Report 2022 Strategic report Oil and gas Oil demand varies depending on the scenario pathway taken. In the NGFS 'Hot House’ world scenario, the oil demand remains like the present day across the time horizon, whereas in both NGFS Orderly and NGFS Disorderly Transit ion scenar ios, oil demand begins to fall after 2030 and drops by about half by 2050. By contrast, in the IEA Announced Pledges scenario, the oil demand shows a marginal decline to the present day, whereas in both IEA Net Zero Emiss ions and IEA Susta inable Development, oil demand begins to fall after 2030 and drops by about half by 2050. The oil price is expected to be impacted. Under both NGFS Orderly and NGFS Disorderly Transit ion, the o il price continues to increase steadily by 2050. In the NGFS Disorderly scenario, there is an in it ial increase before it peaks by 2030 and after which it follows the Orderly Transit ion scenar io. In the ‘Hot House’ world scenario, the oil price is expected to increase continuously to above $100 by 2050. By contrast, in the IEA Announced Pledges scenario, the oil price remains sim ilar to the present day across the time horizon, whereas in both IEA Sustainable Development and IEA Net Zero scenarios, the oil price continues to fall and drops by about half by 2050. 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 mboe (Million barrel of oil equivalent)/year 2022 2026 2030 2034 2038 2042 2046 2050 NGFS – Orderly Transition NGFS – Orderly Transition NGFS – Hot House World IEA – Net Zero Emissions IEA – Sustainable Development IEA – Announced Pledges Global oil demand 0 5,000 10,000 15,000 20,000 25,000 30,000 mboe (Million barrel of oil equivalent)/year 2022 2026 2030 2034 2038 2042 2046 2050 NGFS – Orderly Transition NGFS – Orderly Transition NGFS – Hot House World IEA – Net Zero Emissions IEA – Sustainable Development IEA – Announced Pledges Global gas demand 0 20 40 60 80 100 120 $2015/boe (barrel oil equivalent) 2022 2026 2030 2034 2038 2042 2046 2050 NGFS – Orderly Transition NGFS – Orderly Transition NGFS – Hot House World IEA – Net Zero Emissions IEA – Sustainable Development IEA – Announced Pledges Global oil price 0 2 4 6 8 10 $2015/MMbtu (Million British thermal units) 2022 2026 2030 2034 2038 2042 2046 2050 NGFS – Orderly Transition NGFS – Orderly Transition NGFS – Hot House World IEA – Net Zero Emissions IEA – Sustainable Development IEA – Announced Pledges Global gas price ![]() 94 Standard Chartered – Annual Report 2022 Strategic report Sustainab il ity Lim itat ions Despite the efforts in gathering data, sign ificant gaps st ill exist, and we have not been able to run a Transit ion R isk scenario for CPBB. We have a plan to close these data gaps, but it is likely to take several years, includ ing per iod ically working with third parties, use of proxies and engaging clients to gather more informat ion. The impact of the scenarios has so far been based on a simpl ified approach, pr imar ily focus ing on the credit risk of the Group’s portfolios, static balance sheets and conducted at a counterparty level for CCIB clients and postcode level for Consumer Mortgages. Sign ificant increase in credit risk (SICR) thresholds are not incorporated while estimat ing cred it risk losses for climate scenario analysis. Many of the assumptions and methodologies that underpin scenario analysis rely sign ificantly on nascent methodolog ies as well as a dependence on first generation external models and data challenges. Most of these lim itat ions are shared across the industry. Levels of disclosure, climate preparedness and polic ies to l im it em iss ions are often observed to be less mature in some emerging market regions. As more solution providers come to the market and banks start extensively using them to build internal understanding and capabil it ies, the transparency and sophist icat ion of modelling methodologies and assumptions will likely increase. Regional Power Generation Power sector decarbonisat ion is not uniform across all regions in our scenarios, reflective of current market condit ions and reg ional need for energy. It also considers that population growth and economies expand at different rates. Both the NGFS Orderly and NGFS Disorderly Transit ion scenarios are characterised by a highly decarbonised power sector in 2050 with a sign ificant expans ion in renewables. Sim ilarly, IEA Net Zero and IEA Susta inable Development scenarios show sign ificant expans ion in renewables. In the NGFS ‘Hot House’ world scenario, renewables are projected to increase to meet the growing demand, while the total hydrocarbon power production remains relatively stable. Sim ilarly, in the IEA Announced Pledges scenario, renewables increase to meet reduction in hydrocarbon power production. mboe/year 2020 NGFS - Hot House World NGFS – Orderly Transition NGFS – Disorderly Transition IEA – Net Zero Emissions IEA – Sustainable Development IEA – Announced Pledges 2050 2050 2050 2050 2050 2050 CHN EUR IND NAM CHN EUR IND NAM CHN EUR IND NAM CHN EUR IND NAM CHN EUR IND NAM CHN EUR IND NAM CHN EUR IND NAM 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 Other Regional power production by energy mix used in the NGFS and IEA scenarios, applied by Standard Chartered Group Wind Solar Oil Nuclear Hydro Natural Gas Coal Bio Energy ![]() 95 Standard Chartered – Annual Report 2022 Strategic report Transit ion and Phys ical Risk scenario analysis results Modelled results demonstrate the clear benefits of early action to mit igate cl imate change. 1 The modelled results across the IEA and NGFS scenarios have been carried out for approximately 53 per cent of our corporate portfolio, primar ily reflective of the gross transit ion r isks, while client-level transit ion plans have not been factored into the analysis. Relatively lower loss estimates in the NGFS ‘Hot House’ world and the IEA Announced Pledges scenarios reflect the nascent modelling capabil it ies on assessing Physical Risk impact to client asset locations, and second-order impacts such as on the supply chain. The impact from each of the scenarios on aggregate gross expected credit loss in the NGFS and IEA scenarios is shown in the bubble charts on page 91. In comparison to other stress tests conducted across our portfolios, these estimates are relatively muted. The result of the IEA Net Zero scenario is more crit ical, w ith severe loss projection over a 30-year hor izon compared to the other two IEA scenarios. The increase in carbon price, drastic decrease in oil and gas demand and oil price, along with the emergence of a highly decarbonised power sector by 2050 impacts Oil and gas, Commodity traders and the Transportation sectors. The IEA Announced Pledges scenario shows the least severe loss projection over a 30-year hor izon. The scenario depicts a neglig ible increase in carbon price and almost no change in oil demand and price by 2050. The combinat ion of these factors results in a moderate loss project ion. The IEA Sustainable Development scenario depicts a moderate increase in carbon price. Oil demand almost halves and oil price reduces by ~30 per cent over current levels. The combinat ion of these factors results in higher losses for the Oil and gas, Commodity Traders and Automobile sectors. The results for the NGFS Orderly Transit ion scenar io are driven by an increase in carbon price and drop in oil and gas demand. The steady increase in carbon price from 2021 to 2050 leads to an overall increase in defaults, driven by the decrease in revenue and profitab il ity levels due to an increase in carbon price related costs. By contrast, the NGFS Disorderly Transit ion scenar io sees fast-growing carbon prices after 2030, which impacts company Probabil ity of Defaults (PDs) and leads to an increase in loss project ions. The Commod ity Traders, Oil and gas and Automobiles sectors are the most impacted in this scenario. The concentration of the Group’s portfolio exposure for the top eight resident ial mortgage portfol ios exposed to extreme sea-level rise risk was computed using the Munich Re model’s outputs. It has been observed to remain stable at 2 per cent for RCP 4.5 and 8.5 scenarios and at 1 per cent under the RCP 2.6 scenario. Developing our capabil it ies We have ident ified several areas for future development: • Improved data availab il ity and abil ity to gather data across our corporate and retail clients (e.g. client-level emiss ion intens ity, phys ical locations of assets, power consumption patterns). Through our client-level climate risk questionna ires (cover ing approximately 65 per cent of our total corporate exposure in 2022) we gather informat ion on client-level transit ion plans, includ ing potent ial client outreach for clients with high Transit ion R isk and low transit ion m it igat ion levels. • Continued improvement in scenario design and modelling capabil it ies, with an established roadmap to develop this capabil ity in-house and build internal models. • In line with plans to develop internal modelling capabil it ies, engage an external vendor and/or partner with our academic adviser (Imperial College London) to design a range of scenarios (e.g. short-term, bespoke scenarios targeted to our portfolios and markets, and considerat ion of second-order impacts). • Despite these lim itat ions, our intent ion is to focus on how Climate Risk management can inform portfolio management and support opportunity ident ification w ith clients on their transit ion and adaptat ion pathways. Qualitat ive rev iew of climate risks and opportunit ies in annual business strategy and financial plann ing In 2022, Climate Risk was considered as part of our formal annual corporate strategy and financial plann ing process. In addit ion, we developed management scenar ios with an aim of strengthening our business strategy and financ ial planning to support the Group’s net zero journey. We use both qualitat ive and quant itat ive aspects focus ing on revenue reliance from clients in high-carbon sectors and/or locations in regions most exposed to Physical Risk, consider ing adequacy of mit igat ion plans. Where applicable, results are then independently reviewed by regional and client-segment Chief Risk Officers (CROs) and the Climate Risk team. Climate Risk impact is also included in the Risk review of our corporate plan, which is considered by the Board as part of their approval of the overall Corporate Plan. The 2023 Corporate Plan includes an increase in loan impa irment due to the impact from Climate Risk. In most cases, the physical and transit ion r isks ident ified were assessed to be well controlled in the short term. We are not actively targeting growth in most of the high-carbon sectors and are instead prior it is ing susta inable finance products to clients in high-carbon sectors to decarbonise their business models. Growth ambit ion is shift ing to lower-carbon sectors such as clean technology. Our sustainable finance prior it ies, includ ing new emerg ing products such as sustainable deposits, carbon trading and ESG Advisory, and dedicated transit ion frameworks, seek to respond to trans it ion r isks in the short term, strengthening our resil ience towards a 2°C or lower transit ion scenar io. However, longer-term transit ion r isks were highl ighted, part icularly for the Africa and Middle East (AME) region, given its dependency on fossil fuels; and longer-term physical risks were deemed to be most relevant for the Asia region. 1 The modelled results across the IEA and NGFS scenarios have been carried out for approximately 53% of our corporate portfolio reflective of primar ily the gross transit ion r isks while client-level transit ion plans have not been factored into the analysis. Relatively lower loss estimates in the NGFS ‘Hot House’ world scenario and the IEA Announced Pledges scenario reflect the nascent modelling capabil it ies on assessing Physical Risk impact to client asset locations and second-order impacts such as that on the supply chain. The impact from each of the scenarios on aggregate gross expected credit loss in the NGFS and IEA scenarios is shown in the bubble charts on page 91. In comparison to other stress tests conducted across our portfolios, these estimates are relatively muted. ![]() 96 Standard Chartered – Annual Report 2022 Strategic report Sustainab il ity We are exposed to Climate Risk through our clients, our own operations and from the sectors and markets we support. Preparations to manage Climate Risk as a Prudential Financ ial risk began in 2019. At that time, our Group Chief Risk Officer took responsib il ity for Climate Risk and the requirements set out in the Prudential Regulation Authority's Supervisory Statement 3/19. Climate Risk was also incorporated into our Group-wide risk taxonomy through the ERMF (where it is defined as ‘the potential for financ ial loss and non-financial detriments aris ing from cl imate change and society’s response to it’). Since then, we have designed an approach that begins to integrate Climate Risk with other Princ ipal R isk Types (PRTs) with in our central ERMF, based around two pr inc iples: • Treat Climate Risk like a tradit ional r isk type. Climate Risk may lead to financial losses and non-financial detr iments, much like Credit Risk, and should be managed as such to lim it the Group’s exposure to detr iments. This means embedding Climate Risk considerat ions into our exist ing r isk ident ification and management processes, governance, reporting, scenario analysis (includ ing stress test ing), strategy and financial plann ing. • Recognise and build for where Climate Risk is different. Unlike tradit ional r isk types, Climate Risk is likely to crystallise over much longer time horizons and is inherently diff icult to quantify. Its unique features and a need for granular forward-looking measurements require the use and development of new tools and methodologies to quantify and analyse the impl icat ions. Climate Risk The potential for financ ial loss and non-financial detr iments aris ing from climate change and society’s response to it. Sub-risk types Physical Risk Risks aris ing from increas ing sever ity and frequency of climate- and weather-related events. These events can damage property and other infrastructure, disrupt business supply chains, and impact food production. This can reduce asset values, potentially resulting in lower profitabil ity for companies. Indirect effects on the macroeconomic environment, such as lower output and productiv ity, exacerbate these d irect impacts. Acute Specif ic event-dr iven weather events, includ ing increased severity of extreme weather events, such as cyclones, hurricanes, floods or wildf ires. Chronic Longer-term shifts in climate patterns, such as changing precip itat ion patterns, sea-level rise, and longer-term drought. Transit ion R isk Risk aris ing from the adjustment towards a carbon-neutral economy, wh ich will require sign ificant structural changes to the economy. These changes w ill prompt a reassessment of a wide range of asset values, a change in energy prices, and a fall in income and creditworth iness of some borrowers. In turn, th is entails credit losses for lenders and market losses for investors. Climate Risk is considered an Integrated Risk Type because it manifests though impacted Princ ipal R isk Types (PRTs) or overarching risk types. Princ ipal r isks are those risks that are inherent in our strategy and business model and are also formally defined in the ERMF. We have ident ified seven PRTs that are most mater ially impacted by potential climate risks and describes transmiss ion channels for Cl imate Risk manifest ing as financial and non-financial r isk. Climate Risk taxonomy #### Mitigating the financial and non-financial risks from climate change ![]() 97 Standard Chartered – Annual Report 2022 Strategic report Exist ing r isk classif icat ion and Climate Risk transmiss ion channels in the context of the Group’s exist ing r isk types. Credit CCIB Disrupt ion to cl ient business models or operations from both Transit ion and Physical Risk events may increase operating expenditure as well as cause disrupt ion to revenue. A client’s profitab il ity can be impacted due to a reduced demand in high- carbon products or services, impacted asset/collateral valuations and increas ing capital expenditure driven by regulatory carbon penalties and investment in new technology aimed at encouraging transit ion to a low-carbon economy. The impact to profitab il ity can thereby affect their capacity to generate the income required to repay debt, or the capital and collateral required to back the loan. Credit CPBB Physical risks, such as ris ing sea levels and increas ingly severe flood events, could damage property and impact collateral valuations, or through direct damage or loss of insurance, could also adversely affect repayment abil ity and leading to potential increases in credit losses. Furthermore, increased default risk and losses may arise through changes to the economic environment as the economy transit ions towards lower emiss ions. Compliance Risk of fail ing to comply w ith current and emerging Climate Risk regulations globally. For example, the Prudential Regulation Authority’s Supervisory Statement SS3/19 and the Monetary Authority of Singapore’s Environmental Risk Management guidel ines. Reputational and Sustainab il ity Potential for stakeholders to view the Group negatively due to actual or perceived actions or inact ions related to our stated climate, ESG and net zero ambit ion. Increas ing expectations on banks from governments, regulators, NGOs, investors and ind iv iduals brings heightened reputational risks. Traded Acute Physical Risk events or an extremely disrupt ive transit ion can cause sudden changes in the fair value of assets driven by commodity price changes. Addit ional impact may result due to trigger sales, sudden and negative price adjustments where Climate Risk is not yet incorporated into prices. Country Climate-related risks may adversely impact sovereigns' economic strength and impact their abil ity to ra ise taxes and increase their cost of borrowing, directly impact ing the ir overall creditworth iness. Phys ical risks from increas ing frequency and severity of extreme climate change- related weather events may lead to the degradation of exist ing infrastructure, large-scale disrupt ions, displacement of assets and mass migrat ion, wh ile transit ion r isk arises from a sovereigns' efforts to transit ion towards a low- carbon economy which leads to policy, market and technology shocks. Treasury Disrupt ion from weather events and adverse impacts due to the transit ion to a low-carbon economy, on client business models and financial stab il ity of cl ients that provide us liqu id ity, can impact capital adequacy and/or liqu id ity levels needed to ensure financial stab il ity during periods of stress. Operational and Technology Climate-related risks manifest when acute or chronic physical risks, such as flooding or storms disrupt our own properties (includ ing branches, offices, data centres), client service resil ience, th ird- party corporate service arrangements and material supply chain arrangements. Climate Risk manifests through exist ing r isk types Princ ipal R isk Types: Financ ial Non-financial Physical Risk Transit ion R isk ![]() 98 Standard Chartered – Annual Report 2022 Strategic report Sustainab il ity Across each risk type, we provide some early-stage prototype metrics that provide quantitat ive est imates of gross transit ion and gross physical risks using the toolkits explained above and are used to inform risk management for each of the PRTs integrated with climate-related risks. Depending on the PRT, metrics are used for risk-management activ it ies and processes spanning across stress testing, transaction assessments, client reviews, portfolio assessments, risk-appetite metrics and management informat ion. For all the metr ics presented, there are challenges with availab il ity of reliable data, and methodologies that are simpl ist ic and first-generation, placing some reliance on proxy informat ion. As methodologies and learnings emerge, we intend to progressively refine and update our approach, and to extend the coverage of client or product groups captured. Our climate toolkit – processes for ident ify ing and assessing Climate Risk While the outputs and find ings inform our risk management decis ions, it is important to be aware of the lim itat ions when assessing Climate Risk. Approaches to quantify ing Cl imate Risk are nascent and data availab il ity and coverage present challenges. This is particularly true in emerging markets where Climate Risk-related disclosure and preparedness can be less advanced. This places some reliance on proxy informat ion and we will refine our evaluations and methodologies progressively as the availab il ity and quality of data improves. To enable us to gather more data and manage and monitor Physical and Transit ion r isks actively, we continue to conduct case level reviews for enhanced due dil igence on h igh ‘Climate Credit’ and ‘Climate and RSR’ for our corporate clients. The toolkits are used to ident ify and assess: • Physical Risk: current-day and longer-term time horizons (2050, 2100) under representative concentration pathway (RCP) scenarios 2.6, 4.5 and 8.5, for acute weather events (e.g. storms, floods or earthquakes) and chronic sea-level rise. • Transit ion R isk: translates orderly, disorderly and ‘hot-house’ world transit ion scenar io variables from NGFS and Net Zero Emiss ions by 2050, Susta inable development and announced pledges scenario variables from IEA to financ ial impact at a client level. See page 94 for more detail on how we use these scenarios and their lim itat ions. • Temperature alignment: provides a temperature score to ind icate cl ient- and portfolio-level global warming potential up to 2030. ![]() 99 Standard Chartered – Annual Report 2022 Strategic report Overview of our Climate Risk toolkit and applicat ion Advisor or Data Provider Asset Class or Operations Metrics Scope Time Horizon Scenario Applicat ion Munich RE • Corporate • Retail mortgages • The Group’s offices, branches and data centres Location-based hazard and risk scores • Tropical Cyclone • River • Flood • Sea-Level Rise • Heat Stress Index • Precip itat ion Stress Index • Fire Weather Stress (climatolog ical index) • Drought Stress Index Current day, 2050, 2100 RCP 2.6, 4.5, 8.5 Assessing Physical Risk for: 1. Client assets and operating locations as well as property collateral. 2. Retail mortgages – portfolio concentrations by hazard type. 3. The Group’s location strategy for operations – branches, offices and data centres, other sites. 4. The toolkit also helps inform the Group’s risk appetite across all risk types. BlackRock • Corporate Temperature Alignment • Generate a company’s TA score to measure its impact on the climate through a dedicated methodology 2030 2 degrees only Reputational and Sustainab il ity Risk assessment for CCIB clients in high carbon-emitt ing sectors BlackRock • Corporate • Sovereigns • Financ ial impact • Equity valuations • Sovereign bond valuations • Using Standard Chartered data and configurations, run BlackRock’s Aladdin Climate Transit ion R isk models to translate transit ion scenar io variables to impact on company financials and probabil it ies of default 1 Up to 2050 Scenarios for categories orderly, disorderly and hot-house world, e.g. NGFS Phase 2, IEA Transit ion R isk assessment over various scenarios for corporate and sovereign clients are used for: 1. Client-level review as part of credit decis ion-mak ing. 2. Portfolio concentration measures includ ing r isk appetite. 3. Scenario analysis and stress testing. Baringa • Corporates • Sovereigns • Financ ial impact • Temperature Alignment (TA) • IEA scenario expansion • Detailed stakeholder walk-through session to review and interpret the results. Up to 2050 Scenarios for categories orderly, disorderly and hot-house world, e.g. NGFS Phase 2, IEA Transit ion R isk assessments over various scenarios for corporate and sovereign clients are used for: 1. Client-level reviews as part of credit decis ion-mak ing. 2. Portfolio concentration measures includ ing R isk Appetite. 3. Scenario analysis and stress testing. S&P Global • Provides addit ional climate data Emiss ions informat ion across clients (includ ing history) Corporate client asset-location data Absolute emiss ions (tonnes of CO 2 e) and emiss ions intens it ies by revenue (tonnes of CO 2 e/$ mill ion) for Scope 1 and 2 and where available for Scope 3 emiss ions. (Client-level emiss ions were only available for about 37 per cent of corporate clients, so sector average proxies were used for the remain ing ent it ies.) Geolocation for clients Current Day and Histor ic N/A Inputs into the Group’s client-level risk assessment for corporate clients and net zero modelling. Imperial College London • Academic advisory and research partnership 1. Long-term research on Climate Risk. 2. Advisory on shorter-term, internally focused projects to enhance Climate Risk capabil it ies. 3. Train ing and educat ion of our colleagues, Management Team and Board. N/A N/A 1. The Group has partnered with Imperial College London to produce a three-part series on ‘Future of Food’ research, exploring the risks and opportunit ies fac ing the global agricultural sector from climate change. Deloitte • Corporates • Sovereigns Forecasting the financial impact • Transit ion R isk • Physical Risk • Climate scenario expansion Up to 2050 NGFS scenarios for orderly transit ion, disorderly transit ion, and hot-house world We are developing our own internal Climate Risk models to reduce reliance on vendor models and increase transparency and control in the assessment of the impact of Climate Risk. Once the models have gone through our model risk management governance and approval process, the outputs will be used to support management in their assessment of the impact of climate risk on IFRS 9 expected credit losses, stress testing runs, and related risk management processes. 1 The inclus ion of the Aladd in Climate analytics, provided by BlackRock, contained in this report should not be construed as a characterisat ion regard ing the material ity or financial impact of that informat ion. The Aladd in Climate analytics include non-financ ial metr ics that are subject to measurement uncertaint ies resulting from lim itat ions inherent in the nature and the methods used for determin ing such data. The Aladdin Climate analytics are not fixed and are likely to change and evolve over time. The Aladdin Climate analytics rely on comparatively new analysis and there is lim ited peer rev iew or comparable data available. BlackRock does not guarantee and shall not be responsible for the content, accuracy, timel iness, non-infr ingement, or completeness of Aladd in Climate analytics contained herein or have any liab il ity resulting from the use of the Aladdin Climate analytics in this report or any actions taken in reliance on any informat ion here in. Some results are disclosed in this report to illustrate our steps in beginn ing to quant ify the impact of Climate Risk. We fully intend to develop and mature our applicat ion of Cl imate Risk assessment over the coming years. Physical Risk Transit ion R isk ![]() 100 Standard Chartered – Annual Report 2022 Strategic report Sustainab il ity Process to embed Climate Risk considerat ions Princ ipal R isk Type Framework/ Polic ies/ Standards Risk Appetite Reporting Further Details Credit Risk – CCIB Y 1 (Effective July 2022) Y Y • The Climate Risk Standard, effective from 1 July 2022, mandates all new and exist ing corporate cl ients (CG 1-12) with an advised lim it greater or equal to $20m to be assessed for Climate Risk considerat ions. • A new technology solution called the ESG Navigator has been deployed to assess Climate Risk considerat ions for all in scope clients since July 2022. • Throughout 2022 we have covered ~80 per cent of high Transit ion R isk sectors (i.e. Oil and gas, Min ing and Power) and ~65 per cent of the Group’s total corporate exposure. • By 2023, we aim to achieve 80 per cent coverage of the Group’s total corporate exposure and extend Climate Risk-related considerat ions to deepen credit underwrit ing and broaden l inkages, account management and client engagement. Credit Risk – CPBB Y Y Y • In our progress for 2022, we have expanded Physical Risk assessments to addit ional markets w ith in Consumer Mortgage (Bangladesh, V ietnam, Jersey) and new products (Business Banking Client Mortgage) and Medium Enterprises (ME). These are over and above the Top 8 markets for the Group covered in 2021. • The metrics are refreshed on a quarterly basis and reported to key governance committees. Country Risk 2 Y Y Y • Our methodology for Physical and Transit ion R isk Sovereign Rankings now includes external benchmarks as key inputs and factors in Transit ion R isk mit igat ion measures being put in place by sovereigns. • We have partnered with Imperial College to develop Physical Risk Report Cards for key sovereigns in Asia, which provide a detailed breakdown of the scores, along with key takeaways and histor ic cl imate disaster statist ics. We intend to expand this to other countries. Reputational and Sustainab il ity Risk Y Y Y • Adherence to net zero RA thresholds for our Phase 1 high-carbon sectors will be monitored as part of management informat ion. The Cl imate Risk Decis ion Framework (CRDF) which helps assess climate-related reputational risk for clients in high transit ion sectors is now embedded with in the Group Reputational Risk Standards. The framework details a set of referral triggers to the Group Climate Risk team to consider for enhanced due dil igence and rating change methodology. • We aim to become net zero in our financed emiss ions by 2050 and have set inter im targets for spec if ic h igh-carbon sectors. This will be extended to other sectors through 2023. Operational and Technology Risk Y In-progress 3 Y • All new property sites onboarded with in the Group are assessed for Phys ical Risk vulnerabil it ies. Material Third-Party Corporate Service arrangements in scope for Business Continu ity Management controls are subject to Cl imate Risk assessment as part of third-party continu ity plans. Traded Risk Y (Effective May 2022) Y Y • The Traded Risk stress testing framework has been updated to cover market impacts from Climate Risk includ ing an assessment of Trans it ion R isk and two Physical Risk scenarios as part of the global Traded Risk scenarios inventory. These flow into exist ing Traded R isk Board-level RA metrics. Compliance Risk Y N 4 N 4 • We have an established process to mainta in overs ight of climate risk-related regulations across footprint markets centrally. Treasury Risk N 3 N 4 N 4 • We consider Capital requirements as part of the Group Internal Capital Adequacy Assessment Process (ICAAP). On the liqu id ity side, we have leveraged our client-level Climate Risk assessments to assess climate risk- related vulnerabil it ies and readiness of our top corporate liqu id ity providers. 1 Relevant Framework/Polic ies/Standards, RA metr ics and Risk Reporting are available/implemented. 2 Integral component of the ERMF. 3 Plans are in place to integrate Climate Risk into the Framework/polic ies/standards, RA and R isk Reporting. 4 Plans to integrate Climate Risk into the Framework/polic ies/standards, RA and R isk Reporting will be developed. Processes for managing Climate Risk Integrating climate-related risks into overall risk management Climate Risk is recognised in the Group ERMF as an integrated risk type, i.e. it manifests through exist ing r isk types and is managed in line with the impacted risk type frameworks. We manage Climate Risk according to the characterist ics of these PRTs and are embedd ing climate-risk considerat ions into the relevant frameworks and processes for each. In 2022, we have continued to build Climate Risk into exist ing r isk-management processes, to enhance our abil ity to ident ify, assess and mon itor across risk types. We continuously look for ways to refine and update our approach as methodologies and learnings emerge, includ ing the expansion of client or product coverage where possible. The areas where we have made progress to embed Climate Risk considerat ions w ith in bus iness and across PRTs are listed below. ![]() 101 Standard Chartered – Annual Report 2022 Strategic report Assessment of gross Physical Risk profile for Consumer Mortgages showing outstanding exposure subject to very high gross Physical Risk \* Outstanding exposure at very high gross Physical Risk % Physical risk event Korea Hong Kong Taiwan India Malaysia Singapore UAE Indonesia Others Globally Flood (Acute) 14% 45% 12% 23% 6% 3% 30% 21% 52% 26% Sea-level rise (Chronic – RPC 8.5) 1% 4% 0% 1% 0% 0% 36% 2% 1% 2% \* Data as of Sep 22 A deeper dive into each risk type is provided in the following section. Credit Risk For many banks, Credit Risk presents the largest proportion of risk they face on their books. The industry has developed sophist icated management frameworks, wh ich provide a baseline level of effective mit igat ion from risks. However, these industry-wide, exist ing processes have not yet evolved to account for the unprecedented level and type of risk that climate change brings, and addit ional cl imate risk-specif ic analysis is required as the tools and methodologies mature. Consumer, Private and Business Banking (CPBB) Credit Risk For CPBB, we have made progress in embedding Climate Risk into mainstream portfolio management in 2022. Our approach is currently more advanced for the Consumer Mortgage business, which is CPBB’s largest portfolio and for which there are ident ifiable and measurable r isks applicable to the resident ial property collateral. Across CPBB, our r isk ident ification and measurement focuses on acute and forward-looking physical risks (storm, flood, wildf ire, and sea-level rise) across key markets. In 2021, this covered approximately 65 per cent of the total CPBB consumer business book. In 2022, this was expanded to three addit ional markets for Consumer Mortgages and select markets for other CPBB products (Business Banking Client Mortgages and Medium Enterprises, representing 3 per cent and 1.6 per cent of the consumer business book respectively). We use the output of the Physical Risk assessments of our Consumer Mortgage property locations to inform discuss ions during our credit portfolio quarterly reviews, and to period ically mon itor concentration exposure to the perils ident ified above. With in the Consumer Mortgage bus iness, we have developed internal guidance on physical Climate Risk management for all our markets. The recommendations covered through this include the establishment of a zoning policy with different iated cr iter ia accord ing to the level of exposure concentration to physical risk, the setting of risk mit igat ions where appropriate, as well as accounting for government-led adaptation measures on Physical Risk if it has not been considered before. A key design step has been to set up the framework for a holist ic approach, cater ing for market forces when establish ing the zon ing policy, includ ing the sett ing of appropriate trigger monitor ing and escalat ion measures. We currently offer different iated loan-to-value for select ESG focused structured products, which align with the Bank’s Green and Sustainable Product Framework. The focus for 2023 will be to further develop our approach for assessing the physical and transit ion impact of unsecured consumer lending products such as credit cards and personal loans and in it iate work on measuring Transit ion R isk vulnerabil it ies of our Consumer Mortgage portfolios. We aim to util ise prox ied financed emiss ions for our key markets to begin model transit ion r isk for consumer mortgages. We recognise that the data lim itat ion will continue to persist given the lack of property-level data on energy consumption and lim ited energy label coverage in the key markets we operate in. To improve the accuracy of our financed emiss ions measurement capabil it ies, we partnered with Imperial College to refine our energy consumption derivat ion methodology, includ ing the enhancement of our em iss ions factor database for major markets. We undertake quarterly scenario analysis for the eight key Consumer Mortgage portfolios, focusing on sea-level rise across 3 RCPs (2.6, 4.5, 8.5) in the year 2100. ![]() 102 Standard Chartered – Annual Report 2022 Strategic report Sustainab il ity Analysis of Consumer Mortgage portfolio showing outstanding exposure subject to very high gross Flood Risk Physical risk event Korea Hong Kong Taiwan India Q4-21 Q3-22 Trend Q4-21 Q3-22 Trend Q4-21 Q3-22 Trend Q4-21 Q3-22 Trend Flood (Acute) 14.2% 13.8% 45.0% 45.0% 11.6% 11.8% 22.0% 23.0% Physical risk event Malaysia Singapore UAE Indonesia Q4-21 Q3-22 Trend Q4-21 Q3-22 Trend Q4-21 Q3-22 Trend Q4-21 Q3-22 Trend Flood (Acute) 6.0% 5.7% 2.8% 3.1% 30.1% 30.4% 19.7% 20.5% Note: Increase is called out for markets showing a rise of >5% year-on-year in flood risk exposure concentration. Caution about the metrics The metrics are based on outputs from Munich Re’s natural catastrophe model and the results do not factor in exist ing adaptation measures, governmental polic ies to protect and build for changing weather, and structural adaptation (e.g. age and quality of construction, or flood defences and dams protecting the property). Over time, sovereigns and policymakers are expected to drive market trends such as investment in adaptation financ ing, technolog ical advancements, innovat ive r isk transfer and mit igat ion approaches to combat the potential impacts of climate change. Presently, we do not see any sign ificant stress over the short-term horizon on account of Physical Risk in our Consumer Mortgage and Business Banking Mortgage portfolios. Corporate, Commercial and Institut ional Banking (CCIB) Credit Risk Our client-level Climate Risk Questionna ire (CRQ) helps us assess the potential financ ial r isks from climate change using both quantitat ive and qual itat ive informat ion across five key pillars. The assessment presents a consolidated view of how the ind iv idual company has performed with regards to overall Climate Risk, how it sits with in the sector as well as a reg ional view against benchmarks. Physical Risk for our corporate client locations is assessed using Munich Re’s NATHAN tool, which helps us evaluate the impact from current and acute risks of operating asset locations as sourced from S&P's Trucost asset location data. A view of Transit ion R isk across a variety of global transit ion pathways is derived using a climate change scenario modelling tool as well as a temperature alignment tool. We have also ident ified relevant cl imate policy inputs at a sector and regional level and assessed the specif ic impact timeframe that an entity may face, to provide an understanding of Transit ion R isk applicable to each client. Their outputs are fed into our client-level Climate Risk Questionna ires (CRQ) to help to create a mult i-dimens ional consolidated assessment of Climate Risk. By the end of 2022, we had embedded assessments in our exist ing cred it process for clients covering approximately 85 per cent of high Transit ion R isk sectors (i.e. Oil and gas, Min ing and Power) and 65 per cent of the Group’s total corporate exposure (c. 2,100 clients assessed). Where climate change is expected to manifest into a financ ial risk in the near-term, we may find it appropriate to apply warning signals, such as risk triggers through an enhanced due dil igence conducted by the Group Cl imate Risk and Credit Risk teams. In 2023, we intend to look at implement ing guidance to allow adjustments to credit grading scorecards and addit ional mon itor ing mechan isms, for example through our Early Alert process. One of our key focus areas is to develop a pilot framework to help inform these credit decis ions and we aim to embed this framework by December 2023. ![]() 103 Standard Chartered – Annual Report 2022 Strategic report \* Data as of Nov 22 Our Climate Risk client-level assessment for Credit Risk and data sources In 2023, we aim to refresh exist ing assessments as well as expand our coverage to c.4,000 clients covering 80 per cent of the overall corporate net nominal exposure. Addit ionally, as part of our ongoing agenda to accurately measure the total impact from Climate Risk, we have started to develop an approach for assessing the Climate Risk of our clients’ collateral across property, shipp ing and av iat ion and w ill begin incorporating this into our Climate Risk assessments when finalised. For the sh ipp ing and av iat ion sectors, we assess the vulnerabil ity to trans it ion r isk of the underlying collateral asset itself (aircraft or carriers), whereas for property collateral, Physical risk related vulnerabil it ies are prior it ised. The client assessments not only help form a view of the overall Climate Risk vulnerabil it ies and readiness for clients but provide a tool for data gathering and analysis of the underlying themes that drive Climate Risk and its mit igat ions. The following section gives ins ights ga ined from all completed Client Risk assessments performed over 2022 (2,100 entit ies covering approximately 65 per cent of corporate net nominal exposure), compared with the previous year (covering 1,940 entit ies), to h ighl ight the d irect ion of travel across our portfol io. The charts ind icate the percentage of cl ients with in our assessed portfolio performing Climate Risk management activ it ies. Governance and Disclosures Identify any acknowledgment of climate change related risks in public reports, defined targets, management incent ives al ignment with Climate Risk, TCFD aligned disclosures. It helps to review the level of Climate Risk management a company has in place, as well as assess how the market can perceive their sophist icat ion of climate disclosures. TCFD disclosures, CDP, ESG, Sustainab il ity reports, annual reports Standard Chartered’s corporate client Climate Risk assessment framework Data sources Gross Physical Risk Modelled output to assess the current day and forward-looking risks to client’s operating locations across a number of climate related hazards. S&P (asset level data), Climate Change Scenario Model and Munich Re’s NATHAN & Climate tool Physical Risk Adaptation Acknowledgment and assessment of Physical Risk to client’s business, its supply chain and on assets from a forward- looking perspective, quantif icat ion of Physical Risk impact, adaptation measures to date, adaptation measures in plan, includ ing insurance coverage. TCFD disclosures, CDP, ESG, Sustainab il ity reports, annual reports Gross Transit ion Risk Identify Transit ion R isk of a company based on the client’s reliance on fossil fuels as part of product/service mix, potential financ ial impact under various climate scenarios as well as potential macro and micro-climate risks via the tracking of climate transit ion pol ic ies across all footprint regions and sectors. Addit ionally, we look at how the entity performs across these areas, with respect to the average of the sector in which they operate, to ident ify divergences from sector transit ion expectat ions. S&P for client-level emiss ions data, temperature alignment model and climate change scenario model Transit ion Risk Mit igat ion Acknowledgement of Transit ion R isk and a display of credib il ity of a client’s business and supply chain focused on assessing their emiss ions reporting, emiss ions reductions targets and progress, plans to reduce reliance on fossil fuels, capital expenditure or investment in low carbon technologies, adaptabil ity for change in consumer demand as well as strategy plans towards implement ing internal carbon pric ing or other offset related mechanisms. TCFD disclosures, CDP, ESG, Sustainab il ity reports, annual reports ![]() 104 Standard Chartered – Annual Report 2022 Strategic report Sustainab il ity Governance and disclosures This pillar of our client assessment seeks to understand how climate-related responsib il it ies are managed w ith in an organisat ion w ith a stronger score ind icat ing a greater degree of client readiness. Two-thirds of clients now acknowledge Climate Risk as a financ ial r isk to their direct operations and/ or supply chain, while only 58 per cent have a quantif iable climate policy or commitment in place. These have both increased since our 2021 assessment, reflecting an increase in our coverage, as well as a posit ive movement from compan ies to disclose their climate-related risks, moving to over half of assessed clients. Transit ion R isk readiness This pillar of the CRA covers the intent, progress and capabil ity of the cl ient to mit igate the r isks in transit ion ing to a net zero economy. There has been a drop in the percentage of clients reporting Scope 1, 2 & 3 emiss ions. Desp ite this, the number of clients that have set Scope 1, 2 & 3 emiss ions reduction targets has grown, showing a posit ive trend towards setting quantif iable comm itments to action against climate change. This is encouraging as it shows quantif iable steps taken by corporates to act on their transit ion plans. Physical Risk readiness Through this pillar, we are seeking to assess if clients have quantif ied the financial impact of physical risks and understand if they are taking proportionate adaptation actions. We have seen a posit ive movement in the number of clients acknowledging the impact that physical risks could have on their direct operations, up to 54 per cent, while those adopting adaptation measures against these risks has only climbed by 1 per cent. This is not surpris ing, as we have seen l ittle progress in industr ies towards phys ical adaptation measures given the long-term and large-scale nature of mit igants. Acknowledges c limate risks in annual/ E SG reporting 67% 64% 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 55% 58% 49% 55% 29% 32% 37% 29% 33% 29% Has quantifiable climate policy or commitment Has board member with climate oversight Have management incentives linked to climate Has TCFD-aligned disclosures Discloses to CDP Reports Scope 1 & 2 emissions Percentage of clients in scope Reports Scope 3 emissions Has transition plan to meet current or future regulations Has made plans for investment in low- carbon technologies Has Scope 1 & 2 reduction targets Has Scope 3 reduction targets Client performs financial transition scenario analysis 61% 71% 52% 61% 43% 43% 54% 49% 49% 35% 17% 13% 21% 23% 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 Acknowledges Physical Risk Assessed Physical Risk Have taken adaptation measures to date or made future plans to Estimates a financial impact 54% 50% 39% 34% 40% 39% 24% 22% Percentage of clients in scope 2022 2021 2022 2021 2022 2021 2022 2021 Results from our client-level Climate Risk assessment on governance and disclosure\* 2022 (2,109 clients) 2021 (1,940 clients) Results from our client-level Climate Risk assessment on transit ion read iness\* 2022 2021 Results from our client-level Climate Risk assessment on Physical Risk readiness\* 2022 2021 \* Data as of Nov 22 \* Data as of Nov 22 ![]() 105 Standard Chartered – Annual Report 2022 Strategic report Client-level Climate Risk assessment scores by region 18 Worst Best 71 How do different regions fare in their risk and preparedness? 2022 Assessment\* Number of clients Overall score Governance & disclosures Gross Physical Risk Physical Risk adaptation Gross Transit ion Risk Transit ion R isk Mit igat ion Asia 1,335 41% 40% 66% 27% 42% 36% Africa & Middle East 386 37% 31% 67% 21% 38% 27% Europe & Americas 388 57% 63% 81% 47% 46% 58% Total 2,109 43% 43% 69% 29% 42% 38% 2021 Assessment Number of clients Overall score Governance & disclosures Gross Physical Risk Physical Risk adaptation Gross Transit ion Risk Transit ion R isk Mit igat ion Asia 1,238 40% 36% 67% 27% 36% 36% Africa & Middle East 340 38% 34% 69% 25% 33% 32% Europe & Americas 360 51% 53% 78% 39% 37% 50% Total 1,938 42% 39% 70% 29% 35% 38% \* Data as of Nov 22 The average overall score in our client-level Climate Risk assessment has remained at around 43 per cent in 2022. This is despite our increased coverage of clients with high Climate Risk scores. Scores were on average better in developed economies and regions (EU, US, UK) and on average lower in the emerging markets (AAME), and this observation was seen consistently across the assessment pillars. This is driven by the increased level of climate policy and regulation in the developed economies and regions; however, clients in these markets are also subject to higher expectations and scrutiny as a result. Physical Risk adaptation scored the lowest across all five questionna ire sect ions, ind icat ing a low readiness of corporates to potential climate-related events, while gross Physical Risk scores decreased to 69 per cent in 2022 from 70 per cent in 2021. This is driven by an increased assessment coverage in our Asia region, where there is a higher frequency of physical risk hazards (e.g. storms and flooding). Overall levels and consistency in the availab il ity of climate informat ion from publ ic disclosures is still low, and in many cases absent, which highl ights the importance of carrying out direct engagement with our clients. Benefits from the client engagement We learned a lot from undertaking the client assessments, and so did our clients. The benefits included: • Improvement of our data coverage, especially where this was not publicly available, and strengthening the quality of our risk assessments and modelling capabil it ies. The client-level risk assessments are now being integrated into the CCIB Credit Risk underwrit ing process. • Clients were interested in seeing their Climate Risk profiles, as well as the tools and methodologies we use to quantify their Transit ion R isk. They were also interested in how to improve their climate-related reporting and disclosures. • Internal capabil ity-bu ild ing of our cl ient bankers and risk teams, with all affected frontline staff required to complete internal climate-risk train ing. ![]() 106 Standard Chartered – Annual Report 2022 Strategic report Sustainab il ity Vulnerable sectors to Climate Risk Climate change impacts almost all the sectors with in the economy. However, we note that there are certain sectors that are more vulnerable to climate risks under different Transit ion Risk and Physical Risk scenarios. Our approach to Transit ion R isk assessment is data-led, covering a broad range of sectors and at a company level where data is available and use of proxies in absence of granular informat ion. We use a cl imate-change scenario model, which helps us to assess potential credit-grade movements for our corporate clients over a 30-year time horizon for a range of scenarios ranging from NGFS scenarios as well as the IEA scenarios. This is based on a sample of 2,388 corporate client entit ies cover ing 53 per cent of corporate good book on net nominal basis. We have used the MSCI Market Classif icat ion to assign countries or regions as developed or emerging markets. Caution about the metrics Scenario-based potential credit downgrades are one approach for estimat ing future Trans it ion R isk. The probabil ity of default metrics that inform potential credit downgrades capture the potential impact to clients’ financ ials under different transit ion scenar ios. The potential credit downgrades estimated do not factor in the transit ion m it igat ion plans that our clients and the Group will undertake over the next 30 years and represent the gross risks we are exposed to. The results ind icate a ‘what if’ analysis, and not a ‘what is likely to happen’ view. As climate action increases globally, clients, sovereigns and banks are likely to take addit ional m it igat ion measures to manage transit ion r isks. A 30-year period inherently brings challenges around forecasting likely outcomes, due to the uncertaint ies associated with the speed and direct ion of trans it ion, includ ing breakthrough technolog ical developments, sovereign polic ies and management responses. Insights Climate risks are likely to impact our portfolios disproport ionately, depend ing on the region and sector. Fossil fuel dependent sectors that are most sensit ive to em iss ions reduct ion polic ies are l ikely to see larger credit downgrades over a 30-year period. Oil and gas, Metals and min ing, Transportat ion, Automotive and Commercial Real Estate are the sectors most impacted in the NGFS scenarios, while the oil and gas sector is likely to be most impacted under the IEA scenarios. Compared with our 2021 disclosures, the impact is relatively muted given the scenario selection and underlying scenario pathways being more benign as provided in the NGFS and IEA scenario datasets. Projected potential average minor notch credit grade downgrade by 2050 based on our climate scenario analysis of the in-scope sample corporate portfolio\* Developed Markets Emerging Markets IEA Net Zero Emiss ions IEA Sustainable Develop- ment IEA Announced Pledges NGFS Orderly NGFS Disorderly NGFS “Hot House“ IEA Net Zero Emiss ions IEA Sustainable Develop- ment IEA Announced Pledges NGFS Orderly NGFS Disorderly NGFS “Hot House“ Automobiles and components 0 0 0 1 2 1 0 0 0 1 2 1 Construction 0 0 0 1 2 1 0 0 0 1 2 1 Consumer durables and apparel 0 0 0 1 1 1 0 0 0 1 2 1 CRE 0 0 0 0 1 1 0 0 0 0 1 1 Metals and min ing 1 1 0 2 3 1 1 0 0 2 2 1 Oil and gas 9 7 3 8 8 1 7 5 3 5 5 1 Telecom 0 0 0 0 0 0 0 0 0 0 1 1 Transportation 2 1 1 2 3 1 1 1 0 3 3 1 Util it ies 1 0 0 1 1 0 0 0 0 0 1 0 Total portfolio 1 1 0 2 2 1 1 0 0 1 2 1 \* Data as of Nov 22 ![]() 107 Standard Chartered – Annual Report 2022 Strategic report Sectors exposed to Transit ion R isk The vulnerable industr ies l ist ident ified below is based on the expected increase in potential addit ional costs dr iven by adopting new technology, changing energy mix towards renewables and associated technology adoption costs as well as an applicat ion of a carbon pr ice over a long-term horizon which will eventually impact the companies’ abil ity to rema in profitable in the long run. Sectors most impacted by Transit ion R isk include: Oil and gas, includ ing coal and the manufacture of refined petroleum products. Industry efforts to decarbonise are currently supported by switch ing to gas, b iofuels, hydrogen and renewables, as well as leveraging technologies such as Carbon Capture and other emiss ions abatement projects. The oil and gas sector plays a central role in global efforts to decarbonise, with several of our clients having already committed to decarbonisat ion targets, most w ith carbon intens ity targets for Scope 1 and Scope 2 em iss ions. Another linked sector that is likely to be impacted is the Commodity Traders linked to upstream and downstream supply chains for Oil and gas. Power: Our focus remains on selectively financ ing gr id expansion and renewable energy, recognis ing that these are key enabling technologies that support the transit ion towards greener sources of power. Switch ing to abated gas w ill be key in the short-term to support the transit ion away from thermal coal. Metals and min ing: This sector provides raw materials that support much of the global economy includ ing those requ ired for build ing and scal ing clean energy technologies at the rate required in the NZ scenario. The sector contributes around 12 per cent of global emiss ions (Scope 1 and 2), of wh ich Asia, Africa and the Middle East contribute more than 75 per cent. Structural changes in demand, combined with financ ial and regulatory pressures, are driv ing increased awareness of the need for companies in this sector to decarbonise operations. Some of our clients have already committed to net zero targets and we are working with them to reduce their emiss ions through financing trans it ion technolog ies. Transportation: This covers a range of sub-sectors that primar ily rely on the burn ing of fossil fuels such as gasoline and diesel to deliver its direct and ind irect serv ices. Burning fuels directly results in the release of CO 2 and other emiss ions into the atmosphere and contribute sign ificantly to Scope 3 emiss ions on many other industr ies. These sub-sectors consist of: • Aviat ion, such as airl ines and a ir transport entit ies themselves, aircraft manufacturers as well as air transport services, such as airports and ground staff. • Shipp ing, such as freight ing serv ices as well as entit ies that mainta in and operate ports and term inals. • Automobiles, includ ing the product ion and manufacture of automobiles and their components, as well as any related service companies. Sectors exposed to Physical Risk Below vulnerable industr ies are shortl isted based on expected physical damage to the industry over a longer time horizon. Real Estate activ it ies: One of the sectors that is most likely to be impacted is Real Estate activ it ies. Given the nature of the asset-backed lending, an increased frequency and severity of acute weather events and increase in chronic risks will sign ificantly increase damage costs that the Real Estate portfolio will be exposed to if adaptation measures taken are not sign ificant. Manufacture of food and agricultural products: Agriculture is highly vulnerable to climate change and therefore from the impact higher carbon emiss ions can have on local cl imate and the environment. Dry summers or heavy rainfall seasons could dramatically impact crops, leading to sign ificant fluctuations in profitab il ity and risks for companies throughout the supply chain. The impact in developed markets is found to be higher than that in emerging markets. This is driven by higher regional carbon prices in developed markets which lead to a higher number of defaults over the next 30 years. Reputational and Sustainab il ity Risk Climate Risk is considered with in the Reputat ional and Sustainab il ity Risk Framework, for our corporate clients, through an assessment of a client's abil ity to meet the ir own climate related commitments, as well as satisfy the Group's public ambit ions and pos it ion statements as well as its responsib il it ies for ESG r isk management. We have continued to perform addit ional cl ient-level due dil igence leverag ing our Climate Risk questionna ires where possible to ident ify add it ional Reputat ional Risk from climate- related factors. This addit ional due d il igence is conducted by the Group Climate Risk team for (i) clients in our high Transit ion R isk and Phase 1 net zero sectors (Oil and gas, Power, Metals and min ing), ( i i) cl ients with a coal nexus 1 as well as (i i i) those that have been assessed at client level as high Climate Risk. Given the lack of attribut ion for Phys ical Risk events, the assessment concentrates on Transit ion R isk. The assessment focuses on three pillars covering both client and transaction level aspects: Client level • Temperature alignment scoring and a comparison to the client’s peers. • Client-level transit ion read iness and robustness of plans from Climate Risk Questionna ires or through desktop assessments Transaction level • Emiss ions impact of transactions consider ing both internal and regional contexts. \* Data as of Nov 22 1 As defined by the Group’s public Posit ion Statement to only prov ide financ ial serv ices to clients who, by 2030, are less than 5% dependent on thermal coal (based on % revenue). ![]() 108 Standard Chartered – Annual Report 2022 Strategic report Sustainab il ity • Of the case reviews completed, an increase in Reputational Risk rating was suggested for ~13 per cent of transactions. These consisted of companies in both the oil and gas and manufacturing sectors, primar ily look ing to procure coal or other high-carbon emitt ing products for manufactur ing, production or wholesale purposes. In addit ion, some ent it ies with high temperature alignment scores and no clear transit ion plan were ra ised as having addit ional r isk and rating increases recommended. The above-mentioned due dil igence is in addit ion to w ider exist ing env ironmental and social (E&S) risk management processes as well as our oversight against our Posit ion Statements and Prohib ited Act iv it ies list. During 2022, we have enhanced this E&S process through the Environmental & Social Risk Assessment (ESRA) to ident ify cl ients and transactions which may be more susceptible to reputational risk by assessing clients’ level of commitment and strategy to manage climate change as well as their level of alignment to internat ional standards of greenhouse gas em iss ions reporting. This is intended to ensure a greater level of oversight of clients’ readiness to manage climate change and the lim itat ions on business activ it ies that could result in a sign ificant sh ift in stakeholder views (from both environmental and social impact) and/or negative perception by investors and the market. Where negative perception exists or there is exposure to clients that do not comply with E&S criter ia, rev iews are conducted at a client level to ident ify root causes and propose mit igat ion plans, which are agreed with the relationsh ip manager. These may involve client engagement, commitment from clients to take corrective action in the context of their business, or may result in potential run down if corrections cannot be achieved. Addit ionally, where spec if ic cr iter ia in Posit ion Statements are not fully met or there are ind iv idual clients that do not comply with the enhanced E&S criter ia, these may be deemed to have high/very high reputational risks and are escalated to the Group Responsib il ity and Reputational Risk Committee (GRRRC) for client and transactional determinat ions. We have also set a Risk Appetite for our exposure concentration to clients with a high-temperature alignment combined with low-transit ion read iness. We use temperature alignment as a metric to inform our client-level Climate Risk assessment, which is part of the Reputational and Sustainab il ity Risk reviews for clients and transactions as mentioned above. Temperature alignment is one way to consider a company’s impact on climate change and an approach to estimate the emiss ions profile of our clients. It is calculated based on emiss ion intens it ies and volume of hydrocarbons produced. It maps the company’s forward-looking carbon intens ity and hydrocarbon production outlook (where applicable) against a temperature alignment score. We assessed the weighted average temperature alignment (WATA) of 2,388 corporate client entit ies (cover ing 53 per cent of corporate good book on net nominal basis) by high-carbon sector, projected to 2030. As part of our 2023 modelling roadmap, we are also looking to develop an in-house methodology to model temperature alignment and overall reduce reliance on third-party modelling capabil it ies. Caution about the metrics • Temperature alignment is an emerging concept, and industry-wide standards on methodology are still evolving. We expect our approach to evolve in line with best practice. • Client-level emiss ions were only ava ilable for about 37 per cent of corporate clients, so sector average proxies were used for the remain ing ent it ies. In 2023, we a im to refresh exist ing assessments as well as expand our coverage to c.4,000 clients. The client assessments not only help form a view of the overall Climate Risk vulnerabil it ies and readiness for clients but provide a tool for data gathering and analysis of the underlying themes that drive Climate Risk and its mit igat ions. Addit ionally, expanded coverage from the exist ing vendor engagement w ill help to bridge the data gaps. Insights • Our overall average is 3.25⁰C, ind icat ing that our portfolio is largely in line with the current global emiss ions and temperature trajectory. • Compared to other sectors with in our portfol io, Util it ies and CRE have a higher temperature alignment compared to other sectors, given the dependence on high-carbon emitt ing product ion, but our portfolio temperature alignment for these sectors is below the sector average. • Compared to the previous year, average sector temperature alignment scores have increased across most of the sectors. This increase is driven by improvements in both emiss ion data coverage for our clients (i.e. reduced use of proxies) and changes in the third-party temperature alignment scoring methodology. A maximum increase of 26 per cent for CRE is observed where WATA score has increased from 3.1 in 2021 to 3.8 in 2022. Telecommunicat ion (26 per cent increase) and Consumer durables and apparel (24 per cent increase) are other notable sectors with an increase in WATA. 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 WATA (⁰C) Utilities O&G Transportation CRE Construction Automobiles & Components Telecoms Others 1 Metals & Mining Consumer Durables & Apparel 3.84 2.81 3.27 3.84 3.05 3.56 3.12 3.49 2.98 3.25 Weighted average temperature alignment (WATA) – 2030 by client sectors 1 The weighted average of approximately 20 other sectors to which the Group has the lowest net nominal exposure ![]() 109 Standard Chartered – Annual Report 2022 Strategic report Country Risk The Group has developed a set of Physical and Transit ion r isk rankings, to ident ify from a set of 165 sovere igns globally that are deemed most vulnerable and least ready to adapt and mit igate cl imate-related Physical and Transit ion r isks. • The Physical Risk rankings are based on a set of publicly available scores such as ND-Gain Country Index and GermanWatch Climate Risk Index, as well as S&P Global Ratings and Moody’s Investors Service. • The Transit ion R isk rankings are based on an internally developed methodology which comprises a combinat ion of both climate and macroeconomic data. The two pillars underlying this assessment include the Sovereigns’ Gross Transit ion R isks (such as reliance on carbon-intense sectors, import and export of fossil fuels, gap to fill to meet 2030 Nationally Determined Contribut ions targets) and Transit ion R isk Mit igat ions established (such as low-carbon energy production in place, imports of low-carbon technology, governments’ abil ity and cred ib il ity to support the transit ion). The two p illars are further combined to obtain a measure of Net Transit ion R isk for each market. Based on their aggregated Physical and Transit ion r isk scores, sovereigns are split into decile-based rankings. These rankings are a qualitat ive input to the Group Country Risk reviews for sovereign credit grades and lim its, inputs to various climate- related stress tests and computation of Country Risk Benchmarks and Risk Appetite. They are also used as proxies for miss ing cl ient asset location informat ion in Climate Risk Assessments. Insight • For Physical Risk, the bulk of exposure is located in sovereigns which score in the top half (buckets 1 to 5), with over 2 per cent in the two lowest categories (buckets 9 and 10). • Sim ilarly, for Trans it ion R isk, the bulk of exposure is located in sovereigns which score in the top half, with less than 1 per cent in the two lowest categories (buckets 9 and 10). • This ind icates that the Group is overall well posit ioned in managing its climate-related physical and transit ion r isks. The combined exposures in the two worst categories are also well below the Group's current Risk Appetite escalation levels. Caution about the metrics • The rankings are informed by external ind ices. – Physical Risk rankings are based on four scores (ND-Gain Country Index/GermanWatch Climate Risk Index/S&P Global Ratings/Moody’s Investors Service) – Transit ion R isk rankings are based on Gross Transit ion R isk and Transit ion R isk Mit igat ion factors, with data sourced from World Bank/OECD/S&P/International Monetary Fund/Fitch Ratings • The computation inputs are based on latest available data which may be dated. Proxies have been used where data for the sovereign is not available. • The ranking uses equally spaced decile scores and provides the results in an ordinal manner. While the simpl ic ity helps in adoption and provides the relative posit ion of the sovereigns, other systems may provide more informat ion. Physical and Transit ion R isk rankings methodological deep dives ND-Gain Country Index S&P Global Rating German Watch Climate Risk Index Moody’s Investor Services Assessing markets’ vulnerabil it ies to climate change and readiness to adapt Physical Risk Transit ion R isk Risk faced to transit ion Abil ity to trans it ion Gross Transit ion Risk factors Transit ion R isk Mit igat ion factors Measuring markets’ exposure to extreme weather events Gauging markets’ histor ical losses as a result of extreme weather events Measuring markets’ exposure to extreme weather events Reil iance on foss il fuel imports and exports Governments’ effectiveness in achiev ing targets Emiss ion footpr int per capita Low-carbon energy production capacity Carbon footprint of imports and efforts Governments’ fiscal flexib il ity to support the transit ion Energy efficiency levels Imports of low-carbon technology products ![]() 110 Standard Chartered – Annual Report 2022 Strategic report Sustainab il ity Gross Country Risk (GCR) exposure distr ibut ion as at 31 December 2022 across the Physical Risk categories Category 1 (Best) 2 3 4 5 6 7 8 9 10 (Worst) Exposures % 11.21 27.08 20.61 4.71 18.17 8.30 1.83 5.83 1.14 1.12 Gross Country Risk (GCR) exposure distr ibut ion as at 31 December 2022 across the Transit ion R isk categories Category 1 (Best) 2 3 4 5 6 7 8 9 10 (Worst) Exposures % 3.07 13.72 25.11 26.27 16.20 6.85 7.49 0.74 0.37 0.18 Physical and Transit ion r isk rankings distr ibut ions 1 5 10 Physical Risk Transit ion R isk Bucket distr ibut ion Operational and Technology Risk Standard Chartered’s own operations We perform granular Physical Risk assessment across all our own operating sites (offices, branches and data centres). From a risk management and mit igat ion perspective, all new properties (branches, offices) onboarded with in the Group are assessed for Physical Risk vulnerabil it ies. A key development this year has been that all material Third-Party Corporate Service arrangements in scope for Business Continu ity Management controls are subject to Climate Risk assessment as part of third-party continu ity plans. We analysed approximately 1,000 of our operating locations across branches, offices, data centres and other sites to assess the gross Physical Risk profile. Caution about the metrics The metrics are based on outputs from Munich Re’s natural catastrophe model and do not assume adaptation measures such as build ing qual ity, hazard protection infrastructure (such as flood defences) or government adaptation polic ies. Assessment of gross Physical Risk at our own operating locations\* Physical risk event Time horizon Scenario Operating locations at extreme Physical Risk (%) Korea UAE Indonesia Globally Flood (Acute) 2022 N/A 26% 10% 16% 22% Wildf ire (Acute) 0% 0% 0% 0% Storm (Acute) 20% 1% 5% 15% Sea-level rise (Chronic) 2100 RCP 8.5 1% 4% 0% 2% Number of operating locations 734 223 37 994 \* Data as of Nov 22 Insight • Outputs from the Munich Re Location Risk Intelligence platform show that 22 per cent of the Group’s locations globally are in locations of extreme flood risk, 15 per cent with extreme storm risk and none at risk from wildf ire. • Longer-term risk (up to 2100) from sea-level rise under RCP 8.5 are min imal, be ing below 5 per cent. • Not surpris ingly, g iven our footprint, a higher proportion (26 per cent for flood, 20 per cent for storm) of the Group’s locations in Asia are subject to extreme physical risks. A total of 16 per cent of locations in Europe & Americas are subject to flood risks, which is entirely driven by the locations in America. • In the locations where weather events such as storms or cyclones are frequent, the build ings are bu ilt with this in mind. • Mit igat ion options include property insurance and operating a divers ified locat ion strategy, splitt ing delivery and therefore reducing concentration risk. ![]() 111 Standard Chartered – Annual Report 2022 Strategic report Traded Risk We manage the Climate Risk of Traded Risk exposures as part of the Traded Risk stress-testing framework. Climate risks are incorporated with in Traded R isk Stress Risk Appetite. Climate-related stress scenarios are designed to include Transit ion R isk effects from climate change polic ies and shocks to markets due to supply and demand disrupt ion from physical climate events. Posit ions booked in the trading and fair value banking books are in scope, with a time horizon for stress shocks of between three days and one year depending on underlying market liqu id ity. From a risk management and mit igat ion process, two physical climate stress scenarios – ‘Hurricane Season’ and ‘Winter Cold Wave’ – were introduced after consider ing the impact of extreme weather events on commodit ies pr ices and own account and client portfolio concentrations. Addit ionally, an exist ing global stress scenar io, ‘Global Inflation’, was updated to incorporate the impact of transit ion effects from cl imate change polic ies, notably inelast ic carbon energy suppl ies. Descript ion Traded Risk: Market Risk stress loss from physical climate event Potential stress loss to trading and fair value banking book exposures from extreme weather events, includ ing increased impact and intens ity of hurricanes and severe winter Traded Risk: increase in Counterparty Credit Risk stress exposures from physical climate event Potential increase in counterparty credit stressed exposures from extreme weather, includ ing increased impact and intens ity of hurricanes and severe winter Basel Committee Princ iples of effective climate risk management in Jun 22 and FAQ Dec 22 Australia – APRA Climate change financial r isk management guidel ines in Nov 21 Climate scenario analysis conducted in 22 Singapore – MAS Guidel ines on environmental risk management published in Dec 20, effective Q2 22 Climate impact included in 2022 industry-wide stress testing excercise Malaysia – BNM Guidel ines on environmental risk management published in Dec 20, effective Q2 22 Climate impact included in 2022 industry-wide stress testing excercise China – CBIRC Green Finance guidel ines issued in Jun 22 Japan – JFSA Guidel ines on climate risk management in Jul 22 Hong Kong – HKMA Supervisory Manual on climate risk management published in Dec 21, effective Dec 22 Pilot climate stress testing conducted in 2021 Phil ipp ines – BSP Draft environmental risk management guidel ines in Sep 21 Draft circular on climate risk stress testing Aug 22 UK – BoE/PRA Supervisory Statement on Enhancing climate risk management (SS3/19) BoE 21 stress testing includ ing cl imate impact US – OCC, FDIC, Fed OCC, FDIC and Fed consultations in Feb, May and Dec 22 on climate risk management Fed announced pilot climate stress testing in 23 EU – ECB Supervisory guide on climate and environmental risk management in Nov 20, effective immed iately ECB-led climate stress testing ECB report on state of readiness of EU banks AME region Central Bank of Kenya guidel ines on climate risk in Oct 21 Dubai FSA to isssue draft guidel ines on climate risk in Sep 21 Central Bank of Oman adopted the Basel princ iples in climate risk management in Dec 21 India – RBI Survey on climate risk and sustainable finance in March 22 followed by a discuss ion paper in Sept 22. RBI-led climate scenario analysis expected Nepal – BoN Guidel ines on climate risk management in Feb 22 Compliance Risk We have established a process for tracking various Climate Risk-related regulatory developments and obligat ions set by financial serv ice regulators at Group and regional/country level, with roles and responsib il it ies set out in the Climate Risk Policy. Regulatory requirements or enhancements needed are recorded through workplans across various teams. The workplans are coordinated and monitored through various working groups by having the relevant accountable executives partic ipate in the relevant forums. The processes of implement ing regulat ions or addressing regulatory feedback is also monitored and challenged by the relevant governance committees. Many regulators across our footprint have proposed or set supervisory expectations on climate/environmental risk management. Those expectations are broadly aligned in princ iple, but local implementat ions could vary. We have actively worked with industry bodies and regulators to promote consistency in policy making around the globe. Over 2022, we have developed horizon-scanning capabil it ies for climate-related regulations as well as a global register. We on-boarded external counsel to assist with horizon-scanning of ESG-related regulations for both Group and 13 of our key markets in standard regulatory scanning and ident ification. Aggregating inputs from both external counsel and internal markets, a global obligat ions reg ister has been established to provide a complete view of the current obligat ions and upcoming regulatory requirements. We have documented an operating model clarify ing roles and respons ib il it ies across the Group and our markets to establish clear ownership of sustainab il ity regulations. ![]() 112 Standard Chartered – Annual Report 2022 Strategic report Sustainab il ity Treasury Risk From a capital perspective, Climate Risk considerat ions have been part of our Internal Capital Adequacy Assessment Process (ICAAP) submiss ions s ince 2019. Our approach for assessing the Climate Risk impact on capital adequacy has improved from qualitat ive judgements to quant itat ive simulat ions w ith the availab il ity of tools and greater understanding of our portfolio. For the 2022 ICAAP submiss ion, we moved towards a more quantitat ive approach compar ing the worst (annualised) five-year loss period from all three NGFS scenarios to the projected peak losses from the 2022 Group ICAAP. The Late Action scenario was ident ified to dr ive the maximum difference in losses; however, this was lower than credit losses experienced under the ICAAP macroeconomic stress scenario, concluding that addit ional cap ital add-on was not required for Climate Risk. The severity and potential impact on our clients’ loan impa irment level under cl imate scenarios was lower than the ICAAP scenario and we determined that an addit ional cap ital buffer was not required. The approach for incorporating climate related credit risks into the Group’s ICAAP is set to continue using scenario driven analysis to best judge the financ ial impact of Climate Risk. It is envisaged however that as understanding of Climate Risk management and potential forward-looking scenarios develops, this may lead to evolution in our approach and assessment includ ing us ing a wide range of scenario outcomes to determine any potential capital related impact in the future. From a Liqu id ity Risk perspective, we conducted a proof-of- concept analysis to assess climate risk-related vulnerabil it ies and readiness of approximately 77 per cent of the corporate liqu id ity portfolio, leveraging the client outreach and data gathering exercise being undertaken on the asset side. The analysis showed that exposure concentration in the ‘high transit ion r isk and low readiness’ bucket is broadly comparable to what we see for our top corporate client exposures on the asset side. Liqu id ity providers with high transit ion r isk are from the Oil and gas, Pharma, Transport storage – others and Util it ies sectors. We will continue to enhance our analysis capabil it ies and exposure coverage through 2023, includ ing embedd ing climate related liqu id ity considerat ions w ith in our Internal L iqu id ity Adequacy Assessment Process. ![]() 113 Standard Chartered – Annual Report 2022 Strategic report #### Climate change and its associated risks, opportunities and organisationalimplications #### are overseen by the Group’s Board, Management #### Team and multiple supporting sub-committees. The structure of the Group’s Board and Management Team can be found on pages 138 to 145 . Standard Chartered PLC Board The Board is responsible for the long-term success of the Group and its supporting committees consider climate- related risks and opportunit ies when rev iew ing and gu id ing strategic decis ions. Since 2019, the Board has approved a Climate Risk Appetite Statement (RAS) annually to reflect both our aim to measure and manage the financial and non-financial r isks aris ing from climate change, and to reduce emiss ions related to the Group’s own activ it ies and those associated with the financ ing of clients seeking to align with the Paris Agreement. In November 2021, we introduced a suite of Risk Appetite (RA) metrics and thresholds to monitor and manage the exposure concentration in our portfolio across key risk types. Throughout 2022, Board activ it ies have included review ing and guid ing strateg ic decis ions on our approach to reach net zero financed emiss ions by 2050. For more informat ion on our governance structure please see page 184 in the Directors' remunerations report. Management Team Each member of the Group Management Team is responsible for strategically driv ing cl imate considerat ions w ith in the ir geography, business segment or function in line with our net zero pathway. In response to the Prudential Regulation Authority’s (PRA’s) Supervisory Statement 3/19, ‘enhancing banks’ and insurers’ approaches to managing the financ ial r isks from climate change’, and responsib il ity for ident ify ing and managing financial r isks from climate change sits with the Group Chief Risk Officer (CRO) as the appropriate Senior Management Function (SMF) under the Senior Managers Regime (SMR). The Group CRO is supported by the Global Head, Enterprise Risk Management (ERM) who has day-to-day oversight and central responsib il ity for the Group’s second line of defence against Climate Risk. The Global Head, ERM has also appointed a dedicated Managing Director, Global Head of Climate Risk and Net Zero Oversight. Risk Framework Owners for the impacted Princ ipal Risk Types (PRTs) and integral component of the Enterprise Risk Management Framework (ERMF) are responsible for embedding Climate Risk requirements with in the ir respective risk types. Governance committees and steering groups Several committees with in the Group support the Board and Management Team on the management and monitor ing of climate change and its associated impacts. #### Governance of our #### Sustainability Agenda Structural overview of Standard Chartered PLC’s climate-related governance Group Risk Committee (GRC) Sustainab il ity Forum Board Risk Committee (BRC) Audit Committee Culture and Sustainab il ity Committee (CSC) Group Management Team (MT) #### Standard Chartered PLC Board Group Responsib il ity and Reputational Risk Committee (GRRRC) Sustainable Finance Governance and Other Committees Climate Risk Management Committee (CRMC) ![]() 114 Standard Chartered – Annual Report 2022 Strategic report Sustainab il ity Governance committees and steering groups with responsib il ity for climate-related issues Governance body Chair Climate-related agenda frequency and inputs Key purposes and responsib il it ies related to climate Climate-related topic 2022 Board Standard Chartered PLC Group Chairman Twice during 2022. Climate Risk updates delivered via Group CRO Reports • Oversee the Group’s overall net zero approach. • Responsible for the net zero pathway shareholder advisory vote proposal. • Discussed and reviewed the Group’s net zero pathway, approved its approach and reviewed the progress on delivery. • Completed train ing focus ing on how Climate Risk is being embedded across the three lines of defence. Board Risk Committee (BRC) Independent non-Executive Director Three times a year. Climate Risk updates to BRC in Group reports seven times a year, delivered via Group Chief Risk Officer’s Reports Quarterly Climate Risk informat ion provided as part of the Risk Information Report, covering key metrics based on the concentration of transit ion and physical risks in our portfolio. • Provide oversight of the Group’s key risks on behalf of the Board and is the primary Risk Committee at the Board level that oversees Climate Risk. • Consider the Group’s Risk Appetite and make recommendations to the Board on the Risk Appetite Statement (RAS). • Assess risk types (includ ing Cl imate Risk) and the effectiveness of risk management frameworks and polic ies. • Provide oversight and challenge of the design and execution of climate-related stress testing. • Reviewed, discussed and challenged the Group’s Management scenario analysis. • Reviewed and recommended Group Climate RAS to the Board. • Reviewed Climate Risk Information Report (RIR) quarterly. • Monitored adherence to RA metrics includ ing any relevant breaches. Culture and Sustainab il ity Committee (CSC) Independent non-Executive Director Four times in 2022. • Oversee the Group’s overall sustainab il ity strategy. • Monitor the development and implementat ion of the susta inab il ity framework to align with the Group’s net zero approach. • Discussed ESG benchmarking and ind ices progress, includ ing via CDP climate change survey. • Reviewed Group Sustainab il ity Strategy (includ ing cl imate). • Discussed Board engagement protocols on sustainab il ity. Audit Committee Independent non-Executive Director Once in 2022 (Q4). This will be quarterly from 2023. • Responsible for oversight of the Group’s quantitat ive report ing metrics. • Reviewed proposal to integrate TCFD-aligned disclosures and metrics into Annual Report and agreed this approach. Group Risk Committee (GRC) Group Chief Risk Officer (CRO) Three times during 2022. Climate Risk updates in Group CRO and CRIR reports 11 times per year. • Ensure the effective management of Group risk in support of the Group’s Strategy. • Oversee implementat ion of the Enterprise Risk Management Framework. • Review Risk Appetite and approve Management Team level Risk Appetite metrics and thresholds for Princ ipal R isk Types (PRT) and integrated risks, includ ing Cl imate Risk. • Received update on Climate Bienn ial Exploratory Scenar io Round 2. • Received update on Climate Risk embedding and the Climate Risk profile as part of the Risk Information Report. • Approved the Management Team level Climate RA metrics and monitored adherence to these. ![]() 115 Standard Chartered – Annual Report 2022 Strategic report Governance body Chair Climate-related agenda frequency and inputs Key purposes and responsib il it ies related to climate Climate-related topic 2022 Climate Risk Management Committee (CRMC) Group CRO Three times in 2022. (CRMC commenced in July 2022) and will be held six times a year in 2023. Note: Prior to its formalisat ion as a Committee, there were also three Climate Risk Management Forum (CRMF) meetings held in 2022. Climate Risk Information Report (RIR) tabled quarterly, covering key metrics based on the concentration of transit ion and physical risks in our portfolio. • Oversee development and implementat ion of the Cl imate Risk framework. • Oversee all aspects of risk management practices for climate- related financial and non-financial risks, includ ing leadersh ip and oversight in developing and effectively implement ing the Group’s Climate Risk management framework. • Provide structured governance around engagement with relevant PRTs impacted by or linked to Climate Risk. Drove delivery of: • Climate stress testing and management scenario analysis. • Progress associated with integrat ing Cl imate Risk across all impacted risk types. • Climate risk-related disclosures, includ ing those d iscussed in this report. • Climate Risk research with Imperial College London. • Regulatory feedback and supervis ion. • Climate-related management informat ion and RA metr ics. • Approach to deliver ing tra in ing and upskill ing staff on Cl imate Risk across the Group. Group Responsib il ity and Reputational Risk Committee (GRRRC) Group Head, Conduct, Financ ial Crime and Compliance Monthly • Oversee and approve climate- related Posit ion Statements includ ing sector-spec if ic trans it ion criter ia and assoc iated risk tolerance thresholds Reviewed: • Exposure to clients that do not comply with enhanced E&S criter ia. • Transactions where Posit ion Statements are not fully met. • Transactions with high or very high Reputational Risk with climate change factors. Sustainab il ity Forum Group Head, Corporate Affairs Brand & Marketing (Jan-Aug); Chief Sustainab il ity Officer (Sep-Dec) The Forum meets eight times per annum. • Oversee development and implementat ion of the Group’s sustainab il ity strategy, includ ing climate. • Guide a coordinated Group-wide approach to key sustainab il ity themes, includ ing cl imate change. Reviewed: • New, exist ing, and updated Sustainab il ity Aspirat ions. • Processes for integrat ion of Climate Risk into Reputational and Sustainab il ity Risk. • Approved the approach to the Group’s own ESG ratings. • Discussed Group-wide climate internal and external engagement programmes. ![]() 116 Standard Chartered – Annual Report 2022 Strategic report Sustainab il ity Governance body Chair Climate-related agenda frequency and inputs Key purposes and responsib il it ies related to climate Climate-related topic 2022 Sustainable Finance Governance Committee Global Head of Sustainable Finance Monthly • Provide leadership, governance and oversight in deliver ing the Group’s sustainable finance offerings. • Review and endorse sustainable finance products. • Guide the Group in ident ify ing and embracing opportunit ies and review ing the reputat ional risks relating to sustainable finance includ ing any greenwash ing risks on sustainable finance products. Reviewed and approved: • Sustainable finance products includ ing susta inable deposits, green mortgages, sustainable trade finance products, sustainable finance wealth management products. • Green and sustainable finance transactions includ ing transactions with climate- related KPIs. • The Group’s approach to launching sustainable and climate products. • The Group’s Green and Sustainable Product Framework, encompassing a range of climate finance activ it ies. • The Group’s update to the 2022 Sustainable Finance Impact Report. Sustainable Finance Steering Committee Global Head of Sustainable Finance Monthly • Provide strategic direct ion for the Corporate, Commercial and Institut ional Bank ing (CCIB) sustainab il ity agenda. • Coordinate and scale CCIB products, segments and markets. • Discussed Sustainable Finance trends. • Monitored and tracked progress of sustainable finance targets. • Coordinate and scale CCIB products, segments and markets. Net Zero Operating Steering Committee 1 Net Zero Transit ion Programme Director Weekly • Drive the operational isat ion of the Group’s net zero pathway. • Coordinated the embedding of net zero pathway across the bank. Consumer, Private and Business Banking Sustainab il ity Steering Group (CPBB) Global Head, Transfor- mation and Strategic Init iat ives Bi-monthly • Provide strategic direct ion for the Consumer, Private and Business Banking (CPBB) sustainab il ity agenda. • Discussed Sustainable Finance trends. • Tracked progress of Sustainable Finance targets and discussed further opportunit ies. • Updates and progress on CPBB net zero plans. 1 The Net Zero and overall Sustainab il ity governance structure will be renewed and refreshed in 2023. Addit ionally, we are expand ing governance and risk management at the regional, country and segment levels to better ident ify the risk and actively manage their portfolios. ![]() 117 Standard Chartered – Annual Report 2022 Strategic report Assessing and managing climate with in our bus iness Climate risks and opportunit ies are a grow ing prior ity across the Group. Mul itple different teams across our businesses and functions are either dedicated to, or spend a proportion of their time working on climate-related activ it ies. Employees dedicated to supporting Climate Risk and opportunit ies Line of defence Team Purpose and responsib il it ies related to climate First line Sustainab il ity Strategy and Net Zero Project Management Office Formed in July 2022 under the new CSO, this team manages the overall Group sustainab il ity strategy includ ing external d isclosures and engagement with NGOs and Policy Coalit ions, w ith team members actively partic ipat ing in and convening the Group’s partic ipat ion in industry platforms and in it iat ives. The team acts as Secretariat to the Sustainab il ity Forum helping shape the direct ion of the Group’s act ion on sustainab il ity and leads the Group’s net zero strategy and implementat ion. As of 2023, th is team will serve as the host of the Group Net Zero Programme Management Office (PMO). Sustainable Finance Comprises Sustainable Finance Orig inat ion and Strategic Init iat ives teams who actively collaborate to ident ify, capture and manage opportun it ies regard ing Climate Finance. The Transit ion finance team also s its with in th is structure and supports our clients with their decarbonisat ion financing needs. ESRM Responsible for setting and operational is ing the Group’s sector-specif ic Pos it ion Statements and working with clients in all our carbon-intens ive sectors to avo id, mit igate and manage any potent ial negative impacts of our financ ing. Climate Risk Analysis (includ ing Adv isory and Analyst teams) Formed in 2022. Conducts data collection and analysis for the client-level Climate Risk assessments for all in-scope clients. Second line Climate Risk Forms part of the Group Enterprise Risk Management (ERM) function. Conducts period ic hor izon scanning, looking at both top-down risk ident ification of emerging industry themes and regulatory expectations, and bottom-up risk ident ification through impacted processes. Reputational and Sustainab il ity Risk (RSR) Responsible for overseeing and challenging the first line of defence in respect of risk management activ it ies of reputational and climate-related risks. Other Princ ipal R isk Types As Climate Risk is integrated into impacted PRT frameworks, responsib il ity for second line ownership of Climate Risk specif ic to each Pr inc iple R isk Type is delegated to the relevant Risk Framework Owner. Other Business Partners Legal, Conduct Financ ial Crime and Compliance and Supply Chain Management Provide support to the Group as necessary, includ ing to Susta inable Finance, Sustainab il ity, Climate Risk and RSR. \* Headcount is based on budgeted numbers and could change subject to ongoing recruitment. Sustainab il ity Strategy and Net Zero Project Management Office and Climate Risk Analysis teams didn't exist in years prior to their 2022 formation. ![]() 118 Standard Chartered – Annual Report 2022 Strategic report Sustainab il ity Education and train ing Understanding Sustainab il ity We are encouraging all employees across our footprint to grow their understanding of sustainab il ity and climate, how we embed it into our business, operations and communit ies, and how they can actively play their part in this journey. In April 2022, we launched our ‘Understanding Sustainab il ity’ online learning, and more than 12,800 (15 per cent) of colleagues voluntarily completed this programme during the year. To recognise their engagement, we planted a tree for each employee completing the train ing in our ‘Standard Chartered Forest’, which spans seven of our footprint markets and is tended by local NGOs. Climate-related financ ial and non-financial r isk train ing For Climate Risk specif ically, the Board were g iven train ing that provided an overview of how Climate Risk is being embedded across the three lines of defence, as well as what this means for our clients and colleagues. In addit ion, we launched R isk-wide mandatory e-learnings, and provided 35 hours of bespoke classroom-based train ing for almost 4,000 colleagues across CCIB, CPBB, Risk and Audit. Recordings of these sessions are available to all staff to access as convenient. In Q1 2023, we intend to embed Climate Risk-related credit train ing mater ial into both our first and second line Credit Risk curricula. In addit ion, in partnership with our academic partner, Imperial College London, we also aim to launch a detailed online train ing programme ava ilable to all impacted staff. Sustainable Finance and ESRM train ing In 2022, we focused on educating colleagues across all levels of the Group on our net zero pathway and Sustainable Finance in it iat ives. We launched foundat ional sustainab il ity and Sustainable Finance curricula across the Group; provided dedicated train ing on our Susta inable Finance product suite and Posit ion Statements; hosted panel d iscuss ions on key themes includ ing greenwash ing risk and ESG ratings; and held topical sessions on net zero and Transit ion F inance concepts, such as carbon capture, util isat ion and storage, and decarbonisat ion market trends. In 2023, our Sustainable Finance education programmes will accelerate. This will include the roll-out of a tiered practit ioner- level learning curriculum, and further modularisat ion of our Sustainable Finance train ing to help us improve knowledge and awareness across our network. Incentive structure Variable remuneration is applicable to employees through the Group Scorecard and the Long-Term Incentive Plan (LTIP). This is overseen by the Board-level Remuneration Committee. Selected sustainab il ity targets, includ ing those w ith a climate change dimens ion, are incorporated into our annual Group Scorecard which informs variable remuneration for all colleagues under our Target Total Variable Compensation plan, includ ing execut ive directors and the Group Management Team. Sustainab il ity has also been included in the 2023–25 LTIP performance measures, with an increased focus on the broader impact of client activ ity, rather than on our internal operations. The sustainab il ity measures in the 2023–25 plan include: • Sustainable Finance income in excess of $1 bill ion by 2025 • Delivery of the net zero roadmap • Contribut ion to the advancement of susta inab il ity ecosystem The Group scorecard includes the following for 2023: • Progress against the Group’s aim to achieve net zero by 2050 • Improve community engagement through employee volunteering partic ipat ion In addit ion to the Group Scorecard and LTIP performance measures, dedicated climate and sustainab il ity-related objectives apply across funct ional and regional scorecards includ ing the R isk function, and ind iv idual object ives add a further link between sustainab il ity and reward. Specif ically, in relation to the delivery of core aspects of our climate change approach, several ind iv iduals and teams have object ives which impact variable remuneration. ![]() 119 Standard Chartered – Annual Report 2022 Strategic report Indiv iduals or teams w ith object ives wh ich impact variable remuneration Indiv idual or team Objectives/performance l inkage Chief Risk Officer (CRO) The Group CRO is responsible and accountable for Climate Risk under the Financ ial Conduct Authority’s Senior Managers and Certif icat ion Regime. This includes responsib il ity for overseeing the delivery of the Climate Risk workplan covering Climate Risk governance, Climate Risk assessment, Climate Risk scenario analysis and stress testing, and Climate Risk disclosure. These responsib il it ies form part of the Group CRO’s objectives, and therefore d irectly affect their remuneration. Risk The Group scorecard includes a 10 per cent weighted metric for the sustainab il ity pillar to achieve net zero by 2050, and another 15 per cent for Risk & Controls. Climate Risk team Delivery of the Group’s approach to Climate Risk management, development of tools and methodologies for risk ident ification, quant if icat ion, management, monitor ing and report ing; build ing capac ity and skills for Climate Risk management across three lines of defence and organisat ion w ide. Sustainable Finance team Income targets for sustainable finance strategic revenue related to sustainable finance products and delivery of relevant Sustainab il ity Aspirat ions targets. Clean Technology team, and other climate finance orig inat ion teams Revenue targets for orig inat ion of climate finance. Property team Delivery of emiss ions reduct ion targets, operational net zero strategy by 2025 and Scope 1 and 2 carbon offsetting. Supply Chain Management Delivery of business travel emiss ion reduct ion targets and Scope 3 business travel carbon offsetting. Corporate Real Estate Partners, JLL and CBRE Setting operational KPIs and implemented incent ives structures for our partners, JLL and CBRE, who manage day-to-day property management activ it ies. In addit ion, we further incent iv ise our partners to accelerate activ it ies, with the aim of achiev ing our targets ahead of schedule. Metrics and targets The data we have used provides the best available approach to making progress, notwithstand ing the challenges that ex ist given the incompleteness and novelty of the data sets and methodologies required. We expect the availab il ity and reliab il ity of required data to improve over time, and we intend to integrate applicable improved data into our reporting as it becomes available. ![]() 120 Standard Chartered – Annual Report 2022 Strategic report Sustainab il ity #### Social Sustainability #### While it’s clear that our main impact on society and the environment is through the businesses we finance, we aim to be a force for good for our clients, people and communities. To us, that #### not only means ensuring that we are minimising our own environmental impact, but also striving to be a responsible company: utilising our skills, experience and network to fight financial crime, #### embedding our values across the markets where we operate, and investingin our people and communities. Conduct and ethics Good conduct is crit ical to del iver ing pos it ive outcomes for our clients, markets and stakeholders. It’s fundamental to achiev ing our brand prom ise, here for good. Our Conduct Risk management approach has been strengthened since 2021 through several in it iat ives, includ ing launching a new annual Conduct Risk management effectiveness review, which increased our abil ity to ident ify and mit igate aga inst Conduct Risk, and re-energis ing our engagement strategy. Our Speaking Up programme is essential to upholding our here for good brand promise and valued behaviours. The early disclosure of concerns reduces the risk of financ ial and reputational loss caused by misconduct. We encourage colleagues, contractors, clients, suppliers and members of the public to use our Speaking Up programme which offers secure and confidential channels to report known or suspected misconduct without fear of retaliat ion. Examples of concerns include breaches of regulatory requirements, breaches of Group policy or standards, or behaviour that has adverse effects on colleagues and/or our reputation. The Speaking Up programme continues to be util ised across all countries, businesses and functions, and our 2022 MyVoice survey found that 88 per cent of employees (87 per cent in 2021) felt comfortable rais ing concerns through the channels. Despite this, 2022 saw a 9.6 per cent (113 cases) decrease noted in the volume of total disclosures via Speaking Up channels compared with the previous period. This is a trend noted across the industry, primar ily due to the COVID-19 pandemic which continues to influence internal reporting trends. 15 Throughout 2022, we hosted a series of awareness campaigns to ensure that our colleagues understand the importance of upholding our conduct standards and know how, and when, to Speak Up. To celebrate Whistleblowers’ Day on 23 June, we held a month-long global campaign themed around ‘Doing the Right Thing One Speak Up at a Time’, and in October colleagues in Africa and the Middle East region ran a regional Conduct Week. In December, we celebrated Conduct Month and UN Anti-Corruption Day, under the theme ‘The Stands, Conduct and Me’, highl ight ing the link between the day-to- day conduct of ind iv idual colleagues and the Bank’s Stands. All campaigns included interact ive messages from our sen ior leaders and live panel discuss ions des igned to both set the tone from the top and nurture it from with in. The Group Code of Conduct (the Code) remains the primary tool through which we set our conduct expectations: it supports all our polic ies, sett ing min imum standards and reinforc ing our valued and expected behav iours. It also outlines a framework to help colleagues make good decis ions. 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 to reaffirm their commitment. In 2022, 99.5 per cent of our colleagues completed the mandatory train ing and affirmation. Colleagues who are overdue w ithout a valid reason (i.e. for which they are given an exemption) are subject to a 40 per cent reduction in their annual variable compensation for the year they failed to attest. In 2023, we plan to refresh the Code to improve alignment with our Stands, strengthen the link between ethics, culture and conduct, and intertw ine the Code w ith the Group strategy. We also intend to take steps to make the Code more accessible and relatable to all colleagues. Download our Group Code of Conduct at sc.com/codeofconduct and vis it sc.com/speakingup to find more about how our Speaking Up programme works % colleagues affirmed commitment to Code of Conduct 99.5 15 Navex 2022 Regional Whistleblow ing Benchmark Report ![]() 121 Standard Chartered – Annual Report 2022 Strategic report Fight ing financial cr ime Access to the financial system helps transform l ives around the world, helping to reduce poverty and spur economic development. But the financial system is also used by those involved in some of today’s most damaging crimes – from human trafficking to terror ism, corruption and the drug trade. Our ambit ion is to help tackle these crimes by making the financial system a host ile environment for crim inals and terrorists. We have no appetite for breaches in laws and regulations related to financ ial cr ime. Our Conduct, Financ ial Cr ime & Compliance (CFCC) team sets our financial cr ime risk management framework. We seek to safeguard our clients and communit ies aga inst money laundering (AML), terrorist financ ing, sanct ions, fraud and other risks, applying core controls such as client due-dil igence, screening and monitor ing, and strengthen ing our people's understanding as to how to ident ify, manage and m it igate such risks. In addit ion, ant i-bribery and corruption (ABC) controls aim to prevent colleagues, or third parties working on our behalf, from engaging in bribery. A particular focus of our financ ial cr ime invest igatory teams is the use of data analytics to ident ify those cl ients and cases which generate the greatest financ ial cr ime risk. This has strengthened the second line of defence in support of colleagues in business lines and country teams across the Group. To mit igate the r isk of financ ial cr ime, particularly laundering the proceeds of corruption, in the lead-up to, during and after major polit ical elect ions in footprint markets, the Group conducts enhanced monitor ing des igned to ident ify and invest igate transact ions of potential concern. In 2022, enhanced monitor ing was conducted dur ing major elections and times of polit ical trans it ion or confl ict, for example in Kenya, Angola, Nepal, Phil ipp ines and Sri Lanka. Since the beginn ing of the war in Ukraine on 24 February 2022, the authorit ies of the European Un ion, United Kingdom, United States, and several other nations have imposed multiple rounds of sanctions against Russia by targeting a wide range of Russian entit ies (state-owned and pr ivate) and a large number of Russian elites, oligarchs, polit ical leaders and officials. Wh ile the pace of change and the complexity of these sanctions against Russia are unprecedented and had the potential to create areas of uncertainty as to the scope of some of the regulatory prohib it ions, we have sought to comply with these requirements fully and promptly. This work has been a sign ificant area of focus for F inanc ial Cr ime Compliance teams during 2022. We have invested sign ificantly to ensure our employees are properly equipped to combat financ ial cr ime. In 2022, 99.7 per cent of colleagues and governance body members completed financial cr ime e-learnings which cover ABC, AML, sanctions and fraud topics (Asia: 99.7 per cent, AME: 99.7 per cent, EA: 99.8 per cent, Governance body members: 100 per cent). For those in high-risk roles and functions, addit ional targeted ABC train ing, masterclasses and forums were held to deepen understanding. We also shared our Supplier Charter, which sets out our aspirat ions and prov ides guidance related to ABC, with more than 11,700 suppliers and third parties across 48 markets. This was supported by our Group-wide communicat ion campaign, ‘The whole story’, which aimed to raise employee awareness of the real-life impact of financ ial cr ime and highl ight the work we are do ing ind iv idually and collectively to build a robust Risk Culture and lead in the fight against financial cr ime. In 2022, the theme for The Whole Story was ‘Connecting the Dots’ and focused on our efforts to fight crime by ‘Connecting, Collaborating and Communicat ing’, and build ing partnersh ips with government bodies, regulators and other global banks to strengthen our collective defences. These public-private partnerships include in it iat ives w ith the International Center for Miss ing & Explo ited Children which focuses on the use of cryptoassets in the trade of child exploitat ion and abuse mater ial; the National Cyber Forensics and Train ing All iance which assists law enforcement in ident ify ing sign ificant organ ised groups engaged 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 ights about var ious crim inal typolog ies and advances in how we collectively combat financ ial cr ime in an increas ing number of jurisd ict ions, includ ing S ingapore, South Africa, the UK and Hong Kong. Throughout 2022, we also engaged with peers in contribut ing to the ongoing dialogue to advance effectiveness in combating financ ial cr ime through our active partic ipat ion in several of the leading industry groups, includ ing the Wolfsberg Group of global banks (Including our Global Head of FCC serving as co-chair and hosting the September meeting of the organisat ion), Mad ison Group and UK Finance. We also partic ipated in discuss ions and forums w ith many external thought leaders includ ing the World Econom ic Forum’s Partnering Against Corruption Init iat ive (PACI). For more, vis it sc.com/fightingfinancialcr ime Read our Fair Pay Report at https://av.sc.com/corp-en/content/docs/fair-pay-report.pdf ![]() 122 Standard Chartered – Annual Report 2022 Strategic report Sustainab il ity Respecting human rights We strive to be a responsible company and safeguard human rights across our business. We recognise that the global nature of our business may expose us to the risk of modern slavery and human trafficking (MSHT) in our operations, supply chain and customer and client relationsh ips, and we are committed to ident ify ing and mit igat ing these risks. Our approach to managing and mit igat ing environmental and social risk is reflected in our Sustainab il ity Framework, which includes a Posit ion Statement on Human R ights. The framework outlines the cross-sector and thematic Posit ion Statements that we use to assess whether to provide financ ial services to our clients. These documents, informed by internat ional best pract ice and the International Finance Corporation’s (IFC) Environmental and Social Performance Standards, outline the cross-sector standards that form part of the credit approval processes for CCIB clients and transactions. Our Modern Slavery Statement details our actions to tackle MSHT across our CCIB client base, supply chain and workforce. In 2022, we enhanced our human rights due dil igence by requir ing CCIB cl ients to provide evidence of their polic ies and processes to manage potential human rights risks in their operations or supply chains. We also developed more detailed guidance for clients on grievance mechanisms in line with IFC guidel ines and UN Gu id ing Pr inc iples for Bus iness and Human Rights. We continued to work with third parties, such as the Thun Group and Sustainable Shipp ing In it iat ive, to promote coordinated action against MSHT. We completed a risk review of our supply chain and supplemented our MSHT assessment questionna ire w ith geopolit ical analys is. We also plan to review enhancements to MSHT controls in our procurement system alongside broader ESG requirements under review. For our workforce, we introduced a refreshed set of Industrial Relations princ iples that take into considerat ion the fundamental ILO conventions. We also expanded pay gap reporting to include ethnic ity data. Our ethn ic ity pay gap reporting covered the United Kingdom and United States, having achieved the min imum requ ired levels of ethnic ity declared by employees in these regions to make pay gap analysis possible. Impact in our communit ies Young people across the world – women and girls in particular – continue to face barriers to economic inclus ion. Many fall short of their potential and become stuck in low-income poverty. The future of work also presents challenges – an estimated 50 per cent of employees worldwide will need reskill ing by 2025 16 , as adoption of technology increases. Accessing the relevant train ing w ill be vital for young people. We seek to amplify our social impact and continue to support communit ies through Futuremakers, our global in it iat ive to tackle youth economic inclus ion. Futuremakers supports disadvantaged young people, especially girls and people with visual impa irments, to learn new sk ills and improve their chances of getting a job or starting their own business. In 2022, we contributed $14.7 mill ion to Futuremakers, includ ing donations from the Group and fundrais ing of $3.8 m ill ion from our employees and partners, to enable the next generation to learn, earn and grow. With our internat ional and local partners, includ ing the Standard Chartered Foundation, in 2022 we reached more than 335,000 young people through Futuremakers, includ ing provid ing financial educat ion to 102,248 unbanked or young people. In India, we continue to support eye health and water, sanitat ion and hyg iene education (WASHE) in alignment with development prior it ies in the market. Our Futuremakers Impact Report reviews the progress we have made through Futuremakers since its launch in 2019. Highl ights include reaching more than one mill ion young people (74 per cent women) across 43 markets and rais ing $78.7 mill ion. Key results show that s ince 2019, 28,423 young people have entered employment; 5,202 jobs have been created by young entrepreneurs; and 40,615 adolescent girls are more likely to continue in secondary education. Collective effort is needed to accelerate progress in tackling inequal ity and promot ing economic growth. In 2022, we published ins ights from our partnersh ip with Unilever supporting over 25,000 small-scale retailers affected by COVID-19 to build more resil ient bus inesses through dig it isat ion. We joined the UK Fore ign and Commonwealth Development Office led Girls’ Education Skills Partnership alongside 10 other companies, and agreed a partnership with Primark to design solutions to support the financ ial health of garment sector workers. Read our Modern Slavery Slavery Statement at sc.com/modernslavery Read out Human Rights Posit ion Statement at sc.com/posit ionstatements ![]() 123 Standard Chartered – Annual Report 2022 Strategic report 16 World Economic Forum, The Future of Jobs Report 2020, Page 6 To inform access to finance solutions for young people, 1,270 young people from 21 markets partic ipated in research conducted with Business Fights Poverty and Cambridge Univers ity. The Futuremakers Ins ights Paper 2022 provided informat ion and data for the th ird edit ion of the Futuremakers Forum. More than 1,700 stakeholders from 61 markets partic ipated in this two-day virtual event to hear first-hand from Futuremakers partic ipants, and to explore how to advance inclus ive finance. Over 39 per cent of our colleagues gave back to the community through volunteering in 2022, contribut ing almost 50,000 days of their time to support worthwhile causes. Our IGNITE programme aims to unlock the potential of female talent across the Group. In 2022, we partnered with IGNITE to extend this coaching support to Futuremakers partic ipants to help them change, challenge and stretch themselves in pursuit of their goals. In addit ion, we hosted 12 Mentor’s Den sessions across our markets, supporting over 300 young people with strategic advice on personal brand, future skills and banking services. We mobil ised our colleagues to support famil ies affected by the floods in Pakistan and increased our provis ion of three volunteer ing days annually to five per colleague in the Europe region to help support displaced people from Ukraine. In 2023, we will set up a women entrepreneurs’ network involv ing alumn i of Futuremakers and expand our women’s entrepreneurial support further across our footprint markets. Furthermore, in alignment with our commitment to the UN Princ iples for Respons ible Banking, we will final ise our impact analysis to better understand our broader impact. This work will support us to shape our onwards Futuremakers strategy and further increase employee volunteering support for communit ies. Read more about Futuremakers by Standard Chartered at sc.com/futuremakers Read our Futuremakers impact report at sc.com/futuremakersimpact The content contained in the above Sustainab il ity section (includ ing, for the avo idance of doubt, the TCFD disclosures) of this Annual Report is subject to the statements included in (i) the ‘Forward-Looking Statements’ section; and (i i) the ‘Basis of Preparation and Caution Regarding Data Lim itat ions’ section provided under ‘Important Notices’ at page 498. ![]() 124 Standard Chartered – Annual Report 2022 Strategic report Sustainab il ity This table sets out where shareholders and stakeholders can find informat ion about key non-financial matters in this report, in compliance with the non-financ ial report ing requirements contained in sections 414CA and 414CB of the Companies Act 2006. Further disclosures are available on sc.com and in our 2022 ESG Reporting Index, published at sc.com/esg-reporting-index in Q1 2023. Reporting requirement Where to read more in this report about our polic ies and impact (includ ing r isks, policy embedding, due dil igence and outcomes) Page Environmental matters Risk overview • Risk overview 42 Stakeholders and Sustainab il ity • Our approach to climate change 66 • Our net zero plan 67 • TCFD summary and alignment index 68 • Reducing our environmental footprint in our operations and supply chain 74 • Reducing our financed emiss ions 76 • Catalysing finance and partnerships for transit ion 84 • Mit igat ing environmental and social risk 88 • Assessing the resil ience of our strategy us ing scenario analysis 90 • Mit igat ing the financ ial and non-financial r isks from climate change 96 • Governance of our sustainab il ity agenda 113 Directors' report • Environmental impact of our operations 227 Employees Engaging stakeholders • Employees 60 Stakeholders and Sustainab il ity • Conduct and ethics 120 Directors' report • Employee polic ies and engagement 223 • Health and safety 224 Human rights Engaging stakeholders • Suppliers 58 Stakeholders and Sustainab il ity • Respecting human rights 122 Social matters Engaging stakeholders • Society 59 Stakeholders and Sustainab il ity • Impact in our communit ies 122 Anti-corruption and bribery Risk overview 42 Stakeholders and Sustainab il ity • Conduct and ethics 120 • Fight ing financial cr ime 121 Directors' report • Polit ical donat ions 219 Descript ion of bus iness model Business model 18 Non-financial KPIs Employees • Employee engagement (eNPS) 60 • Gender and ethnic ity pay d isclosure 63 • Gender divers ity in senior roles 63 • Train ing on financial cr ime (includ ing ABC, AML, sanct ions and fraud) 121 • Recommitment to the Code of Conduct 120 • Supplementary people informat ion 484 Environment and Society • Sustainab il ity Aspirat ions ach ieved or on track 23 • Supplementary informat ion: Env ironmental and social risk management 488 • Supplementary informat ion: Env ironment 489 • Supplementary informat ion: Char itable giv ing 492 Princ ipal r isks and uncertaint ies Risk review and Capital review 234 \* Vis it sc.com/environmentcriter ia for our carbon emiss ions cr iter ia and sc.com/environmentalassurance for Global Documentation’s Assurance Statement of our Scope 1 and 2 emiss ions, and waste and water data #### Non-financialinformation statement ![]() ### Our Sustainable ### Accounts go global In 2022, we launched our innovative Sustainable Account for #### corporate clients in Mainland China, Singapore, Dubai, Hong Kong, Taiwan, Malaysia and the US, after pilot launches in the UK and UAE in 2021. Our Sustainable Account offers clients the flexibility of retaining access to the #### ir cash while supporting activities aligned with the United Nations Sustainable Development Goals. Cash placed into the Sustainable #### Account is referenced against projects aligned with the Bank’s Green and Sustainable Product Framework, developed with the support of Sustainalytics, anindependent provider of #### environmental, social and governance research and ratings. Read more online at www.sc.com/sustainableaccounts 125 Standard Chartered – Annual Report 2022 Strategic report ![]() 126 Standard Chartered – Annual Report 2022 Strategic report Underlying versus statutory results Reconcil iat ions between underlying and statutory results are set out in the tables below: Operating income by client segment 2022 Corporate, Commercial & Institut ional Banking $mill ion Consumer, Private & Business Banking $mill ion Ventures $mill ion Central & other items (segment) $mill ion Total $mill ion Underlying operating income 10,045 6,016 29 165 16,255 Restructuring 41 – – 2 43 Other items – – – 20 20 Statutory operating income 10,086 6,016 29 187 16,318 2021 (Restated)¹ Corporate, Commercial & Institut ional Banking $mill ion Consumer, Private & Business Banking $mill ion Ventures $mill ion Central & other items (segment) $mill ion Total $mill ion Underlying operating income 8,407 5,735 1 570 14,713 Restructuring 9 – – (41) (32) Other items – – 20 – 20 Statutory operating income 8,416 5,735 21 529 14,701 1 Following the increased strategic importance and reporting of Ventures to management, this has been established as a separate operating segment. In 2022 Prior periods have been restated. Operating income by region 2022 Asia $mill ion Africa & Middle East $mill ion Europe & Americas $mill ion Central & other items $mill ion Total $mill ion Underlying operating income 11,213 2,606 2,353 83 16,255 Restructuring 23 2 (1) 19 43 Other items 20 – – – 20 Statutory operating income 11,256 2,608 2,352 102 16,318 2021 Asia $mill ion Africa & Middle East $mill ion Europe & Americas $mill ion Central & other items $mill ion Total $mill ion Underlying operating income 10,448 2,446 2,003 (184) 14,713 Restructuring 30 3 (30) (35) (32) Other items – – – 20 20 Statutory operating income 10,478 2,449 1,973 (199) 14,701 #### Underlying versus statutory results reconciliations ![]() 127 Standard Chartered – Annual Report 2022 Strategic report Profit before taxation (PBT) 2022 Underlying $mill ion Regulatory fine $mill ion Restructuring $mill ion Net gain on businesses disposed of/ held for sale $mill ion Goodwill and other impa irment 1 $mill ion Statutory $mill ion Operating income 16,255 – 43 20 – 16,318 Operating expenses (10,743) – (170) – – (10,913) Operating profit/(loss) before impa irment losses and taxat ion 5,512 – (127) 20 – 5,405 Credit impa irment (838) – 2 – – (836) Other impa irment (79) – (38) – (322) (439) Profit from associates and jo int ventures 167 – (11) – – 156 Profit/(loss) before taxation 4,762 – (174) 20 (322) 4,286 2021 Underlying $mill ion Regulatory fine $mill ion Restructuring $mill ion Net gain on businesses disposed of/ held for sale $mill ion Goodwill and other impa irment 1 $mill ion Statutory $mill ion Operating income 14,713 – (32) 20 – 14,701 Operating expenses (10,375) (62) (487) – – (10,924) Operating profit/(loss) before impa irment losses and taxat ion 4,338 (62) (519) 20 – 3,777 Credit impa irment (263) – 9 – – (254) Other impa irment (55) – (17) – (300) (372) Profit from associates and jo int ventures 176 – 20 – – 196 Profit/(loss) before taxation 4,196 (62) (507) 20 (300) 3,347 1 Goodwill and other impa irment include $308 mill ion impa irment charge relat ing to the Group’s investment in its associate China Bohai Bank (Bohai). The 2021 comparative has been restated for consistency to reclassify the $300 mill ion impa irment from Other impa irment w ith in Underly ing profit to Goodwill and other impa irment Profit before taxation (PBT) by client segment 2022 Corporate, Commercial & Institut ional Banking $mill ion Consumer, Private & Business Banking $mill ion Ventures $mill ion Central & other items (segment) $mill ion Total $mill ion Operating income 10,045 6,016 29 165 16,255 External 8,899 4,989 29 2,338 16,255 Inter-segment 1,146 1,027 – (2,173) – Operating expenses (5,480) (4,148) (336) (779) (10,743) Operating profit/(loss) before impa irment losses and taxation 4,565 1,868 (307) (614) 5,512 Credit impa irment (425) (262) (16) (135) (838) Other impa irment (40) (10) (24) (5) (79) Profit from associates and jo int ventures – – (16) 183 167 Underlying profit/(loss) before taxation 4,100 1,596 (363) (571) 4,762 Restructuring (50) (63) (1) (60) (174) Goodwill and other impa irment 1 – – – (322) (322) Other items – – – 20 20 Statutory profit/(loss) before taxation 4,050 1,533 (364) (933) 4,286 1 Goodwill and other impa irment include $308 mill ion impa irment charge relat ing to the Group’s investment in its associate China Bohai Bank (Bohai). The 2021 comparative has been restated for consistency to reclassify the $300 mill ion impa irment from Other impa irment w ith in Underly ing profit to Goodwill and other impa irment ![]() 128 Standard Chartered – Annual Report 2022 Strategic report Underlying versus statutory results Profit before taxation (PBT) by client segment continued 2021 (Restated) 1 Corporate, Commercial & Institut ional Banking $mill ion Consumer, Private & Business Banking $mill ion Ventures $mill ion Central & other items (segment) $mill ion Total $mill ion Operating income 8,407 5,735 1 570 14,713 External 7,952 5,375 1 1,385 14,713 Inter-segment 455 360 – (815) – Operating expenses (5,278) (4,227) (253) (617) (10,375) Operating profit/(loss) before impa irment losses and taxation 3,129 1,508 (252) (47) 4,338 Credit impa irment 44 (282) (3) (22) (263) Other impa irment (49) – – (6) (55) Profit from associates and jo int ventures – – (6) 182 176 Underlying profit/(loss) before taxation 3,124 1,226 (261) 107 4,196 Restructuring (114) (235) (3) (155) (507) Goodwill and other impa irment 2 – – – (300) (300) Other items – – 20 (62) (42) Statutory profit/(loss) before taxation 3,010 991 (244) (410) 3,347 1 Following the increased strategic importance and reporting of Ventures to management, this has been established as a separate operating segment in 2022. Prior periods have been restated. 2 Goodwill and other impa irment include impa irment charge relat ing to the Group’s investment in its associate China Bohai Bank (Bohai). The 2021 comparative has been restated for consistency to reclassify the $300 mill ion impa irment from Other impa irment w ith in Underly ing profit to Goodwill and other impa irment. Profit before taxation (PBT) by region 2022 Asia $mill ion Africa & Middle East $mill ion Europe & Americas $mill ion Central & other items $mill ion Total $mill ion Operating income 11,213 2,606 2,353 83 16,255 Operating expenses (6,867) (1,669) (1,564) (643) (10,743) Operating profit/(loss) before impa irment losses and taxation 4,346 937 789 (560) 5,512 Credit impa irment (790) (120) 77 (5) (838) Other impa irment (47) 2 (3) (31) (79) Profit from associates and jo int ventures 179 – – (12) 167 Underlying profit/(loss) before taxation 3,688 819 863 (608) 4,762 Restructuring (75) (29) (23) (47) (174) Goodwill and other impa irment 1 (308) – – (14) (322) Other items 20 – – – 20 Statutory profit/(loss) before taxation 3,325 790 840 (669) 4,286 2021 Asia $mill ion Africa & Middle East $mill ion Europe & Americas $mill ion Central & other items $mill ion Total $mill ion 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 irment losses and taxation 3,675 823 518 (678) 4,338 Credit impa irment (434) 34 144 (7) (263) Other impa irment – (1) (18) (36) (55) Profit from associates and jo int ventures 175 – – 1 176 Underlying profit/(loss) before taxation 3,416 856 644 (720) 4,196 Restructuring (286) (25) (69) (127) (507) Goodwill and other impa irment 1 (300) – – – (300) Other items – – – (42) (42) Statutory profit/(loss) before taxation 2,830 831 575 (889) 3,347 1 Goodwill and other impa irment include $308 mill ion impa irment charge relat ing to the Group’s investment in its associate China Bohai Bank (Bohai). The 2021 comparative has been restated for consistency to reclassify the $300 mill ion impa irment from Other impa irment w ith in Underly ing profit to Goodwill and other impa irment ![]() 129 Standard Chartered – Annual Report 2022 Strategic report Return on tangible equity (RoTE) 2022 $mill ion 2021 $mill ion Average parent company Shareholders’ Equity 44,237 46,383 Less Preference share premium (1,494) (1,494) Less Average intang ible assets (5,557) (5,218) Average Ordinary Shareholders’ Tangible Equity 37,186 39,671 Profit for the period attributable to equity holders 2,902 2,313 Non-controlling interests 46 2 Div idend payable on preference shares and AT1 class if ied as equ ity (401) (410) Profit for the period attributable to ordinary shareholders 2,547 1,905 Items normalised: Provis ion for regulatory matters – 62 Restructuring 174 507 Goodwill and other impa irment¹ 322 300 Net gains on sale of businesses (20) (20) Ventures FVOCI unrealised (gains)/losses net of tax (36) 38 Tax on normalised items (24) (87) Underlying profit for the period attributable to ordinary shareholders 2,963 2,705 Underlying return on Tangible Equity 8.0% 6.8% Statutory return on Tangible Equity 6.8% 4.8% 1 Other impa irment includes $308 mill ion impa irment charge relat ing to the Group’s investment in its associate China Bohai Bank (Bohai). The 2021 comparative has been restated for consistency to reclassify the $300 mill ion impa irment from Other impa irment w ith in Underly ing profit. 2022 Corporate, Commercial& Institut ional Banking % Consumer, Private & Business Banking % Ventures % Central & other Items (Segment) % Total % Underlying RoTE 13.7 15.8 nm² (14.0) 8.0 Regulatory fine – – – – – Restructuring Of which: Income 0.2 – – – 0.1 Of which: Expenses (0.3) (0.8) (1.2) (0.4) (0.5) Of which: Credit impa irment – – – – – Of which: Other impa irment (0.1) – – (0.3) (0.1) Of which: Profit from associates and jo int ventures – – – (0.1) – Net gain on businesses disposed/held for sale – – – 0.3 0.1 Goodwill and other impa irment – – – (4.5) (0.9) Ventures FVOCI Unrealised gains net of taxes – – 35.6 – 0.1 Tax on normalised items 0.1 0.2 0.3 (0.1) 0.1 Statutory RoTE 13.6 15.2 nm² (19.2) 6.8 ![]() 130 Standard Chartered – Annual Report 2022 Strategic report Underlying versus statutory results 2021 (Restated) 1, 3 Corporate, Commercial& Institut ional Banking % Consumer, Private & Business Banking % Ventures % Central & other Items (Segment) % Total % Underlying RoTE 9.6 11.6 nm² (5.4) 6.8 Regulatory fine – – – (0.8) (0.2) Restructuring Of which: Income – – – (0.6) (0.1) Of which: Expenses (0.6) (3.0) (45.2) (1.2) (1.2) Of which: Credit impa irment – – – – – Of which: Other impa irment 0.1 – – (0.6) – Of which: Profit from associates and jo int ventures – – – 0.3 0.1 Net loss on businesses disposed/held for sale – – nm² – 0.1 Goodwill and other impa irment – – – (4.1) (0.8) Ventures FVOCI Unrealised gains/(losses) net of taxes – – nm² – (0.1) Tax on normalised items 0.2 0.8 (59.7) – 0.2 Statutory RoTE 9.3 9.4 nm² (12.3) 4.8 1 Following the increased strategic importance and reporting of Ventures to management, this has been established as a separate operating segment in 2022. Prior periods have been restated. 2 Not meaningful 3 Goodwill and other impa irment include $308 mill ion impa irment charge relat ing to the Group’s investment in its associate China Bohai Bank (Bohai). The 2021 comparative has been restated for consistency to reclassify the $300 mill ion impa irment from Other impa irment w ith in Underly ing profit to Goodwill and other impa irment RoTE for a segment is calculated as current year’s profits to weighted average tangible equity of that segment. Full details of RoTE calculation is provided in APM defin it ions. Net charge-off ratio 2022 2021 Credit impa irment (charge)/ release for the year/period $mill ion Net average exposure $mill ion Net charge-off ratio % Credit impa irment (charge)/ release for the year/period $mill ion Net average exposure $mill ion Net charge-off ratio % Stage 1 5 317,962 0.00% 1 319,860 0.00% Stage 2 (325) 13,486 2.41% (65) 17,896 0.36% Stage 3 (423) 3,022 14.00% (194) 3,740 5.19% Total exposure (743) 334,470 0.22% (258) 341,496 0.08% Earnings per ordinary share (EPS) 2022 Underlying $ mill ion Provis ion for regulatory matters $ mill ion Restructuring $ mill ion Net loss on sale of businesses $ mill ion Goodwill & other impa irment 1 $ mill ion Tax on normalised items $ mill ion Statutory $ mill ion Profit/(loss) for the year attributable to ordinary shareholders 2,999 – (174) 20 (322) 24 2,547 Basic – Weighted average number of shares (mill ions) 2,966 2,966 Basic earnings per ordinary share (cents) 101.1 85.9 2021 (Restated)¹ Underlying $ mill ion Provis ion for regulatory matters $ mill ion Restructuring $ mill ion Net loss on sale of businesses $ mill ion Goodwill & other impa irment 1 $ mill ion Tax on normalised items $ mill ion Statutory $ mill ion Profit/(loss) for the year attributable to ordinary shareholders 2,667 (62) (507) 20 (300) 87 1,905 Basic – Weighted average number of shares (mill ions) 3,108 3,108 Basic earnings per ordinary share (cents) 85.8 61.3 1 Other Impairment includes $308 mill ion impa irment charge relat ing to the Group’s investment in its associate China Bohai Bank (Bohai). The 2021 comparative has been restated for consistency to reclassify the $300 mill ion impa irment from Other impa irment w ith in Underly ing profit which has resulted in the restatement of Underlying basic earnings per ordinary share (cents) and Underlying diluted earnings per ordinary share (cents) ![]() 131 Standard Chartered – Annual Report 2022 Strategic report An alternative performance measure is a financ ial measure of h istor ical or future financial performance, financial pos it ion, or cash flows, other than a financial measure defined or spec if ied in the applicable financ ial report ing framework. The following are key alternative performance measures used by the Group to assess financ ial performance and financial pos it ion. Measure Definit ion Constant currency basis 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 for restructuring and other items representing profits or losses of a capital nature; amounts consequent to investment transactions driven by strategic intent, excluding amounts consequent to Ventures transactions, as these are considered part of the Group’s ordinary course of business; and other infrequent and/or exceptional transactions that are sign ificant or mater ial in the context of the Group’s normal business earnings for the period, and items which management and investors would ordinar ily ident ify separately when assess ing performance period-by-period. A reconcil iat ion between underlying/normalised and statutory performance is contained in Note 2 to the financ ial statements. The following balances and measures are presented on an underlying basis when described as such: • Operating income • Operating expense • Profit before tax • Earnings per share (basic and diluted) • Cost-to-income ratio • Jaws • RoTE or Return on tangible equity Advances-to-deposits/ customer advances-to-deposits (ADR) ratio The ratio of total loans and advances to customers relative to total customer accounts, excluding approved balances held with central banks, confirmed as repayable at the point of stress. A low advances-to-deposits ratio demonstrates that customer accounts exceed customer loans resulting from emphasis placed on generating a high level of stable funding from customers. Cost-to-income ratio The proportion of total operating expenses to total operating income. Cover ratio The ratio of impa irment prov is ions for each stage to the gross loan exposure for each stage. Cover ratio after collateral/ cover ratio includ ing collateral The ratio of impa irment prov is ions for stage 3 loans and real isable value of collateral held against these non-performing loan exposures to the gross loan exposure of stage 3 loans. Gross yield Statutory interest income div ided by average interest earning assets. Jaws The difference between the rates of change in revenue and operating expenses. Posit ive jaws occurs when the percentage change in revenue is higher than, or less negative than, the corresponding rate for operating expenses. Loan loss rate Total credit impa irment for loans and advances to customers over average loans and advances to customers. Net charge-off ratio The ratio of net credit impa irment charge or release to average outstand ing net exposures. Net tangible asset value per share Ratio of net tangible assets (total tangible assets less total liab il it ies) to the number of ord inary shares outstanding at the end of a reporting period. Net yield Gross yield less rate paid. NIM or Net interest margin Net interest income adjusted for interest expense incurred on amortised cost liab il it ies used to fund the Financ ial Markets bus iness, div ided by average interest-earning assets excluding financ ial 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 irment over the past 12 months. RAR is then div ided by the 12 month roll ing average full-time equivalent (FTE) to determine RAR per FTE. Rate paid Statutory interest expense adjusted for interest expense incurred on amortised cost liab il it ies used to fund financial instruments held at fair value through profit or loss, div ided by average interest bearing liab il it ies. RoTE or Return on ordinary shareholders’ tangible equity The ratio of the current year’s profit available for distr ibut ion to ordinary shareholders to the weighted average tangible equity, being ordinary shareholders’ equity less the average goodwill and intang ible assets for the report ing period. Where a target RoTE is stated, this is based on profit and equity expectations for future periods. Underlying RoTE The ratio of the current year’s profit available for distr ibut ion to ordinary shareholders plus fair value movements through other comprehensive income relating to the Ventures segment to the weighted average ordinary shareholders’ equity for the reporting period. TSR or Total shareholder return The total return of the Group’s equity (share price growth and div idends) to investors. #### Alternative performance measures ![]() 132 Standard Chartered – Annual Report 2022 Strategic report Viab il ity statement The directors are required to issue a viab il ity statement regarding the Group, explain ing the ir assessment of the prospects of the Group over an appropriate period of time and state whether they have reasonable expectation that the Group will be able to continue in operation and meet its liab il it ies as they fall due. The directors are to also disclose the period of time for which they have made the assessment and the reason they consider that period to be appropriate. In consider ing the v iab il ity of the Group, the directors have assessed the key factors includ ing, but not l im ited to; inflat ionary pressures, sovereign downgrades and recession, the war in Ukraine and other geopolit ical events l ikely to affect the Group’s business model and strategic plan, future performance, capital adequacy, solvency and liqu id ity taking into account the emerging risks as well as the princ ipal r isks. The viab il ity assessment has been made over a period of three years, which the directors consider appropriate as it is with in 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 affecting the financ ial serv ices industry. The directors will continue to monitor and consider 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 2023 Corporate Plan, the forward-looking cash flows and balances includes the antic ipated impact of global interest rates on revenues and inflat ionary pressure on costs . The corporate plan is evaluated and approved each year by the Board with confirmation from the Group Ch ief Risk Officer that the Plan is aligned with the Enterprise Risk Management Framework and Group Risk Appetite Statement and considers the Group’s future projections of profitabil ity, cash flows, capital requirements and resources, liqu id ity ratios and other key financ ial and regulatory ratios over the period. The corporate plan details the Group’s key performance measures, of forecast profit, CET 1 capital ratio forecast, return on tangible equity forecasts, cost to income ratio forecasts and cash investment project ions. 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 performs enterprise-wide stress tests using a range of bespoke hypothetical scenarios that explore the resil ience of the Group to shocks to its balance sheet and business model. To assess the Group’s balance sheet vulnerabil it ies and capital and liqu id ity adequacy, severe but plausible macro-financ ial scenarios explore shocks that trigger one or more of: • Global slowdowns includ ing recess ions in China, Asian and Western economies that can be acute or more protracted, resulting in severe declines in propertyprices • Sharp falls in world trade volumes and disrupt ion to global supply chains, includ ing the severe worsen ing of trade tensions and rise of protection ism. • Inflationary pressures in the global economy includ ing volat il ity in commodity prices • Sign ificant r ises in interest rates and depreciat ion in emerging market currencies, resulting in heightened sovereign risk • Financ ial market volat il ity, includ ing s ign ificant moves in asset prices driven by a combinat ion of macroeconom ic and geopolit ical events This year, the primary focus has been on the effects of ris ing interest rates and inflat ion, comb ined with severe market volatil ity and a global economic downturn. The Group has explored the impact of ris ing rates and inflat ion on customers’ ab il ity to serv ice debt and considered how net interest income sensit iv ity evolves under various scenarios. For the 2022 ICAAP submiss ion for cl imate risk, the Group moved towards a more quantitat ive approach compar ing the worst (annualised) five-year loss period from all three NGFS scenarios to the projected peak losses from the 2022 Group ICAAP. The Late Action scenario was ident ified to dr ive the maximum difference in losses in a five year period; however, this was lower than losses experienced under the ICAAP macroeconomic stress scenario, concluding that an addit ional cap ital add-on was not required for climate risk. In 2022, the Group further assessed the impact from Climate risk on our CCIB corporate client portfolio based on three International Energy Agency (IEA) scenarios and three Phase 2 NGFS scenarios and partic ipated in the Monetary Authority of Singapore Industry-Wide Stress Test. The impact of sea level rises under various Intergovernmental Panel on Climate Change (IPCC) Representative Concentration Pathways (RCP) scenarios was used to explore the Physical Risk impact on the Consumer, Private and Business Banking (CPBB) resident ial mortgage portfol io. Under this range of scenarios, the results of these stress tests demonstrate that the Group has sufficient cap ital and liqu id ity to continue as a going concern and meet regulatory min imum capital and liqu id ity requirements. To assess the Group’s business model vulnerabil it ies, 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 ical tens ions disrupt ing cap ital flows with in the Group’s footpr int and cyber security attacks. Insights from these reverse stress tests can inform strategy, risk management and capital and liqu id ity planning. Further informat ion on stress test ing is provided in the Risk management approach section (page 295). The directors further considered the Group’s Internal Liqu id ity Adequacy Assessment Process (ILAAP), which considers the Group’s liqu id ity posit ion, its framework and whether suffic ient liqu id ity resources are being mainta ined to meet l iab il it ies as they fall due. Funding and liqu id ity was considered in the context of the risk appetite metrics, includ ing the ADR and LCR rat ios. Further informat ion on stress test ing is provided in the Risk management approach section (page 297). 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 il ity, compliance, informat ion and cyber secur ity financial cr ime and model risks. The BRC further exercises oversight over the integrated risks of climate, dig ital asset and third party which cut across all princ ipal r isks. #### Viability statement ![]() 133 Standard Chartered – Annual Report 2022 Strategic report The BRC receives regular reports that inform it of the Group’s key risks, as well as updates on the macroeconomic environment, geo-polit ical outlook, market developments, and regulatory updates on relevant matters. In 2022, the BRC had deeper discuss ion on: Blue Sky Th ink ing/ Hor izon Scanning, CCIB Risk deep dives, specif ically the r isk to the Group’s assets, operations and ind iv iduals due to the potential for unauthorised access, use, disclosure, disrupt ion, mod if icat ion or destruction of informat ion. GSAM second line to first line transit ion, Commod ity Traders Framework, Credit Portfolio Management annual review, cloud governance and material cloud deployments, Reputational and Sustainab il ity risk includ ing the Groups approach to ident ification and management thereof. CPBB Risk Review, Safety and Security risk, Credit Risk review includ ing how COVID-19 related restr ict ions are lift ing in many of the groups markets. Chief Risk officer report around balance sheet capital and liqu id ity management. SC Ventures risk and governance, Taiwan tensions and actions proposed by management, emerging financ ial cr ime threats and the appointment of the new GCRO. Based on the informat ion rece ived, the directors’ considered the princ ipal uncerta int ies as well as the pr inc ipal r isks in their assessment of the Group’ viab il ity, how these impact the risk profile, performance and viab il ity of the Group and any specif ic mit igat ing or remedial actions necessary. For further details of informat ion relevant to the d irectors, assessment can be found in the following sections of the annual report and accounts: • The Group’s Business model (pages 18 to 20) and Strategy (pages 22 to 23) • The Group’s current posit ion and prospects includ ing factors likely to affect future results and development, together with a descript ion of financial and fund ing posit ions are descr ibed in the client segment reviews and regional reviews (pages 26 to 31) • An update on the key risk themes of the Group is discussed in the Risk overview, fo und in the Strategic Report (pages 42 to 51) • The BRC section of the Director’s report (pages 170 to 175) • The Group’s Topical and Emerging Risks, sets out the key external factors that could impact the Group in the coming year (page 48 to pages 51). • The Group’s Enterprise Risk Management Framework details how the Group ident ifies, manages and governs r isk (pages 295 to 300) • The Group’s Risk profile provides an analysis of our risk exposures across all major risk types (page 301 to 319) • The capital posit ion of the Group, regulatory development and the approach to management and allocation of capital are set out in the Capital review (pages 320 to 325) 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 il it ies as they fall due over the period of the assessment up to 31 December 2025. Our Strategic report from pages 01 to 133 has been reviewed and approved by the Board. Bill Winters Group Chief Executive 16 February 2023 ![]() #### Directors’ report 136 Group Chairman’s governance overview 138 Board of Directors 143 Management Team 146 Corporate governance 184 Directors’ remuneration report 218 Other disclosures 231 Statement of Directors’ responsib il it ies #### Four more years with Liverpool FC #### This year we announced a four-year extension of our partnership with Liverpool Football Club and Liverpool #### Football Club Women. #### We first became main sponsors in July #### 2010 and the extension runs until the end of 2026/27 UK football season. #### The extension includes increased investment in LFC Women. As part of our partnership with the Reds, Liverpool plays an active role in our Goal programme - which aims to #### empower young girls through sport by providing financial education and life skills. Read more online at www.sc.com/lfc 134 Standard Chartered – Annual Report 2022 Directors’ report ![]() 135 Standard Chartered – Annual Report 2022 Directors’ report ![]() 136 Standard Chartered – Annual Report 2022 Directors’ report Group Chairman’s governance overview #### Group Chairman’s governance overview “Good governance requires an awareness of the landscape, appropriate oversight, and a strong tone from the top, #### driven by an effective Board.” Dr José Viñals Group Chairman strengthening of our risk oversight through the reallocation of the work of the Board Financ ial Cr ime Risk Committee to a combinat ion of the Board, Board Risk Committee and Audit Committee. The reallocation enables a more integrated review of risks that are closely associated, such as fraud, informat ion and cyber secur ity and financial cr ime. Financ ial and non-financial r isks continue to receive substantial attention and focus at the Board Risk Committee and Board. In addit ion, the Aud it Committee carefully scrutin ised financial reporting matters and internal controls, cognisant of the challenging external environment. The Corporate Plan is an important part of the Board’s agenda each year and never more than this year, with so many economic and polit ical headw inds. The Board considered a number of strategic opportunit ies for growth in the context of our risk appetite, receiv ing presentations from our front-line businesses and risk teams before approving the plan. The easing of travel restrict ions has meant that I have been able to vis it a number of markets and we have add it ionally held Board meetings in Singapore and Dubai, where we hosted a subsid iary governance conference attended by the chairs of many of our banking subsid iar ies. It was a great event and I welcomed the opportunity to engage with so many of my colleagues, both old and new. The Board is planning to vis it several countr ies across our footprint this year as we continue to strengthen the linkages between the main and subsid iary boards. We also were pleased that shareholders could attend our 2022 Annual General Meeting (AGM) in person for the first time since 2019 given the easing of restrict ions on public gatherings. Recognis ing the impact on society and other stakeholders, the Board sought, and received, shareholder endorsement of our net zero pathway at the 2022 AGM. Market Forces and Friends Provident Foundation filed a resolution outlin ing a d ifferent approach, which did not pass. We appreciate the involvement of both organisat ions and share their commitment to the transit ion to net zero, but the Board preferred the Group’s strategic approach to achieve this and recommended that shareholders support our advisory resolution and oppose the requis it ioned resolution. The Board, whether directly or through our Culture and Sustainab il ity Committee, is regularly apprised of the progress we are making against the commitments in the net zero pathway and continues to be actively involved, and I am pleased that we are meeting the milestones set out in our plan. Further informat ion on th is can be found on pages 64 to 124. I was disappo inted w ith the levels of support for our directors’ remuneration policy and directors’ remuneration report at last year’s AGM, which was the subject of much Board and Remuneration Committee discuss ion. I am grateful to Chr ist ine for lead ing the engagement with many of our shareholders to better understand their views. This resulted in the updates announced in September which are detailed, along with the extensive engagement undertaken by the Committee, in the Directors’ Remuneration Report starting on page 184. The Board was heartened by the results of the externally facil itated effectiveness review of the Board and its committees. It assessed the Board’s progress since the last external review in 2019 and concluded that the Board continues to operate effectively while also ident ify ing some areas for improvement. More detail on process, outcomes and actions can be found on page 156. Finally, the Board remains confident for the Group’s future and is committed to our strategy, our purpose, and is laser focused on developing sustained and sustainable returns with in our r isk appetite. Dr José Viñals Group Chairman In my opening letter, I referred to the uncertain backdrop to 2022, caused by ongoing economic, polit ical and soc ial dislocat ion, the continu ing impact of COVID-19 and geopolit ical tens ions in many parts of the World. Despite the uncertainty, we have made strong progress across our portfolio. This progress is supported by the resil ience of the bus iness, which is in turn underpinned by our governance. Good governance requires an awareness of the landscape, appropriate oversight, and a strong tone from the top, driven by an effective Board. A key focus of the Board this year was managing its own succession, with the loss of a number of very experienced non-executives and the appointment of some excellent replacements, as I mentioned in my statement on pages 7 and 8. I am very conscious that with the retirements of Naguib Kheraj, Byron Grote, Christ ine Hodgson and Jasm ine Whitbread, we lose a wealth of experience and knowledge of the Group. Accordingly, we have accelerated the induct ions of our new non-executives who have spent a lot of time with the outgoing non-executives. I was also pleased to welcome Adrian de Souza as Group Company Secretary in May 2022, who takes over from Scott Corrigan’s inter im tenure and I would l ike to take the opportunity to thank Scott for his wise counsel. Further detail regarding the changes made to our Board appears in the Governance and Nominat ion Comm ittee report starting on page 179. Another key area of focus was geopolit ical r isk. The Board received presentations from economists, strategists and geo-polit ical commentators over a number of Board sessions and dinners. We considered carefully the impact on our business of China- US tensions and the Russia-Ukraine war, as well as those presented by Climate Risks. The conclusions of these sessions helped us challenge and shape our Corporate Plan. In April, we continued the ![]() 137 Standard Chartered – Annual Report 2022 Directors’ report Succession The Board planned for the transit ion of our long standing non-executive directors, ensuring that the Board and its committees remained well balanced with a strong pipel ine of candidates with the appropriate skillsets, experience and capabil it ies. #### Board at a glance Strategy The Board approved actions to focus resources with in its Africa and Middle East (AME) region to those areas where it can have the greatest scale and growth potential, in order to better support its clients. Female 6 Male 8 100% director attendance at scheduled Board meetings during 2022 Review undertaken over 4 months. 43% female representation on the Board as at 10 February 2023 Exits in 7 markets Focus solely on our CCIB business in 2 markets Meetings Divers ity Effectiveness Engagement The Board paid sign ificant attent ion to enhancing its effectiveness and that of its committees. An externally facil itated Board effect iveness review was commiss ioned dur ing 2022. Given the alleviat ion of travel restrict ions in many of our markets we were able to reintroduce director vis its across our footpr int. 16 72 4 See page 156 See pages 179 to 183 See page 152 See pages 179 to 183 See pages 158 to 162 See page 147 4 new director appointments Shir ish Apte Robin Lawther, CBE Jackie Hunt Dr Linda Yueh, CBE 2 new committee Chairs Maria Ramos Shir ish Apte New Senior Independent Director Maria Ramos Figures on this page cover the period 1 January 2022 to 10 February 2023 100 % 43 % Directors, either collectively or ind iv idually, vis ited more than 16 markets in total during the year ![]() 138 Standard Chartered – Annual Report 2022 Directors’ report Board of Directors #### Board of Directors Committee Chair shown in green Audit Committee Board Risk Committee Culture and Sustainab il ity Committee Governance and Nominat ion Comm ittee Remuneration Committee A Ri S N R Committee key Dr José Viñals (68) 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 substantial experience in the internat ional regulatory arena and has exceptional understanding of the economic, financial and pol it ical dynam ics of our markets and of global trade. He has a broad network of decis ion-makers in the jurisd ict ions in our footprint. Career Until 2016, José was the Financ ial Counsellor and the Director of the Monetary and Capital Markets Department at the International Monetary Fund (IMF) and was responsible for the oversight and direct ion of the IMF’s monetary and financial sector work. He was the IMF’s chief spokesman on financial matters, includ ing global financial stabil ity. Dur ing his tenure, José was a member of the Plenary and Steering Committee of the Financ ial Stab il ity Board, playing a key role in the reform of internat ional financial regulat ion. Prior to the IMF, José began his career as an economist and as a member of the faculty at Stanford Univers ity, before go ing to the Central Bank of Spain, where he was the Deputy Governor. José has held many other board and advisory posit ions, includ ing cha ir of Spain’s Deposit Guarantee Fund, chair of the International Relations Committee at the European Central Bank, member of the Economic and Financ ial Comm ittee of the European Union, and chair of the Working Group on Institut ional Investors at the Bank for International Settlements. External appointments José is Co-Chair of the United Nations’ Alliance of Global Investors for Sustainable Development (GISD). He is a board member of the Institute of International Finance (IIF), a member of the board of directors of the Bretton Woods Committee, member of the Advisory Council of CityUK, member of the World Economic Forum’s Community of Chairpersons and board member of the Social Progress Init iat ive. He is a past President of the International Monetary Conference. Committees N Bill Winters (61) 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 ificant frontl ine global banking experience and a proven track record of leadership and financ ial success. He has extensive experience 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 ited to be a comm ittee member of the Independent Commiss ion on Bank ing to recommend ways to improve competit ion and financial stab il ity in banking. Subsequently, he served as an adviser to the Parliamentary Commiss ion on Bank ing Standards and was asked by the Court of the Bank of England to complete an independent review of the bank’s liqu id ity operations. In 2011, Bill founded Renshaw Bay, an alternative asset management firm, 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 Pension Insurance Corporation plc and RIT Capital Partners plc. He received a CBE in 2013. Bill is a director of Standard Chartered Holdings Lim ited. External appointments Bill is an independent non-executive director of Novartis International AG. He is also an Advisory Group Member of the Integrity Council for Voluntary Carbon Markets and a member of the Steering Committee of the UK Voluntary Carbon Markets Forum. Bill Winters leads the Management Team ![]() 139 Standard Chartered – Annual Report 2022 Directors’ report Andy Halford (63) Group Chief Financ ial Officer Appointed July 2014. Andy was also appointed to the Court of Standard Chartered Bank in July 2014. Experience Andy has a strong finance background and deep experience of managing complex internat ional bus inesses across dynamic and changing markets. Career Andy was finance director at East Midlands Electric ity plc pr ior to jo in ing Vodafone in 1999 as financ ial d irector for Vodafone Lim ited, the UK operat ing company. Andy was later appointed financ ial director for Vodafone’s Northern Europe, Middle East and Africa region, and later the chief financ ial officer of Ver izon Wireless in the US. He was a member of the board of representatives of the Verizon Wireless Partnership. Andy was appointed Chief Financ ial Officer of Vodafone Group plc in 2005, a posit ion he held for n ine years. In 2013, he joined Marks and Spencer Group plc as an independent non-executive director, becoming its Senior Independent Director in 2018 until stepping down on 31 December 2022. As Group Chief Financ ial Officer at Standard Chartered, Andy is responsible for Finance, Treasury, Strategy, Corporate Development, Investor Relations, Property and Supply Chain Management functions. Andy is also director of Standard Chartered Holdings Lim ited and a trustee of the Standard Chartered Foundation. External appointments None. Andy Halford also sits on the Management Team Shir ish Apte (70) Independent Non-Executive Director Appointed May 2022. Shir ish was appointed to the Court of Standard Chartered Bank in January 2023. Experience Shir ish has extens ive corporate, investment banking, risk management, commercial and retail banking experience. He has a deep understanding of financ ial services, notably across the Asia Pacif ic, Middle East, Africa and Central and Eastern European regions. Career Shir ish spent over 30 years w ith Cit igroup, where he focused on corporate and investment banking, and managed commercial and retail banking businesses at country and regional level. He has strong risk experience at country and regional level and was a Senior Credit Officer and a Senior Securit ies Officer at C it igroup. Sh ir ish was Co-CEO for Cit i’s Europe, M iddle East and Africa business from 2008 to 2009, and Regional CEO Asia Pacif ic from 2009 to 2011. He was Chairman of Asia Pacif ic Bank ing from 2012 until his retirement in 2014. He was on the Executive and Operating Committees of Cit igroup from 2008 to 2014. From June 2014, he was an independent non-executive director at the Commonwealth Bank of Australia until stepping down in October 2022. External appointments Shir ish is an independent non-executive director at Singapore Life Pte Ltd, and an independent non-executive director of Keppel Corporation Lim ited, where he is a member of its Audit and Board Risk Committees. Committees R A Ri N Maria Ramos (64) Senior Independent Director Appointed January 2021. Maria was also appointed to the Court of Standard Chartered Bank in January 2021 and appointed Senior Independent Director in September 2022. Experience Maria has extensive CEO, banking, commercial, financ ial, pol icy and internat ional exper ience. Career Based in South Africa, Maria served as chief executive officer of ABSA Group Lim ited (prev iously Barclays Africa Group), a divers ified financial serv ices group serving 12 African markets, from 2009 to 2019. Before join ing ABSA, Maria was the group chief executive of Transnet Ltd, the state- owned freight transport and logist ics serv ice provider, for five years. Prior to her CEO career, Maria served for seven years as director- general of South Africa’s National Treasury (formerly the Department of Finance), where she played a key role in transforming the National Treasury into one of the most effective and effic ient state departments in the post-apartheid admin istrat ion. Maria has served on a number of internat ional boards, includ ing Sanlam Ltd, Remgro Ltd, and SABMiller plc and more recently was a non-executive director of The Saudi Brit ish Bank and Public Investment Corporation Lim ited before stepp ing down in December 2020. External appointments Maria is Chair of AngloGold Ashanti Lim ited and a non- executive director of Compagnie Financ ière Richemont SA. She is also a member of the Group of Thirty, sits on the International Advisory Board of the Blavatnik School of Government at Oxford Univers ity and on the Wits Foundation Board of Governors. Committees Ri A R N ![]() 140 Standard Chartered – Annual Report 2022 Directors’ report Board of Directors Phil Rivett (67) 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 ificant professional accountancy and audit experience, specif ically focused in the financial serv ices sector. He has a strong technical understanding and broad financial and bus iness experience. Career Phil jo ined Pr icewaterhouseCoopers (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 lead relationsh ip Partner for several large FTSE 100 companies, includ ing a number of internat ional banks and financial serv ices inst itut ions. He also has substantial internat ional exper ience, having worked with banks across the Middle East and Asia, in particular China. He became Leader of PwC’s Financ ial Services Assurance practice in 2007 and was appointed Chairman of its Global Financ ial Serv ices Group in 2011. Phil has sat on a number of global financial serv ices industry groups, producing guidel ines for best practice in governance, financ ial reporting and risk management. External appointments Phil is an independent non-executive director and Chair of the Audit Committee at Nationw ide Bu ild ing Soc iety. Committees A Ri N Gay Huey Evans, CBE (68) 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 financial serv ices experience with sign ificant commercial and UK regulatory and governance experience. Career Gay spent over 30 years working with in the financial serv ices industry, the internat ional cap ital markets and with the UK financial regulator. Gay spent seven years with the Financ ial Serv ices Authority from 1998 to 2005, where she was director of markets div is ion, capital markets sector leader, with responsib il ity for establish ing a market-facing div is ion for the supervis ion of market infrastructure, oversight of market conduct and developing markets policy. From 2005 to 2008, Gay held a number of roles at Cit ibank, includ ing head of governance, C it i Alternative Investments, EMEA, before jo in ing Barclays Capital where she was vice chair of investment banking and investment management. She was previously a non-executive director at Aviva plc, the London Stock Exchange Group plc and Itau BBA International Plc. In 2016, she received an OBE for services to financ ial serv ices and divers ity and a CBE for serv ices to the economy and philanthropy in the Queen’s Birthday Honours list 2021. External appointments Gay is Chair of the London Metal Exchange, a non-executive director of ConocoPhill ips and S&P Global, 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 Benjamin Frankl in House. Committees Ri David Conner (74) Independent Non-Executive Director Appointed January 2016. Experience David has sign ificant global and corporate, investment and retail banking experience, strong risk management credentials and an in-depth knowledge of Asian markets. Career David spent his career in the financ ial services industry, liv ing and work ing across Asia for 37 years, for both Cit ibank and OCBC Bank. He joined C it ibank in 1976 as a management trainee and went on to hold a number of Asia-based senior management roles, includ ing ch ief executive officer of Cit ibank Ind ia and managing director and marketing manager at Cit ibank Japan, before leaving Cit ibank in 2002. David jo ined 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 ificant turbulence. David stepped down as chief executive 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 Chair of the Barnard Cancer Institute and an emeritus trustee of Washington Univers ity in St Louis. Committees A Ri R David is also a member of the Combined US Operations Risk Committee of Standard Chartered Bank. Jasmine Whitbread (59) Independent Non-Executive Director Appointed April 2015. Jasmine was appointed to the Court of Standard Chartered Bank in April 2019. Experience Jasmine has sign ificant bus iness leadership experience as well as first-hand experience of operating across our markets. Career Jasmine began her career in internat ional market ing in the technology sector and joined Thomson F inanc ial in 1994, becoming managing director of 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 ional director responsible for Oxfam’s programmes worldwide. Jasmine jo ined Save the Ch ildren in 2005, where she was responsible for revital is ing one of the UK’s most established charit ies. In 2010, she was appo inted as Save the Children’s first internat ional ch ief executive officer, a posit ion she held unt il she stepped down in 2015. 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 ing group w ith a miss ion to make London the best c ity in the world to do 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 ière R ichemont SA. Committees S N R As announced in November 2022, Jasmine will step down from the Board at the 2023 Annual General Meeting (AGM). ![]() 141 Standard Chartered – Annual Report 2022 Directors’ report David Tang (68) Independent Non-Executive Director Appointed June 2019. David was also appointed to the Court of Standard Chartered Bank in June 2019. Experience David has a 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 ional and Ch inese operational experience in the technology and venture capital industr ies, cover ing venture investments, sales, marketing, business development, research and development and manufacturing. From 1989 to 2004, David held a number of senior posit ions in Apple, Dig ital Equ ipment Corp and 3Com based in China and across the Asia Pacif ic region. From 2004 to 2010, David held various posit ions in Nokia, includ ing corporate vice president, chairman of Nokia Telecommunicat ions Ltd and v ice chairman of Nokia (China) Investment Co. Ltd. He went on to become corporate senior vice president and regional president of Advanced Micro Devices (AMD), Greater China, before jo in ing NGP Capital (Nokia Growth Partners) in Beijing as managing director and partner in 2013, a posit ion he held until retir ing in June 2021. External appointments David jo ined Ka iyun 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 listed on the Nasdaq Stock Market, and Kingsoft Corporation, a leading Chinese software and internet services company listed on the Hong Kong Stock Exchange. Committees Ri S Robin Lawther, CBE (61) Independent Non-Executive Director Appointed July 2022. Robin was appointed to the Court of Standard Chartered Bank in December 2022. Experience Robin brings extensive internat ional bank ing experience in global markets and financial inst itut ions. In addit ion to a broad understand ing of commercial banking, she has special ist knowledge in investment banking, mergers and acquis it ions and capital rais ing. Career Robin spent over 25 years at JP Morgan Chase in a number of senior executive posit ions. She has valuable executive and non-executive experience across global markets and has considerable understanding of regulatory and governance issues. From 2019 to 2021, she served as a non-executive director on the board of M&G plc. In January 2014, Robin jo ined Shareholder Executive, which later became UK Government Investments (UKGI), as a non-executive board member until completing her term in May 2022. She received a CBE for services to finance and divers ity in the Queen's Birthday Honours 2020. External appointments Robin is an independent non-executive director of Nordea Bank Abp, the largest Nordic Bank, and a member of its Remuneration & People Committee. She is also an independent board member of Ashurst LLP and a member of the advisory board at Aon PLC. Committees Ri S R Jackie Hunt (54) Independent Non-Executive Director Appointed October 2022. Jackie was also appointed to the Court of Standard Chartered Bank in October 2022. Experience Jackie is a Chartered Accountant and has spent most of her career with in financial serv ices. She brings sign ificant UK and internat ional financial serv ices experience, includ ing asset management, insurance, regulatory and accounting knowledge. Career Jackie has held a number of senior management posit ions in companies includ ing Av iva, Hibern ian Group, Norw ich Union Insurance, PwC and RSA Insurance. From 2016, Jackie was a member of the Allianz SE management Board with executive responsib il ity for the asset management and US life insurance div is ions, a posit ion she held until 2021. Prior to that, Jackie was an executive director of Prudential plc and CEO of Prudential UK, Europe and Africa. She was Group Chief Financ ial Officer of Standard Life plc from 2010 to 2013, where she helped transform the life insurer into a diverse savings, pensions and asset management business. Jackie was previously the Senior Independent Director of National Express Group PLC, a non- executive director of TheCityUK and the Deputy Chair of the FCA Practit ioner Panel. External appointments Jackie is an independent non-executive director of Man Group PLC and Rothesay Life PLC. Ahead of commencing her role as an independent non-executive director of Will is Towers Watson plc from 1 Apr il 2023, Jackie will step down from her role as an independent non-executive director of OneWeb Holdings Lim ited. Committees A S ![]() 142 Standard Chartered – Annual Report 2022 Directors’ report Board of Directors Adrian de Souza (52) Group Company Secretary Appointed Adrian was appointed Group Company Secretary in May 2022. Career Adrian qualif ied as a lawyer in 1997. Prior to jo in ing Standard Chartered, he was General Counsel for Vivo Energy PLC, a FTSE-250 pan-African fuel retailer, where he was responsible for the: Company Secretarial, Governance, Ethics, Compliance and Forensic Investigat ions funct ions and was a member of the group’s Executive Committee. After working in private practice at internat ional law firms Hogan Lovells and Clifford Chance, Adrian served as General Counsel and Company Secretary at IQSA Group (a Goldman Sachs private equity business); Company Secretary at Barclays Bank UK PLC, General Counsel and Company Secretary of the FTSE 100 company, Land Securit ies Group PLC, where he was a member of the Group’s Executive Committee and Head of Legal at SABMiller Europe. Naguib Kheraj, Dr Byron Grote and Christ ine Hodgson, CBE stepped down from the Group as independent non-executive directors on 30 April 2022, 30 November 2022 and 31 January 2023 respectively. Scott Corrigan stepped down as Interim Group Company Secretary on 5 May 2022. Contribut ions of how each d irector standing for re-election is, and continues to be, important to Standard Chartered PLC’s long-term sustainable success will be included in the Notice of AGM 2023. Dr Linda Yueh, CBE (51) Independent Non-Executive Director Appointed January 2023. Linda was also appointed to the Court of Standard Chartered Bank in January 2023. Experience Linda is a renowned economist and financial broadcaster w ith a diverse range of skills and experience across financ ial services, technology, not-for-profit and business to business service sectors. Career Linda has held various academic roles and acted in various advisory roles after starting her career as a corporate lawyer at Paul, Weiss, Rifk ind, Wharton & Garr ison. Linda was Economics Editor at Bloomberg News from 2010 to 2012 and Chief Business Correspondent for the BBC between 2013 and 2015. She was a Vis it ing Professor at LSE IDEAS at the London School of Economics and Polit ical Sc ience from 2019 to 2022 and served on the Independent Review Panel on Ring-Fencing and Proprietary Trading for HM Treasury. Between 2011 and 2013, Linda held non-executive directorsh ips w ith Scottish Mortgage Investment Trust Plc, London & Partners Ltd and JPMorgan Asia Growth & Income Plc. She was Senior Independent Director of Fidel ity Ch ina Special Situat ions Plc from 2019 before stepping down in December 2022. Linda was awarded a CBE for Services to Economics in the New Year Honours List of 2023. External appointments Linda is a Fellow at St Edmund Hall, Oxford Univers ity and Adjunct Professor of Economics at London Business School. She currently serves as an independent non-executive director of Rentokil Init ial Plc and Segro Plc. She is Chair of the Baill ie G ifford The Schiehall ion Fund Ltd, an investment company listed on the Special ist Fund Segment of the London Stock Exchange Main Market. Linda is Executive Chair of the Royal Commonwealth Society, Trustee of the Coutts Foundation, Adviser to the UK Board of Trade and an Associate Fellow at Chatham House. Committees S R Carlson Tong (68) Independent Non-Executive Director Appointed February 2019. Experience Carlson has a deep understanding and knowledge of operating in mainland China and Hong Kong and has sign ificant exper ience of the financ ial services sector in those markets. Career Carlson joined 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 ic cha irman 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 ies and futures markets, serving as a member of the Main Board and Growth Enterprise Market List ing Committee of the Stock Exchange of Hong Kong from 2002 to 2008 (Chair from 2006 to 2008). After retir ing from KPMG in 2011, he was appointed a non-executive director of the Securit ies and Futures Comm iss ion, becoming its Chair in 2012 until he stepped down in October 2018. He oversaw a number of major policy in it iat ives dur ing his term as the chair, includ ing the introduct ion of the Hong Kong and Shanghai/Shenzhen Stock connect schemes and the mutual recognit ion of funds between the mainland and Hong Kong. From 2017 until July 2020, Carlson was a non-executive director of the Hong Kong International Airport Authority. He was a member of the Hong Kong Human Resource Planning Commiss ion from Apr il 2020 until December 2022 and Chair of the Hong Kong Univers ity Grants Comm ittee from January 2016 until he stepped down in December 2022. External appointments Carlson is an independent non-executive director of MTR Corporation Lim ited, Cha irman of its Audit & Risk Committee and a member of its Finance and Investment Committee. He sits on various Hong Kong SAR government bodies and is also an observer on behalf of the Hong Kong Government for Cathay Pacif ic A irways Lim ited. Committees A Ri ![]() 143 Standard Chartered – Annual Report 2022 Directors’ report #### Management Team Bill Winters (61) Group Chief Executive Andy Halford (63) Group Chief Financ ial Officer Simon Cooper (55) CEO, Corporate, Commercial & Institut ional Bank ing and Europe & Americas Simon jo ined the Group as CEO, Corporate & Institut ional Bank ing in April 2016. He assumed addit ional respons ib il ity for Commercial Banking in March 2018 and the Europe & Americas region in January 2021. Career Simon was previously group managing director and chief executive of Global Commercial Banking at HSBC. He has extensive experience across our markets and client segments. Simon jo ined HSBC in 1989 and held a number of senior roles there, includ ing deputy cha irman and chief executive officer, Middle East and North Africa; chief executive officer, Korea; and head of Corporate and Investment Banking, Singapore. He has extensive experience in the areas of investment banking, corporate banking and transaction banking. External appointments Simon is Chairman of the advisory board of the Lee Kong China School of Business. Judy Hsu (59) 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 her most recent appointment, Judy was Regional CEO, ASEAN & South Asia, a posit ion she held from June 2018. Judy was the country CEO for Standard Chartered Singapore from 2015 to 2018. She jo ined 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 ibank, where she held various leadership roles in its Consumer Banking business in Asia. External appointments Judy is serving as a board member of the Urban Redevelopment Authority Singapore. She was appointed to the board of CapitaLand Investment Lim ited as an Independent Director in June 2021. Claire Dixon (50) Group Head of Corporate Affairs, Brand & Marketing Claire jo ined Standard Chartered as Group Head of Corporate Affairs, Brand & Marketing in March 2021. Career Claire is a seasoned communicat ions expert who has led teams at global brands in a variety of sectors, in Europe and the US. She spent nearly eight years liv ing and work ing in Sil icon Valley, includ ing for eBay/PayPal and latterly as Chief Communicat ions Officer at Intel. Throughout her career she has been a champion for creating posit ive global impact, includ ing lead ing Global Corporate Responsib il ity at GlaxoSmithKl ine. Cla ire is Chair of the Standard Chartered Foundation. External appointments None. ![]() 144 Standard Chartered – Annual Report 2022 Directors’ report Management Team Sunil Kaushal (57) 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 included India, 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 inat ions 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 join ing Standard Chartered in 1998, Sunil held various banking posit ions at a number of leading internat ional financial inst itut ions. External appointments Sunil is a Global Advisory Board member of MoneyTap, a leading Indian Fintech company. Tanuj Kapilashram i (45) Group Head, Human Resources Tanuj joined the Management Team as Group Head, Human Resources (HR) in November 2018. Career Prior to jo in ing the Group, Tanuj built her career at HSBC. She has worked across multiple HR disc ipl ines in many of our footprint markets (Hong Kong, Singapore, Dubai, India and London). Tanuj jo ined the Bank in March 2017 as Group Head, Talent, Learning and Culture and took on addit ional responsib il ity as Global Head HR, Corporate, Commercial and Institut ional Bank ing in May 2018. External appointments Tanuj is a non- executive director of Sainsbury’s PLC and a member of their Nominat ion and Remuneration committees. She is a member of the Asia House board of trustees, of which Standard Chartered is a founding stakeholder. Asia House is a London-based centre of expertise on trade, investment and public policy whose miss ion it is to drive polit ical, econom ic and commercial engagement between Asia and Europe. Tanuj is also a board member of the UK Financ ial Serv ices Skills Commiss ion. Benjamin Hung (58) CEO, Asia Ben was appointed CEO, Asia on 1 January 2021. He is the Chairman of Standard Chartered Bank (China) Lim ited and Standard Chartered Bank (Singapore) Lim ited. Career Ben joined Standard Chartered in 1992 and has held a number of senior management posit ions spann ing 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 Banking and Wealth Management businesses globally. He is currently based in Hong Kong and has internat ional bank ing experience in the United Kingdom and in Canada. Ben was previously chairman of the Hong Kong Associat ion of Banks, a member of the Financ ial Serv ices Development Council and a board member of the Hong Kong Airport Authority and the Hong Kong Hospital Authority. He was also a Council Member of the Hong Kong Univers ity. External appointments Ben is an independent non-executive director of the Hong Kong Exchanges and Clearing Lim ited. 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 adviser at the International Consultative Conference on the Future Economic Development of Guangdong Province, China. Roel Louwhoff (57) Chief Technology, Operations and Transformation Officer Roel joined the Group as Ch ief Dig ital, Technology & Innovation Officer in November 2021 and is responsible for leading the dig ital transformation of the Group into an agile, dig ital and future-focused organ isat ion. He spearheads the Group’s technology strategy; the development of its technology systems and infrastructure, which support its customers and employees globally; and leads its innovat ion. Roel’s expanded role as Ch ief Technology, Operations and Transformation Officer commenced in April 2022. Career Prior to jo in ing 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 ital transformat ion of ING, seen by many as a trailblazer in dig it is ing financial serv ices. Before ING, Roel spent ten years at Brit ish Telecom (BT), latterly as CEO of BT-Operate based in the UK. At BT, he redefined the technology and operational approach and led the BT communicat ion s ide of the 2012 Olympics before applying that learning in deliver ing turn-key d ig ital and infrastructure solutions for major exhib it ion and sporting events. External appointments None. ![]() 145 Standard Chartered – Annual Report 2022 Directors’ report Mark Smith, previously Group Chief Risk Officer and a director of Standard Chartered Bank, retired from the Group on 31 December 2022. Paul Day, Group Head of Internal Audit, attends Management Team meetings as an inv itee. Mary Huen (55) CEO, Hong Kong and Cluster CEO, Hong Kong, Taiwan and Macau Mary was appointed Chief Executive Officer (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. Career Mary has over 30 years of experience in business management and banking services. Prior to her current role, Mary was Regional Head of Retail Banking, Greater China & North Asia, and the Head of Retail Banking, Hong Kong. She is a board member of Standard Chartered Bank (Hong Kong) Lim ited. She is also chairperson of the Board of Standard Chartered Bank (Taiwan) Lim ited and Mox Bank L im ited. External appointments Mary is the vice chairperson of the Hong Kong Associat ion of Banks, a member of the Banking Advisory Committee of the Hong Kong Monetary Authority, the Financ ial Infrastructure and Market Development Sub-Committee under the Exchange Fund Advisory Committee. She is also a representative of Hong Kong, China to the Asia-Pacif ic Econom ic Cooperation (APEC) Business Advisory Council, the chairperson of the Hong Kong Trade Development Council Financ ial Serv ices Advisory Committee and the Asian Financ ial Forum Steering Committee, a board member of the Hong Kong Tourism Board and Hospital Authority. Sandie Okoro (58) Group General Counsel Sandie Okoro jo ined the Bank as Group General Counsel in April 2022. In the role, she leads the Bank’s Legal, Group Corporate Secretariat and Shared Investigat ive Serv ices functions. Career Sandie is a pre-eminent lawyer, having served as General Counsel and Senior Vice President, and Vice President for Compliance, at the World Bank Group. Prior to jo in ing the World Bank, Sandie was General Counsel for HSBC Global Asset Management and Global General Counsel at Barings. Sandie is an Honorary Bencher of Middle Temple in the United Kingdom (2018) and was named one of the Upstanding 100 Leading Ethnic Minor ity Execut ives (2016), Top 20 Global General Counsel (2019) by the Financ ial T imes, and was recognised as Brita in’s 10th most influent ial person of Afr ican and African Caribbean heritage by Powerlist (2023). Sandie received a lifet ime ach ievement award from the UK Black Solic itors Network (2016), was named one of the Power 100 Women by City A.M. and 100 Women to Watch by Female FTSE Board. External appointments Sandie was appointed inaugural Chair of the UK-based charity Women of the World Foundation in June 2021, she received an honorary lifet ime Emeritus membership of the Law Societ ies’ Compact and Forum for Sustainable Development Goal 16 in June 2022, and she is a Governor of the Royal Shakespeare Company. Tracey McDermott, CBE (53) Group Head Conduct, Financ ial Cr ime and Compliance Sadia Ricke (52) \*Group Chief Risk Officer, director of Standard Chartered Bank Tracey has been the Group Head Conduct, Financ ial Cr ime and Compliance since January 2019. Career Tracey orig inally joined Standard Chartered as Group Head of Corporate, Public and Regulatory Affairs in March 2017, subsequently adding Brand and Marketing to her portfolio in December 2017 and Compliance in March 2018. Prior to jo in ing the bank, Tracey served as Acting Chief Executive of the Financ ial Conduct Author ity (FCA) from September 2015 to June 2016. She joined the then Financ ial Serv ices Authority (FSA) in 2001 where she held a number of senior roles, includ ing: D irector of Supervis ion and Authorisat ions, and D irector of Enforcement and Financ ial Cr ime. Tracey also served as a Board Member of the FSA from April 2013, as a member of the Financ ial Pol icy Committee of the Bank of England, and as non-executive director of the Prudential Regulation Authority from September 2015 to June 2016. Prior to jo in ing 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 financial serv ice consumers and markets. She is a trustee of the Standard Chartered Foundation. External appointments Tracey chairs the Net Zero Banking Alliance, is a member of the International Regulatory Strategy Group Council and chairs the Conduct and Ethics Committee of the Fixed Income, Currencies and Commodit ies Markets Standards Board. Sadia Ricke jo ined the Bank in February 2023. \*Subject to regulatory approval, she will be appointed Group Chief Risk Officer and a director of Standard Chartered Bank. Career Sadia has a broad range of financ ial and risk experience and a thorough understanding of our footprint markets. She joined the Bank from Soc iété Générale, where she started in 1994 in the Financ ial Inst itut ions Credit department. She gained more than 13 years of structured finance experience in the Natural Resources and Energy Finance div is ion where she was Co-Deputy Head, a posit ion she held unt il 2010. She then became Head of Credit Risk for SG CIB in Paris, before moving to Hong Kong to take on the role of Head of Global Finance for Asia Pacif ic in January 2015. She was appointed Group Country Head and Head of Coverage and Investment Banking for the UK in 2017. In 2019, Sadia became Deputy Chief Risk Officer and then Group Chief Risk Officer in January 2021. External appointments None. ![]() 146 Standard Chartered – Annual Report 2022 Directors’ report Corporate governance #### Corporate governance Our stakeholders, their interests: driv ing commerce and prosper ity through our unique divers ity The Board spends sign ificant t ime consider ing, and engag ing with, its key stakeholders to better understand their views and perspectives. A summary of stakeholder interests can be found in the Strategic report across the pages ident ified below. Clients Read more on page 56 Regulators and governments Read more on page 57 Investors Read more on page 58 Suppliers Read more on page 59 Society Read more on page 59 Employees Read more on page 60 Key areas of Board discuss ion dur ing 2022 This section offers an ins ight into key Board items and activ it ies covered during the year, as well as the structure of the Board, its committees, and its meetings. At the beginn ing of the year, and follow ing approval of the Corporate Plan, the Board reviewed and updated its key prior it ies, as well as discussed potential Blue Sky topics, to help prepare its forward plan. This required careful considerat ion and regular rev iew throughout the year to ensure standing items, strategic object ives, governance princ iples and r isk and compliance requirements were appropriately addressed. Some of the areas detailed on the following pages formed part of the standing agenda for each meeting, while others were reviewed period ically during 2022. Stakeholder considerat ion and engagement is central to the Board’s prior it ies. We recognise the importance of promoting posit ive stakeholder relat ionsh ips and the Board spends sign ificant t ime interact ing w ith them to better understand their views, as well as the opportunit ies, challenges and the Group’s impact across our diverse markets. In addit ion, the Board regularly d iscusses the impact on stakeholders, their perspectives and their feedback, whether in Board and committee meetings, or as part of other interact ions across the Group. Some examples of this can be found in the section 172 of the Companies Act 2006 (s.172) disclosure on pages 54 to 124, with in spotl ight items on the following pages and on pages 158 to 162. Directors are alert to their statutory duties and obligat ions, includ ing those outl ined under s.172, and this forms an integral part of director induct ion and annual tra in ing. The Board will continue to focus on consider ing stakeholders as part of the Board’s decis ion-mak ing. Code compliance The UK Corporate Governance Code 2018 (UK Code) and the Hong Kong Corporate Governance Code contained in Appendix 14 of the Hong Kong List ing Rules (HK Code) are the standards aga inst which we measured ourselves in 2022. The directors are pleased to confirm that Standard Chartered PLC (the Company) continued to comply with the provis ions set out in the UK Code and the HK Code for the year. Throughout this corporate governance report we have provided an ins ight into how governance operates with in the Group and how we have applied the princ iples set out in the UK Code and HK Code. The Group confirms that it has adopted a code of conduct regarding directors’ securit ies transact ions on terms no less exacting than required by Appendix 10 of the Hong Kong List ing Rules. Having made specif ic enqu iry of all directors, the Group confirms that all directors have complied with the required standards of the adopted code of conduct. References to examples of UK Code applicat ion in the Annual Report can be found on page 218 Copies of the UK Code and the HK Code can be found at frc.org.uk and hkex.com.hk respectively To the extent applicable, informat ion requ ired by paragraphs 13(2) (c), (d), (f), (h) and (i) of Schedule 7 of the Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 is available in Other disclosures on pages 218 to 230 ![]() 147 Standard Chartered – Annual Report 2022 Directors’ report Key areas of Board discuss ion dur ing 2022 continued #### Strategy • Reviewed and approved the 2023-2027 Corporate Plan as a basis for preparation of the 2023 budget, receiv ing confirmation from the Group Ch ief 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 it ies and crit ical enablers • Reviewed and scrutin ised the strateg ic and operational performance of the business across client segments, product groups and regions, which included details of their prior it ies, progress, opportunit ies and response to current events. Th is included deep dives into the following areas: – Financ ial Markets – Private Banking – Africa and Middle East • Received and discussed regular corporate development updates • Reviewed and approved changes to focus the Group’s presence in the Africa and Middle East region. Further informat ion on th is can be found on page 57 • Discussed and reviewed the Group’s sustainab il ity strategy • Discussed and reviewed the Group’s Transformation, Technology & Operations strategy • Received an update on the Group’s investment in its associate China Bohai Bank • Approved the corporate restructuring of the Ventures business segment • Approved the Liverpool Football Club sponsorship renewal #### Risk management • Discussed and reviewed progress against the Group’s Transformation and Remediat ion Portfol io and Information and Cyber Security Risk (ICS) profile • Received and discussed brief ings from management on ICS matters regularly throughout the year, includ ing contr ibut ions from the independent adviser to the Board on cyber security and cyber threat management • Discussed and endorsed the Group’s ICS strategy • Reviewed and discussed risk reports from the Group Chief Risk Officer • Approved Sadia Ricke’s appointment as Group Chief Risk Officer, subject to regulatory approval • Discussed, reviewed and/or approved various activ it ies relating to Resolvabil ity • Engaged with the Prudential Regulation Authority (PRA) on the findings of the ir 2022 Period ic Summary Meet ing Letter • Assessed progress in continu ing to strengthen the Group’s r isk culture • Approved the risk appetite validat ion of the 2023 Corporate Plan, which included a considerat ion of pr inc ipal r isks, includ ing Cl imate Risk • Approved the renewal of the Group’s insurance polic ies for 2022/2023 • Approved material changes to the Enterprise Risk Management Framework • Undertook Blue Sky think ing/hor izon scanning discuss ions, which considered the potential risks and opportunit ies that the Group might be or could become exposed to Spotlight #### Liverpool Football Club sponsorship renewal The Group announced a four-year extension to their main sponsor agreement with Liverpool Football Club (LFC) and LFC Women in July 2022. The Board discussed and reviewed the proposed plans to renew the long- standing relationsh ip and fully supported cont inu ing the partnership through to the end of the 2026/27 season, includ ing increased investment in LFC Women. LFC is a globally renowned football club, with many followers across our markets in Asia, Africa and the Middle East. The Board recognised this as a unique and valuable opportunity to help deliver our narrative and Stands. Continu ing to invest in brand and business marketing where appropriate is an important part of the Group’s Corporate Plan. Spotlight #### Resolvability Resolvabil ity was a fundamental part of the Board’s agenda for the year. They reviewed, challenged and approved enhancements to the updated Group’s Resolvabil ity Assessment Report prov ided to the Bank of England in February 2022 and approved the Group’s Resolvabil ity d isclosure published in June 2022. In July 2022, the Board attended a teach-in session of the Master Resolution Playbook. It also partic ipated in a Resolution simulat ion exerc ise with senior leaders and experts in December 2022 to role play a hypothetical scenario that could arise if Standard Chartered were to enter resolution. Further informat ion can be found on page 173 Stakeholders Clients Investors Suppliers Society Stakeholders Clients Regulators and governments Investors Suppliers Society Employees ![]() 148 Standard Chartered – Annual Report 2022 Directors’ report Corporate governance Key areas of Board discuss ion dur ing 2022 continued #### Financials and performance • Monitored the Group’s financ ial performance • Approved the 2021 full year and 2022 half year results • Monitored and assessed the strength of the Group’s capital and liqu id ity posit ions • Considered the Group’s approach to capital management and returns • Approved a 2021 final div idend and 2022 inter im d iv idend • Approved two share buy-back programmes • Received half yearly updates on, and discussed, the Group’s major investment programmes in 2022 • Received half yearly updates on, and discussed, investor relations matters • Approved the Group’s 2021 Country-by-Country Reporting disclosures #### People, culture and values • Approved the Group’s 2021 Modern Slavery Statement • Discussed progress made against the Group’s people strategy and culture aspirat ions • 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 following a number of recent appointments • Discussed the Group’s divers ity and inclus ion in it iat ives • Approved updates to the Board Divers ity Pol icy • Approved changes to the Group’s operational resil ience strategy • Reviewed an annual report update on the operation and effectiveness of the Group’s Speaking Up programme #### External environment • Received updates on the macroeconomic headwinds and tailw inds in the global economy, includ ing an assessment of the impact on the key drivers of the Group’s financ ial performance • Received internal and external brief ings and input across a range of subjects, includ ing: – global market trends – the global macro impact of the Russia-Ukraine war – geopolit ical developments between the US and Ch ina – societal and business impl icat ions of global demographic trends – strategic ins ights into global markets, geopolit ics and policy – regulatory developments and updates Spotlight #### Dividend payments and share buy-backs The Board approved two div idend payments in 2022, as well as two ordinary share buy-back programmes. As part of its decis ion-mak ing process, the Board took account of the importance of approving distr ibut ions and other capital management activ it ies with in an appropr iately prudent framework. The Board sought assurance from management that the proposed plans would not impact the Group’s abil ity to prov ide suffic ient support to the Group’s key clients and other stakeholders. Spotlight #### Culture The Board considered the Group’s culture aspirat ions, recognis ing that good progress had been made in a number of areas, includ ing employee exper ience, psychological safety and leadership. They discussed with management the ambit ions for the future, tak ing into account feedback from across the Group. The aspirat ion is to encourage greater innovat ion that is aligned to our strategy, enable the simpl ification of decis ion-mak ing and drive client centric ity through a culture of high performance and execution. Spotlight #### Global market trends The Board inv ited a number of internal experts and guest speakers to attend Board dinners provid ing important and special ist ins ight and context to the Board d iscuss ion, on a variety of matters. A number covered global market trends, set against the backdrop of demographic, economic and technological developments. Stakeholders Clients Society Employees Stakeholders Regulators and governments Investors Clients Stakeholders Clients Regulators and governments Investors Suppliers Society Employees ![]() 149 Standard Chartered – Annual Report 2022 Directors’ report Examples of how the Board considered stakeholder perspectives in some princ ipal dec is ions dur ing the year are provided on pages 57 and 66 Key areas of Board discuss ion dur ing 2022 continued For a detailed overview of our strategy see pages 22 and 23 #### Governance • Noted and/or approved changes to the membership of the Board’s committees and chairs of the Remuneration Committee and Board Risk Committee • Approved the appointment of the new Senior Independent Director • Received reports at each scheduled meeting from the Board committee chairs on key areas of focus for the committees and quarterly updates from Standard Chartered Bank (Hong Kong) Lim ited and its Audit and Board Risk committees • Undertook train ing on d irector duties and the governance landscape • Approved the reallocation of the work of the Board Financ ial Crime Risk Committee • Discussed and reviewed the independence, performance and annual re-election of the non-executive directors • Approved the continued independence of Christ ine Hodgson, an independent non-executive director (INED), up until she stepped down from the Board on 31 January 2023 • Approved the re-appointment of the independent advisers to the Board, on cyber security and cyber threats, and financ ial crime • Authorised potential conflicts of interest relating to directors’ external appointments • Discussed the observations and themes aris ing from the 2022 external Board and committees’ effectiveness review ahead of approving the 2023 Action Plan in early 2023 • 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 iar ies at chair, board and committee level • Approved changes to the Group Sources of Authority Framework to support the reorganisat ion of certa in client segments #### Shareholder and stakeholder engagement • Engaged with investors, held meetings with brokers, discussed the views of inst itut ional shareholders • Discussed and reviewed the approach to engaging investors and other relevant stakeholders ahead of the 2022 Annual General Meeting (AGM) in relation to the Group’s net zero pathway • Held the 2022 AGM • Held a hybrid stewardship event attended by investors representing a sizeable proportion of our equity as well as several shareholder representative bodies • Engaged with employees, clients, shareholders and regulators • As part of the Group’s asset reunif icat ion programme, approved the donation of reclaimed assets to Futuremakers by Standard Chartered, a global in it iat ive to tackle inequal ity and promote greater economic inclus ion • Met with shareholders to discuss remuneration proposals and outcomes, also following response to our directors’ remuneration policy and directors’ remuneration report at the 2022 AGM, to better understand their views • Discussed support provided to clients, colleagues and communit ies dur ing continued impact of COVID-19 in some markets • Reviewed and discussed an investor sentiment survey • Received bi-annual updates from Investor Relations, includ ing share price and valuation analysis, market engagement and ownership analysis and sell-side sentiment Spotlight #### Board Financial #### Crime Risk Committee Given the progress made by the Board Financ ial Crime Risk Committee (BFCRC) in respect to financ ial crime risk management, the 2020 Board effectiveness review highl ighted the potent ial for the work of the BFCRC to be reallocated to a combinat ion of the Board Risk Committee, the Audit Committee and the Board. Feedback from the 2021 Board effectiveness review ind icated broad support for th is approach. In light of this, the Board agreed to reallocate the work with effect from 1 April 2022. The reallocation of BFCRC oversight enables a more holist ic and efficient examinat ion and d iscuss ion of r isks that are closely linked, such as fraud, informat ion and cyber secur ity and financial cr ime. The BFCRC held one meeting in 2022 where it reviewed the agenda and confirmed the reallocation of each item into the new structure. Spotlight #### Investor sentiment survey An external investor sentiment survey, on an anonymous basis, was conducted during the year with the intent ion of seek ing ins ight into how the Group was perceived, to ident ify areas of focus for investors and understand how the Group could improve its investor communicat ions. Th is was particularly important given the changes in the external environment and the evolution of the Group’s strategy. The Board discussed key areas to focus on to address concerns investors had highl ighted and wh ich had emerged from the report. Stakeholders Regulators and governments Investors Stakeholders Investors Society Employees ![]() 150 Standard Chartered – Annual Report 2022 Directors’ report Corporate governance Board and committee structure: decis ions, respons ib il it ies and delegat ion of authority Terms of Reference for the Board and each committee are in place to provide clarity over where responsib il ity for decis ion- making lies. These are reviewed annually against industry best practice and corporate governance provis ions and gu idance, includ ing the PRA Superv isory Statement on Board Responsib il it ies (as amended). With the exception of the Governance and Nominat ion Comm ittee (where the Group Chairman is its Chair) all of the Board committees are composed of INEDs who bring a divers ity of sk ills, experience and knowledge to the discuss ion, 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 Standard Chartered PLC The Board must act with integr ity and is collectively responsible for establish ing the Company’s purpose, values and strategy. It is also responsible for promoting its culture and overseeing its conduct and affairs for promoting the long-term success of the Group, as well as ensuring leadership with in a framework of effective controls. The Board sets the strategic direct ion of the Group, approves the strategy and takes the appropriate action to ensure that the Group is suitably resourced to achieve its strategic aspirat ions. The Board considers the impact of its decis ions and its responsib il it ies to all of the Group’s stakeholders, includ ing employees, shareholders, regulators and governments, clients, suppliers, the environment and the communit ies in which we operate. The Board discharges its responsib il it ies directly or, in order to assist it in carrying out its function of ensuring effective independent oversight and stewardship, delegates specif ied respons ib il it ies to its committees. Detail of how the Board fulfilled its responsib il it ies in 2022, as well as key topics discussed and considered by the Board committees, can be found in this Directors’ report. Biograph ies for Board members are set out on pages 138 to 142. The Group Chief Executive is responsible for the management of all aspects of the Group’s businesses, developing the strategy in conjunct ion w ith the Group Chairman and the Board, and leading its implementat ion. The Board delegates authority for the operational management of the Group’s business to the Group Chief Executive for further delegation by him in respect of matters that are necessary for the effective day-to-day running and management of the business. The Board holds the Group Chief Executive accountable in discharg ing his delegated responsib il it ies. The Management Team comprises the Group Chief Executive and the Group Chief Financ ial Officer, reg ional CEOs, client segment CEOs, and our global function heads. It has responsib il ity for executing the strategy. Details of the Group’s Management Team can be found on pages 143 to 145 . Group Chief Executive Management Team Audit Committee Oversight and review of matters relating to financ ial report ing, the Group’s internal controls, includ ing internal financ ial controls, and the work undertaken by Conduct, Financ ial Cr ime & Compliance, Group Internal Audit and the Group’s Statutory Auditor, Ernst & Young LLP (EY). Read more on page 163 Board Risk Committee Oversight and review of the Group’s Risk Appetite Statement, the appropriateness and effectiveness of the Group’s risk management systems and the princ ipal r isks, includ ing Cl imate Risk, to the Group’s business. Furthermore, considerat ion of the impl icat ions of material regulatory change proposals and due dil igence on mater ial acquis it ions and disposals. Read more on page 170 Culture and Sustainab il ity Committee Oversight and review of the Group’s culture and sustainab il ity prior it ies. Read more on page 176 Governance and Nominat ion Comm ittee Oversight and review of Board and executive succession, overall Board effectiveness and corporate governance issues. Read more on page 179 Remuneration Committee Oversight and review of remuneration, share plans and other incent ives. Read more on page 184 ![]() 151 Standard Chartered – Annual Report 2022 Directors’ report Our Board meetings The Board is committed to mainta in ing a comprehensive schedule of meetings and a forward agenda to ensure its time is used most effectively and effic iently, and is supported by the Group Company Secretary to facil itate th is. Flexib il ity 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 ial prior it ies is reviewed at every scheduled meeting, with particular reference to the detailed Group management accounts. The Group Chief Executive and Group Chief Financ ial Officer comment on current trad ing, business performance, the market, colleagues, relevant stakeholders, and regulatory and external developments at each scheduled meeting, and present comparative data and client ins ight. In addit ion, the Group Ch ief Risk Officer period ically attends meetings to update the Board on key risks. The Group Chairman holds INED-only meetings ahead of each scheduled Board meeting, which provides the opportunity for discuss ion on key agenda items and other matters without the executive directors and management present. Sir Iain Lobban and Paul Khoo, who are engaged by the Board to act as independent advisers to the Board and its committees on cyber security and cyber threat management, and financial cr ime respectively, attended a combinat ion 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 Ian’s and Paul’s inputs valuable and renewed their appointments for a further 12 months. Our Board committees The Board places sign ificant rel iance on its committees by delegating a broad range of responsib il it ies and 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 icable for all INEDs to be members of all of the committees. Mechanisms are in place to facil itate these linkages, includ ing ensur ing that there are no gaps or unnecessary duplicat ions between the rem it of each committee and overlapping membership 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 ing the ir oversight and focus during 2022, can be found in the Board committee reports starting on page 163. Development of Board activ it ies in 2022 Given the easing of travel restrict ions dur ing 2022, the Board and its committees were pleased to hold a greater number of in-person meetings than seen in the previous couple of years. However, as a global Board that reflects our diverse footprint, some directors continued to face challenges with travel, and as such it was important to continue to util ise interact ive technology where requ ired. As in previous years, the most appropriate format for each Board and committee meeting was assessed by the Group Chairman or respective committee chair, with support from the Group Company Secretary, to ensure inclus iv ity and agil ity and to protect authent ic engagement. This resulted in some meetings being held in person, virtually or a combinat ion of the two. Irrespect ive of location and time zone, each director was able to interact effectively with other attendees. The timel ine on th is page shows the Board’s collective engagement throughout the year. Board activ it ies during 2022 January February March April May June July August September October November December Scheduled meeting Key: Informal session AGM Ad hoc meeting Dubai, UAE Singapore ![]() 152 Standard Chartered – Annual Report 2022 Directors’ report Corporate governance Board composit ion, roles and attendance in 2022 Group Chairman Group Chairman José Viñals The Group Chairman is committed to ensuring optimal Board effectiveness. A key mechanism to #### drive this is the appropriate composition and balance ofindividuals. The Board is composed of a major ity of independent non-executive directors who provide an independent perspective, constructive challenge, and monitor the performance and delivery of the strategy with in the R isk Appetite and controls set by the Board. Detail regarding Board divers ity can be found w ith in the Governance and Nom inat ion Comm ittee report on pages 179 to 183 Group Chief Financ ial Officer Andy Halford Responsib il it ies Responsible for leading 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 ity and governance across the Group and ensures effective communicat ion and understand ing between the Board, management, shareholders and wider stakeholders. Executive directors Group Chief Executive Bill Winters Responsib il it ies Responsible for the management of all aspects of the Group’s businesses, developing the strategy in conjunct ion with the Group Chairman and the Board and leading its implementat ion. Attendance AGM Y Scheduled 8/8 Ad hoc 2/2 Responsib il it ies Responsible for Finance, Corporate Treasury, Strategy, Group Corporate Development, Group Investor Relations, Property and Supply Chain Management functions. Attendance AGM Y Scheduled 8/8 Ad hoc 2/2 Independent non‑executive directors Senior Independent Director Maria Ramos Phil Rivett Gay Huey Evans, CBE Jasmine Whitbread Shir ish Apte David Conner Christ ine Hodgson, CBE 1 David Tang Carlson Tong Responsib il it ies Provides a sounding board for the Group Chairman and discusses concerns that are unable to be resolved through the normal channels or where such contact would be inappropr iate w ith shareholders and other stakeholders. Chairs the Governance and Nominat ion Comm ittee when consider ing succession of the Group Chairman. Is available to shareholders if they have concerns that cannot be resolved or for which the normal channels would be inappropr iate. Can be contacted v ia the Group Company Secretary at 1 Basinghall Avenue, London EC2V 5DD. Maria Ramos took over from Christ ine Hodgson as Sen ior Independent Director on 1 September 2022. Attendance AGM Y Scheduled 8/8 Ad hoc 2/2 Attendance AGM Y Scheduled 8/8 Ad hoc 2/2 Attendance AGM 1 Scheduled Ad hoc Y 8/8 2/2 Y 8/8 2/2 Y 8/8 2/2 Y 8/8 2/2 Y 8/8 2/2 Y 8/8 2/2 Y 8/8 2/2 N/A 2/2 1/1 Y 7/7 2/2 Y 6/6 1/1 N/A 4/4 N/A N/A 2/2 N/A Naguib Kheraj Robin Lawther, CBE INEDs that have stepped down in 2022 Naguib Kheraj and Byron Grote stepped down from the Board on 30 April and 30 November 2022 respectively. INEDs that joined in 2022 Byron Grote Jackie Hunt Shir ish Apte, Rob in Lawther and Jackie Hunt joined the Board on 4 May, 1 July and 1 October 2022 respectively. The biograph ies of each d irector are set out on pages 138 to 142 The roles of the Group Chairman and Group Chief Executive are dist inct from one another and are clearly defined in detailed role descript ions wh ich can be viewed at sc.com/roledescript ions Board committee roles and attendance can be found in the committee sections starting from page 163. Prior to the retirement of the Board Financ ial Cr ime Risk Committee on 1 April 2022, it held one meeting during 2022 with all members in attendance 1 Christ ine Hodgson stepped down from the Board on 31 January 2023. Linda Yueh jo ined the Board on 1 January 2023. Further informat ion can be found on page 142 ![]() 153 Standard Chartered – Annual Report 2022 Directors’ report Director induct ion Three new directors were appointed to the Board during the year. Shir ish Apte, Rob in Lawther and Jackie Hunt possess a range of skills and a breadth of knowledge relevant to the Board debate. Details regarding their experience can be found in their biograph ies on pages 139 to 141. All new Board members are given a comprehensive, formalised induct ion programme. Pr ior to taking up their respective Board and committee posit ions, the three new directors were provided with a number of induct ion sess ions to ensure a smooth transit ion into their roles and posit ive contribut ions from the outset. In add it ion, Sh ir ish Apte and Maria Ramos received in-depth handovers from Christ ine Hodgson and Naguib Kheraj before succeeding them as Chair of the Remuneration Committee and Board Risk Committee respectively. This included a period of shadowing Christ ine Hodgson and Nagu ib Kheraj through discuss ions and meetings in the lead-up to becoming committee chairs. Phil Rivett was appointed inter im Board R isk Committee Chair following the retirement of Naguib Kheraj and pending Maria Ramos’ appointment as Chair receiv ing regulatory approval. He was actively involved in the handover process for Maria Ramos. While a proportion of the induct ion is relevant to all new Board members, the content of the programme is tailored to meet each director’s ind iv idual level of experience and expertise. Shir ish Apte, Rob in Lawther and Jackie Hunt partic ipated or w ill partic ipate in deep-dive sessions on a number of key topics. Examples include: the role and responsib il it ies of a d irector; our strategic prior it ies; the crit ical enablers and the Stands; the markets in which we operate; client groups and product segments and princ ipal r isks. In addit ion, learn ing and development sessions have taken place or have been arranged to ensure they are well versed with the sign ificant issues unique to each of their committee memberships. Each induct ion typ ically consists of a combinat ion of meet ings with exist ing Board members and sen ior staff. New Board members are also given the opportunity to attend key management meetings and engage with stakeholders, includ ing investors and clients. Vis its to key markets across our footprint were lim ited due to the var iat ion of travel restr ict ions but opened up as the year progressed. As such, there was a combinat ion of in person and virtual engagements. Linda Yueh jo ined the Board on 1 January 2023; her exper ience can be found in her biography on page 142. She has made good progress in respect to her induct ion plan so far th is year, vis it ing two of our markets. The Group Corporate Secretariat function supports the INEDs as they undertake their induct ion programmes, which are typically completed with in the first s ix to nine months of an INED appointment and progress is reviewed by the Governance and Nominat ion Comm ittee after six months. The programmes are regularly reviewed and take into account directors’ feedback to ensure continuous development and improvement. Ongoing development plans Continuous train ing and development beyond a d irector’s induct ion plan is essential to mainta in ing a highly engaged, effective and well-informed Board. Ongoing development plans also help ensure directors lead with integr ity and promote the Group’s culture, purpose and values. Mandatory learning and train ing are important elements of directors’ fitness and propriety assessments as required under the Senior Managers Regime. During the year, all directors received a combinat ion of mandatory learn ing and train ing, internal and external brief ings, presentat ions 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 Board committee members also received specif ic tra in ing relevant to the work of their respective committees. The format of ongoing train ing var ied, includ ing formal refresher sess ions and informal meetings. The train ing covered a var iety of topics throughout the year and were held either in person, virtually or a combinat ion of the two. The table on the next page gives further detail on who received these brief ings. The Group Chairman reviews with each director their train ing and development needs both in real time and as part of the annual performance cycle. Where it is recognised that the Board or ind iv idual directors need further train ing or development in key areas, addit ional 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 responsible for advis ing the Board on governance matters. Directors also have access to independent, professional advice at the Group’s expense where they judge it necessary to discharge their responsib il it ies as d irectors. ![]() 154 Standard Chartered – Annual Report 2022 Directors’ report Corporate governance 2022 director train ing overv iew Induction 1 Directors’ duties and regulatory updates Data management 2 Supply chain ICS threats Cloud technology Global demographic trends Resolvabil ity Cyber attacks Climate risk 2 ICS deep dive: Threat Scenario- Led Risk Assessment 5 José Viñals N/A Bill Winters N/A Andy Halford N/A Shir ish Apte 3 N/A David Conner N/A Byron Grote 4 N/A N/A Christ ine Hodgson, CBE N/A Gay Huey Evans, CBE N/A Jackie Hunt 3 N/A N/A N/A N/A N/A N/A N/A Naguib Kheraj 4 N/A N/A N/A N/A N/A N/A N/A N/A N/A Robin Lawther, CBE 3 N/A N/A N/A Maria Ramos N/A Phil Rivett N/A David Tang N/A Carlson Tong N/A Jasmine Whitbread N/A 1 Applicable to directors who received induct ion tra in ing dur ing 2022 2 Train ing sess ions were circulated as online video tutorials 3 Shir ish Apte, Rob in Lawther and Jackie Hunt jo ined the Board on 4 May 2022, 1 July 2022 and 1 October 2022 respectively. A number of train ing sess ions took place before their appointments 4 Naguib Kheraj and Byron Grote stepped down from the Board on 30 April 2022 and 30 November 2022 respectively. Certain train ing sess ions took place after these dates 5 Director attendance was not mandatory Director attended the session Director did not attend the session but received any accompanying material and had opportunit ies to ra ise questions and observations with the Group Chairman and Group Company Secretary Directors’ performance The Group Chairman led the evaluation of ind iv idual director performance during 2022. These one-to-one sessions considered: • their performance against core competencies and their ind iv idual effectiveness • their time commitment to the Group, includ ing (where relevant) the potential impact of any outside interests • their ongoing development and train ing needs • the Board’s composit ion, tak ing into account when each INED envisaged stepping down from the Board • the current and future committee membership and structure • their engagement across the Group. These performance reviews are used as the basis for recommending the re-election of directors by shareholders at the 2023 AGM and to assist the Group Chairman with his assessment of the INEDs’ competencies. In addit ion, the Group Chairman has responsib il ity 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 and no issues in relation to fitness and propriety were ident ified. Group Chairman’s performance Maria Ramos, as Senior Independent Director, assisted by Christ ine Hodgson, who was Sen ior Independent Director for part of the year, and Ffion Hague, who facil itated the Board evaluation this year, reviewed José Viñals’ performance as Group Chairman. Consolidated feedback was shared with him. Time commitment Our INEDs commit suffic ient t ime in discharg ing the ir responsib il it ies as d irectors of Standard Chartered. In general, we estimate that each INED spent approximately 40 to 70 days on Board-related duties, and considerably more for those who chair or are members of multiple committees. ![]() Spotlight #### Interview with Robin Lawther An ins ight into one of our new INEDs Q. What drew you to Standard Chartered and how do your in it ial impress ions al ign to your expectations? A. As an entrepreneur at heart, I was delighted with the opportunity to jo in a global bank that serves bus inesses that promote trade and innovat ion and puts cl ients at the heart of everything they do. Standard Chartered’s drive to be diverse and inclus ive as well as g iv ing back to communit ies in which they work was also a big draw, particularly as these are important concepts I’ve championed throughout my career. Since jo in ing Standard Chartered in July my in it ial impress ions have been great. I’ve enjoyed getting to know my colleagues, as well as other stakeholders, and the Board’s vis it to Dubai in November is a good example of this. We were hosted by an excellent team who ran a comprehensive agenda and were very welcoming. Q. How effective have you found your induct ion programme in preparing you as an INED and for the Standard Chartered Board and committee discuss ions? A. My induct ion programme has been very useful so far and has covered a broad range of different topics relevant to my role. I’ve also engaged with members of our leadership team across the Group who’ve provided valuable ins ight into their roles, the business and the functions. As part of the programme, I recently vis ited Malaysia and Singapore, along with two of my fellow new directors. This was a fascinat ing exper ience where I spoke to many different people from across the business, includ ing our colleagues in the Global Business Service centre, Malaysia as well as our partners in Singapore who work on our dig ital bank ing solutions. I was really encouraged to see how focused everyone is on driv ing the client experience and supporting the younger demographic. I’m looking forward to the remainder of the induct ion process. Q. What are the key skills and experience you bring to the Board? A. I’ve thoroughly enjoyed my executive and non- executive roles over the years at organisat ions such as JP Morgan, UK Government Investments, Nordea Bank Abp, M&G plc, Ashurst LLP and Aon PLC. I’m truly thankful for the opportunit ies and great exper iences these roles have provided, which have helped deepen my comprehensive knowledge across global markets and the financial, regulatory and governance landscape more broadly. I enjoy acting as a sounding board and helping to problem-solve on many issues, as well as having the chance to get to know the teams with whom I have worked. I believe very strongly in being respectful to everyone and embracing inclus iv ity. Whilst I seek to improve divers ity in all aspects, I have chosen to focus on gender. This has been important to me throughout my career, and I feel it’s crucial for women to empower and support each other. In addit ion, I th ink that mentoring and reverse mentoring are crit ical and I am happy to say that I have just been assigned a colleague in Hong Kong as my first reverse mentor and I am learning loads. Q. How important is a company’s culture to you and what are your views on the culture at Standard Chartered? A. This is incred ibly important. In my experience a company that focuses on embedding the right behaviours, and taking actions to make this culture a reality, will have a better chance at achiev ing success in the long-term. I’m impressed by how many people at Standard Chartered are invested in deliver ing on the Group’s ambit ions through collaborat ion and innovat ion, while continu ing to strengthen an inclus ive, h igh performance, risk-aware culture. Q. How do you build connections with key stakeholders? A. I believe respect, empathy and a steely determinat ion to do the right thing are key ingred ients in build ing connections and relationsh ips. We have a wealth of stakeholders to consider at Standard Chartered, includ ing cl ients, suppliers, colleagues, shareholders, regulators and the communit ies in which we operate. Listen ing and respond ing to their prior it ies and concerns is so important and helps to deliver on our strategic prior it ies. As I mentioned before, divers ity and inclus ion are important to me. Earlier in my career I set up an annual women’s networking event which has really grown over the years. I now host this more regularly and I’m delighted by the high turnout and enthusiasm to support one another. Q. What do you see as some of the key prior it ies for Standard Chartered over the next 5 years? A. This is an important aspect of the Board’s agenda, and we discuss this with management in depth. I believe continu ing to put cl ients at the heart of all that we do to be vital, as well as developing our talent and youth, aim ing to increase shareholder returns, giv ing back to the communit ies and env ironments in which we operate, mainta in ing a risk aware strategy, and leveraging off our diverse and unique network. Robin Lawther, CBE Independent Non-Executive Director 155 Standard Chartered – Annual Report 2022 Directors’ report ![]() 156 Standard Chartered – Annual Report 2022 Directors’ report Corporate governance This year, the Board Effectiveness Review comprised an externally facil itated evaluat ion in accordance with the UK Corporate Governance Code. It was conducted by Ffion Hague of Independent Board Evaluation (IBE). The Board’s five committees were also observed as part of the review. Neither Ffion Hague nor IBE has any other connection with the Company or any ind iv idual directors. This was the third external evaluation the Board has undertaken during José Viñals’ tenure as Group Chairman. Board effectiveness review format A comprehensive brief was provided to the assessment team at IBE by the Group Chairman and the assessment team observed the Board and its committees between July and October. The review took the form of detailed interv iews w ith every board member, members from the Management Team and other key non-board contributors, some 26 people in total. All partic ipants were interv iewed thoroughly in accordance with a tailored agenda. The evaluation team also observed Board and committee meetings, reviewed papers from these meetings, as well as more static documentation provided. A report was compiled by the evaluation team based on the informat ion and v iews supplied by those interv iewed and observations from the Board and committee meetings. Draft conclusions were discussed with the Group Chairman and subsequently the whole board in December 2022, with Ffion Hague present. Following the Board discuss ion, IBE prov ided feedback to each committee chair on the performance of their committee and also discussed the report on the Group Chairman’s performance with the current and previous Senior Independent Director. In addit ion, the Group Cha irman received a report with feedback on ind iv idual directors which was used to support the ind iv idual Fit and Proper and annual assessments conducted with directors. Key observations were discussed by the Governance and Nominat ion Comm ittee ahead of the Board and its committees final is ing their 2023 action plans. Key observations and action plans for the Board’s five committees can be found in the Board committee reports starting on page 163. Progress against the 2022 Action Plan The 2022 Action Plan set out a number of actions to be achieved following the internal Board evaluation conducted in 2021. The 2022 Action Plan was regularly reviewed during the year and good progress had been made against actions as evidenced by this year’s external Board effectiveness review. Key observations from the 2022 external effectiveness review • The Board has shown considerable progress since the last external evaluation and believes in continuous improvement. • The Board is regarded as well constructed overall, with plenty of listed experience and good divers ity rat ios, although slightly larger than most market peers. • The Board considered the importance of creating more space on the Board agendas and creating a mechanism to take papers by exception. • That the standard tenure of INEDs needed further considerat ion in order to smooth succession. 2023 Action Plan • Review agendas of the Board and its committees to reduce overlaps and create efficienc ies. • Revise key performance ind icators and regular reports to focus attention on outcomes rather than activ ity and completed steps. • Enhance peer benchmarking informat ion and data. • Improve INED appointment process by increas ing pace of recruitment and decis ion mak ing. • Clarify the timetable and those responsible for Board appointments with in that framework. • Enhance new director induct ion packs to ass ist them in understanding how strategy, risk appetite and the organisat ion fit together. • Rebalance the Board agendas to create more time for linked strategic discuss ions. • Review the mechanism for Board workforce engagement. • Enhance the framework for ensuring reputational risk is appropriately escalated to the Board and its committees. #### Board effectiveness External evaluation process Evaluation brief provided to IBE Observations discussed with the Group Chairman, Governance and Nominat ion Committee, Board and committee chairs Action plans for 2023 agreed with Board and committees One‑to‑one interv iews conducted Board and committees observed Evaluation and report prepared ![]() 157 Standard Chartered – Annual Report 2022 Directors’ report Director independence The Governance and Nominat ion Comm ittee reviews the independence of each of the non-executive directors, taking into account any circumstances likely to impa ir, or wh ich could impa ir, the ir independence. Recommendations are then made to the Board for further considerat ion. In determin ing the independence of a non-executive director, the Board considers each ind iv idual against the criter ia set out in the UK Code, the Hong Kong List ing Rules and also considers their contribut ion and conduct at Board meet ings, includ ing how they demonstrate objective judgement and independent think ing. The Board considers all of the non-executive directors to be independent of Standard Chartered, concluding that there are no relationsh ips or c ircumstances likely to impa ir any INEDs’ judgement. Christ ine Hodgson independence At the request of the Company, Christ ine, who had s ignalled her intent ion to ret ire from the Board at the end of her nine-year term as an independent non-executive director in September 2022, agreed to remain on the Board until 31 January 2023. This enabled Christ ine to fac il itate the orderly transit ion of her role as Cha ir of the Remuneration Committee to her successor, Shir ish Apte, as well as lead the shareholder consultation required following a sign ificant m inor ity vote against the Company’s remuneration policy and report resolutions at the 2022 AGM. The Board, taking into account the provis ions set out in the UK Code and the Hong Kong List ing Rules, cons idered Christ ine independent up until she stepped down from the Board despite her serving for a period of more than nine years and concluded that there were no relationsh ips or c ircumstances likely to impa ir her judgement. Th is was based on a number of factors, includ ing: • Christ ine’s strong record in making object ive dec is ions and holding management to account and remain ing w ill ing and able to do so • her clear independence demonstrated in terms of her partic ipat ion at meetings with management and her interact ions w ith shareholders and proxy agencies • her arm’s-length approach to dealing with executive directors and continued challenge where appropriate • none of Christ ine’s external d irectorsh ip appo intments conflicted or potentially conflicted with those of the Company • the broader composit ion of the Board, includ ing the fact that no other director had a tenure in excess of nine years. External directorsh ips and other bus iness interests Board members hold external directorsh ips and other outs ide business interests. We recognise the sign ificant benefits that broader boardroom exposure provides for our directors. However, we closely monitor the nature and quantity of external directorsh ips our d irectors hold, in order to satisfy ourselves that any addit ional appo intments 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 ip requ irements, as well as the shareholder advisory groups’ ind iv idual guidance on ‘over-boarding’. These requirements impose a lim it on the number of directorsh ips both execut ive and INEDs are permitted to hold. Details of the directors’ external directorsh ips can be found in their biograph ies on pages 138 to 142. Before comm itt ing to an addit ional appo intment, directors confirm the existence of any potential or actual conflicts, that the role will not breach their lim it as set out by the PRA, and prov ide the necessary assurance that the appointment will not adversely impact their abil ity to cont inue to fulfil their role as a director of the Company. All directors continue to hold no more than the maximum number of directorsh ips perm itted under the PRA rules. Our established internal processes ensure that directors do not undertake any new external appointments without first receiv ing formal approval of the Board. The Board has delegated authority to make such approvals to the Group Chairman, with the exception of his own appointments. Of those INEDs who took on new external directorsh ips dur ing the year, four were regarded as sign ificant d irectorsh ips (appo inted to the board of a listed company) and as such were announced to the market in line with our list ing obl igat ions. Further deta il on the specif ic appo intments are provided below: • Gay Huey Evans was appointed to the board of S&P Global as a non-executive director and member of its audit committee on 28 February 2022, following the closing of the merger between S&P Global and IHS Markit. Gay resigned as an independent director of IHS Markit on the same day • Carlson Tong was appointed to the board of MTR Corporation Lim ited as an independent non-executive director, chairman of its audit and risk committee and a member of its finance and investment committee on 25 May 2022 • Byron Grote was appointed to the board of InterContinental Hotels Group PLC (IHG) as a non-executive director and member of its audit and remuneration committees on 1 July 2022 • Jackie Hunt will jo in the Board of W ill is Towers Watson plc (WTW) as an independent non-executive director on 1 April 2023. All four directors discussed their respective appointments with the Group Chairman in advance of accepting the posit ions. Each d irector confirmed the existence of any potential or actual conflicts; provided assurance that the respective roles would not breach their lim its as set out by the PRA; and confirmed that their appointments would not impact their abil it ies to devote suffic ient t ime and focus to both their Board and committee responsib il it ies. The Board’s executive directors are permitted to hold only one non-executive directorsh ip. Of our execut ive directors, Andy Halford, was until 31 December 2022, the Senior Independent Director, Chair of the Audit Committee and member of the Nominat ion Comm ittee at Marks and Spencer Group plc, listed on the FTSE 250 and Bill Winters is a non-executive director of Novartis International AG, listed on SIX Swiss Exchange. ![]() 158 Standard Chartered – Annual Report 2022 Directors’ report Corporate governance #### Stakeholder engagement #### Ensuring authentic engagement across our markets Clients Regulators and governments Employees Investors Society The Board recognises the importance of stakeholder considerat ion and interact ion. It forms a cruc ial part of Board decis ions and d iscuss ions, as well as the rev iew of our purpose, values and strategy. As the impact of COVID-19 started to lessen across many of our markets, overseas travel was gradually reintroduced during the year. This was an opportunity for directors, either collectively or ind iv idually, to engage in person with a wide range of stakeholders, some for the first time since early 2020. Some of our markets continued to face COVID-19-related restrict ions dur ing 2022, particularly in the early stages. Certain vis its were e ither lim ited or replaced w ith virtual engagements. Dialogue via interact ive technology ensured authentic engagement, but did at times prevent the meeting engagement the Board would usually undertake if it were in-person. Despite this, the Board is aware that a combinat ion of both virtual and in-person meetings is an effective way of driv ing stakeholder engagement as it provides flexib il ity and the opportunity to tailor interact ions depend ing on the partic ipants. Regardless of the format, Board activ it ies led to a number of invaluable opportunit ies to engage w ith stakeholders across the Group’s diverse network, includ ing those ident ified on the following pages. Directors did not just engage collectively with stakeholders, but also ind iv idually. Independent adviser members to the Board, Board Risk Committee and Audit Committee also engaged directly with them. Informal and formal sessions with stakeholders across our footprint help provide INEDs and independent adviser members with a comprehensive understanding of the Group’s market operations, implementat ion of strategy, and the external and internal impact of the Group’s activ it ies. 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 163. Members of the Board, Management Team, directors from the Group’s banking subsid iar ies and other colleagues during a market vis it to Duba i in November 2022 Suppliers ![]() 159 Standard Chartered – Annual Report 2022 Directors’ report #### Engagement with investors Our approach Aim ing to del iver robust returns and long-term, sustainable value for shareholders is of key importance to the Board. We continuously reflect on how the Board engages with our investors, openly seeking feedback and review ing prev ious activ it ies. We believe this strengthens engagements and helps support the Board’s focus on developing open and trusted relationsh ips w ith investors. Although travel restrict ions in some markets lim ited in-person engagement at times, the Board was able to physically meet with shareholders on a number of occasions. Where directors could not meet with shareholders in person, a virtual approach was taken. As with last year, this provided the opportunity to partic ipate in events where extensive travel may have restricted investors in the past. During the year, we mainta ined a comprehens ive programme of engagement, includ ing investor advisory bodies and credit rating agencies, and provided updates on progress made to transform our business for improved returns. The Group Chairman and other Board directors had direct contact with investors and advisory voting bodies during the year, and received regular updates from the Investor Relations team, includ ing reports on market and investor sentiment. An external independent investor perception study was commiss ioned, wh ich was then considered by the Board. The Group Chairman, as part of his role, leads engagement with shareholders and hosted the 2022 AGM alongside fellow Board members. The Group Chairman and certain Board members also held an investor stewardship event sim ilar to last year. Christ ine Hodgson, Cha ir of the Remuneration Committee up until 31 December 2022, led the shareholder consultation required following a sign ificant m inor ity vote against the Company directors’ remuneration policy and report resolutions at the 2022 AGM. Maria Ramos took over from Christ ine Hodgson as Sen ior Independent Director in September 2022. The Senior Independent Director was available to shareholders if they had concerns that could not be resolved or for which the normal channels were inappropr iate. Bill Winters and Andy Halford are the primary spokespeople for the Group. Throughout the year they engaged extensively with exist ing shareholders and potent ial new investors during ind iv idual or group meetings and conferences, either in person or virtually. In addit ion, each member of the Management Team responsible for a client segment or a geographic region, as well as the Group Treasurer, engaged with investors to promote greater awareness and understanding of the strategy in their respective areas, as well as taking the opportunity to receive investor feedback first hand. Institut ional shareholders The Group mainta ins a d iverse, high-quality and predominantly inst itut ional shareholder base. The Investor Relations team has primary responsib il ity for managing day-to-day communicat ions w ith these shareholders and provides support to the Group Chairman, Group Chief Executive, Group Chief Financ ial 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 team has primary responsib il ity for managing the Group’s relationsh ips w ith debt investors and the three major rating agencies, with local market chief executives and chief financ ial officers lead ing on smaller subsid iary rat ings. In 2022, management met with debt investors across Europe, North America and Asia, and mainta ined a regular d ialogue with the rating agencies. It is important that the Group, as an active issuer of senior unsecured and non-equity capital, mainta ins regular contact with debt investors to ensure continued appetite for the Group’s credit. The Group’s credit ratings are a key part of the external perception of our financ ial strength and creditworth iness. Engagement with investors: what we did during 2022 February 2021 full year results and roadshows March Conferences and roadshows April 2022 first quarter results and conferences May AGM and conferences June Financ ial Markets event and conferences July 2022 half year results August Roadshows September Conferences and roadshows October 2022 third quarter results November Stewardship event, Consumer, Private & Business Banking event and conferences December Conferences Investor stewardship event The Group Chairman hosted a stewardship event in November 2022 alongside the Senior Independent Director and chairs of the Board Risk, Audit, and Remuneration Committees. Given the easing of travel restrict ions in the UK, the event was held as a hybrid meeting which offered flexib il ity regarding how investors could engage. The Group Chairman provided a strategic update regarding Board and committee activ it ies during the year which was supplemented by opening remarks from the Remuneration Committee Chair. This was followed by a question and answer (Q&A) session. Questions could be submitted in advance of the event, asked live in person or via a web- based platform for those who joined electron ically. ![]() 160 Standard Chartered – Annual Report 2022 Directors’ report Corporate governance #### Engagement with investorscontinued Retail shareholders The Group Company Secretary oversees communicat ion w ith our retail shareholders. AGM The meeting was held on 4 May 2022. We were pleased that shareholders could attend in person for the first time since 2019 given the easing of restrict ions on publ ic gatherings. In addit ion, in light of the success of last year’s dig itally enabled meet ing, we also offered shareholders the opportunity to partic ipate electron ically via a live web- portal. With in th is portal, shareholders were able to view a live video feed of the AGM, submit voting instruct ions and questions in writ ing or ask them through an aud io line. Shareholders who attended the meeting in person were able to submit voting instruct ions and ask quest ions directly. The AGM is a key date in the Board’s calendar and the hybrid format ensured that shareholders could engage with them regarding the Company’s recent performance and strategic prior it ies. Questions received from shareholders covered a diverse range of topics, includ ing climate and the Group’s net zero pathway; divers ity; the Group’s strategy; shareholder engagement; share price and regulatory developments. All Board-proposed resolutions were passed, with shareholder support for each ranging from 68.81 per cent to 100 per cent. We proposed our net zero pathway as a shareholder advisory resolution at the AGM. Market Forces and Friends Provident Foundation filed a resolution outlin ing a d ifferent approach. The Board appreciate the involvement of both of these organisat ions and share their commitment to the transit ion to net zero, however the Board supported the Group’s strategic approach to achieve this and recommended that shareholders support our advisory resolution and oppose the requis it ioned resolution. In line with the Board’s recommendation the advisory resolution was endorsed with 83 per cent of shareholder support at the 2022 AGM, and the requis it ioned resolution did not pass. We remain very grateful for the support of our shareholders. Detail regarding the directors’ remuneration report and directors remuneration policy resolutions can be found in the Directors’ Remuneration Report starting on page 184. Voting results from the 2022 AGM can be viewed at sc.com/investors A summary of responses to questions on key themes raised by shareholders was made available on our website after the meeting and can be found at sc.com/agm Further informat ion can be viewed at sc.com/investors #### Engagement with clients and suppliers Clients are central to everything we do and promoting productive, sustainable relationsh ips w ith them is a key prior ity. Pr ior to the COVID-19 pandemic, customer engagement was built into Board and director vis its across our footprint and given the alleviat ion of travel restr ict ions in certain markets, this method of interact ion was gradually reintroduced during the year. Board members, either collectively or ind iv idually, met clients face-to-face or virtually to keep abreast of developing client trends, experiences and needs. This also formed and will continue to form a part of the director induct ion programme. In addit ion, updates on cl ients’ ins ights form part of deep dives into product segment strategy at Board meetings. Suppliers provide effic ient and susta inable goods and services for our business and certain members of the Board also met with them during the year. Detail on how the Group more generally engaged with clients and suppliers can be found on pages 55, 56, 58 and 59 of the Strategic report. #### Engagement with regulators and governments The Board, either collectively or ind iv idually, engages with relevant authorit ies both in the UK and across our footprint on a regular basis. During 2022, this took place via a number of virtual and physical forums. Topics varied, includ ing recovery from the pandemic, geopolit ical developments, resolut ion planning, dig it isat ion and innovat ion, cl imate-related matters and cyber security. 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 more generally can be found on page 57 of the Strategic report . #### Engagement with society The Board receives regular updates from management concerning the communit ies and env ironment in which we operate. Either collectively or ind iv idually, directors were able to vis it some of the Group’s markets this year given the easing of travel restrict ions in certain markets. This provided a productive opportunity to meet stakeholders in civ il soc iety. In addit ion, external and internal speakers provided input to the Board’s discuss ions, wh ich covered key societal issues such as climate change, the evolving geopolit ical landscape, and the continued impact of the pandemic in some of our markets. Further detail on how the Group engaged with society more generally can be found on page 59. ![]() 161 Standard Chartered – Annual Report 2022 Directors’ report The Group Chairman also hosted two subsid iary cha ir engagement sessions during 2022, both held virtually. Each event opened with specif ic top ics introduced by the Group Chairman, followed by a Q&A session. José Viñals was encouraged by the high level of interact ion and shar ing of best practices by our subsid iary cha irs. Items discussed across the sessions included: • Group performance, strategy and investor reaction • 2022 Board prior it ies • UK Corporate Governance update • New ways of working for certain markets post COVID-19 • Areas of focus for the Group’s boards, includ ing board transformation and overseeing culture • Sustainab il ity. Committee chair engagement The Audit Committee held its annual videoconference during the year, followed by a Q&A session. This was hosted by the Audit Committee Chair and attended by the chairs of subsid iary aud it committees. The Group Financ ial Controller; Group Head, Internal Audit; Regional Head, Audit, Europe and the Americas and Africa and the Middle East; Group Head, Conduct, Financ ial Cr ime and Compliance; members of the Group’s statutory auditor, EY, includ ing the lead aud it partner; the Group Company Secretary and the Committee Secretary also partic ipated in the call. Items discussed during the call included: • 2022 Audit Committee focus areas • Group Finance update, which featured financ ial results, IFRS 9 models, overlays and a status report on the Group’s Aspire Programme • Conduct, financial cr ime and compliance update • Group Internal Audit reporting to subsid iary aud it committees • Group statutory audit update from EY. The Board Risk Committee Chair hosted its annual videoconference with chairs of the subsid iary board risk committees, followed by a Q&A session. The Group Chairman; Group Chief Risk Officer; Global Head of Enterprise Risk Management and Deputy Chief Risk Officer Standard Chartered Bank; the Group Company Secretary and Committee Secretary also partic ipated in the call. Items discussed during the call included: • 2022 Board Risk Committee focus areas • Group Chief Risk Officer’s 2022 prior it ies • Update on Model Risk • Management scenarios undertaken during the year, includ ing stagflat ion. The Remuneration Committee Chair also held a videoconference attended by the subsid iary remunerat ion committee chairs and the chairs of subsid iary boards that have remuneration responsib il it ies. The Group Cha irman; members of the Remuneration Committee; Group Head, Human Resources; Global Head, Performance, Reward and Benefits; Head, Executive Compensation and Reward Governance; the regional, functional and business heads of Pensions, Rewards and Benefits; and the Group Company Secretary also partic ipated in the call. The calls foster knowledge sharing and best practice between the Company Remuneration Committee and the subsid iary remunerat ion committees and raise awareness as remuneration committees are increas ingly expected to have overs ight over the approach to remuneration for the wider workforce. The topics that were discussed included: • 2022 Remuneration Committee focus areas • Framework for subsid iary interact ion • 2022 total variable compensation and ensuring strong different iat ion • 2023 compensation in light of inflat ion and cost of l iv ing pressures. Other activ it ies which took place during 2022 to further strengthen the linkages across the Group included: • the Group Chairman attended a Standard Chartered Bank (Hong Kong) Lim ited (SCBHK) board meet ing • the Chair of the Group Audit Committee attended a SCBHK audit committee meeting and the audit committee chair of Standard Chartered Bank (Singapore) Lim ited attended one Group Audit Committee Meeting • the Chair of the Board Risk Committee attended a SCBHK board risk committee meeting. Further detail regarding how the Group engages with its stakeholders can be found on pages 54 to 124 Global subsid iary governance conference During the Board’s vis it to Duba i in November, we held our third global subsid iary governance conference. Th is two-day event was attended by members of the Board, Management Team and directors from the Group’s banking subsid iar ies. The conference presented the opportunity for the Board to strengthen and reconnect its linkages with the Group’s subsid iary cha irs, hear their views on the progress of the Group’s strategy and discuss what improvements could be made in their markets, as well as a range of other topics. It also enabled the Board and Management Team to gain a better appreciat ion of some of the challenges and opportunit ies the Group faces across its subsid iary markets. Items d iscussed across the two days included: • Group strategy, financial performance and governance structure • The transformation taking place in the UAE from a policy perspective • Regional CEOs strategy session • Build ing res il ient bus iness models and ecosystems for the new economy • Strategic oversight of sustainab il ity • Talent opportunity and changing workforce expectations • Overview of the Dubai International Financ ial Centre (DIFC) Fintech hive. #### Engagement and linkages with the Group’s subsidiaries The Board and its committees recognise the importance of creating, mainta in ing and build ing upon appropr iate linkages with the Group’s subsid iar ies. Sim ilar to 2021, the Board’s ab il ity to phys ically meet with people from across the Group’s footprint remained lim ited. Desp ite this, the Group Chairman and INEDs engaged with the Group’s subsid iar ies through a number of forums. This included video-enabled chair and committee chair engagement sessions, as well as other forms of interact ion. ![]() 162 Standard Chartered – Annual Report 2022 Directors’ report Corporate governance #### Engagement with employees The Board places great importance on workforce engagement and values its interact ions at all levels of the Group. Two-way dialogue through a variety of forums helps build the Board’s understanding of key issues and developments around its markets, as well as provid ing an ins ight into the hands-on experiences of colleagues. The role of the Board is dist inct from management, and the directors are aware of the importance of overseeing, supporting and, where necessary, challenging management in implement ing its people strategy. In light of this, the Board tasked the Culture and Sustainab il ity Committee to oversee a review of the exist ing framework w ith management, consider ing certa in adjustments aimed to enhance the Board workforce engagement. The Board continued to adopt an alternative approach to the 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 ion w ith more than 83,000 employees across 59 diverse markets, it is vital that any Board engagement should gather unfiltered feedback which is representative of the whole workforce in order to be truly effective. Given the easing of travel restrict ions the Board was able to meet colleagues across parts of our footprint, both collectively and ind iv idually. The diagram below illustrates which markets were vis ited. Dur ing the year, directors appreciated being able to meet face-to-face with a number of employees, whether through formal meetings or informal discuss ions. The opportun ity to resume meeting the workforce in person is something directors found highly beneficial and w ill continue to form part of the approach for 2023. Through our comprehensive employee listen ing programme, the Board has an opportunity to understand diverse employee perspectives. This is comprised of an annual engagement survey, a continuous listen ing programme, lifecycle surveys and diagnost ic research on specif ic areas of focus, such as flex ible working, wellbeing and performance management. The Board can also access data on employee issues through our Speak Up channel. Further detail regarding employee engagement this year can be found with in the Culture and Susta inab il ity Committee report starting on page 176 Director travel: an opportunity to engage with the workforce and other stakeholders 4 3 1 2 5 6 7 8 9 10 11 12 13 14 15 16 Europe and the Americas 1. France 2. Germany 3. UK 4. US Africa and Middle East 5. Kenya 6. Qatar 7. Saudi Arabia 8. UAE Asia 9. Bangladesh 10. Hong Kong 11. India 12. Indonesia 13. Korea 14. Malaysia 15. Singapore 16. Vietnam Directors, either together or ind iv idually, vis ited a range of markets. Dubai, UAE On 10 November, the Board hosted an informal lunch with the UAE talent. They inv ited a number of top talents who came from various business segments, support functions and backgrounds, representing the divers ity of the UAE franch ise. José Viñals and Maria Ramos also hosted a townhall for all employees, alongside members of the Management Team. Singapore The Board travelled to Singapore in March 2022. Although pandemic-related restrict ions on soc ial gatherings remained in place, which lim ited the amount of engagement permitted, the Board took advantage of meeting with a wide range of stakeholders where possible, includ ing informal discuss ions w ith senior leaders and other colleagues. ![]() 163 Standard Chartered – Annual Report 2022 Directors’ report Who else attended 2022 Committee meetings? The Group Chairman; Group Chief Executive; Group Chief Financ ial Officer; Group Ch ief Risk Officer; Group General Counsel; Group Head, Internal Audit; Group Head of Conduct, Financ ial Cr ime & Compliance; Group Head, Central Finance; representatives from Group Finance; Group Statutory Auditor; and Group Company Secretary. Sir Iain Lobban and Paul Khoo, independent advisers to the Board, attend discuss ions on Financ ial Cr ime Compliance (FCC)-related matters. As part of his induct ion plan in 2022, Shir ish Apte attended one Comm ittee meeting as an observer prior to jo in ing. As part of, and in addit ion to most scheduled Comm ittee meetings, the Committee held private members-only meetings. The Committee also met with the Group’s Statutory Auditor, Ernst & Young LLP (EY) and the Group Head, Internal Audit, without management being present. The Committee members have detailed and relevant experience and bring an independent mindset to their role. The Board is satisf ied that Ph il Rivett has recent and relevant financial exper ience. Phil is a chartered accountant with over forty years’ experience of professional accountancy and audit focused on banks and insurance companies. He led the audits of a number of leading banks during his career as senior audit partner of PricewaterhouseCoopers (PwC). He is also Chair of the Audit Committee for Nationw ide Bu ild ing Soc iety. Biograph ical deta ils of the committee members can be viewed on pages 138 to 142 What are the main responsib il it ies of the Comm ittee? The Committee is responsible for oversight and advice to the Board on matters relating to financ ial report ing. The Committee’s role is to review, on behalf of the Board, the Group’s internal controls, includ ing internal financ ial controls. The Committee has exercised oversight of the work undertaken by Conduct, Financ ial Cr ime & Compliance (CFCC), Group Internal Audit (GIA) and EY. The Committee Chair reports to the Board on the Committee’s key areas of focus following each meeting. The Committee has written Terms of Reference that can be viewed at sc.com/termsofreference I am pleased to present the Audit Committee report for the year ended 31 December 2022. The report sets out the areas of sign ificant focus for the Committee and its activ it ies over the course of the year. I have enjoyed working with Committee members, management, EY, regulators and colleagues, in what has been a strong year of performance for the Group. There have been some changes to the Committee’s composit ion in 2022. We welcomed Shir ish Apte and Jack ie Hunt as Committee members in May and October respectively. Dr Byron Grote stepped down as a Committee member in November, and I would like to convey the Committee’s gratitude to Byron for his sign ificant contribut ions over the years. Paul Day, Group Head, Internal Aud it, joined the Comm ittee as a permanent inv itee, replac ing the previous incumbent. As you would expect, the challenging external environment and linger ing impacts of COVID-19 have been sign ificant focus areas for the Committee this year. The Committee has carefully scrutin ised and challenged credit impa irment prov is ions, includ ing the cont inued appropriateness or release of COVID-19-related overlays, key accounting issues and sign ificant account ing estimates and judgements made by management, to ensure that they are sufficient, appropriate and clearly communicated in the Group’s public disclosures. The Group’s investment in China Bohai Bank (Bohai) has continued to be an area warranting ongoing attention, includ ing the assumptions and judgements made around the Group’s sign ificant influence over Bohai; and further impa irment of the investment to reflect the challenges and uncertainty in the outlook for the banking industry and property markets in China. China Commercial Real Estate (CRE) has been reviewed, discussed and challenged throughout the year, in light of the Chinese economy and the continued impacts of COVID-19. Sovereign downgrades have also been reviewed and discussed, includ ing Sr i Lanka, Pakistan and Ghana. Given the complex external landscape, this level of scrutiny will continue in 2023. The Committee has continued to place oversight on the Group’s Conduct Programme and the Group’s Speak Up Programme. We observed regulatory developments in the use of private communicat ion channels and the act ions under way by management to protect the Group against the associated risks. The Committee invested time and attention in scrutin is ing Standard Chartered Bank’s implementat ion plans for F inanc ial Conduct Author ity (FCA) Consumer Duty, which comes into effect on 31 July 2023. In 2022, I was appointed as the FCA Consumer Duty Board Champion. As part of this role, I meet regularly with the Accountable Executive and receive monthly updates on the progress of the implementat ion plans, whereby I then update the Group Chairman and Group Chief Executive, as required. Given the retirement of the Board Financ ial Cr ime Risk Committee on 1 April 2022, the Group Money Laundering Reporting Officer’s annual report was transferred to the Audit Committee for review and discuss ion, wh ich took place in December 2022. We had the benefit of Sir Iain Lobban and Paul Khoo, our Board independent advisers, jo in this discuss ion to prov ide independent and special ist perspect ive. In conjunction w ith the Board Risk Committee, we continue to ensure that FC Risk is suffic iently covered in Board committee discuss ions. The Committee continues to receive regular updates from management and EY on the steps being taken by the Group to improve Information Technology (IT) access controls and remediate weaknesses ident ified in prior year statutory audits. The Committee has kept a close watch on the work under way to improve controls and protect the Group’s security systems. The Committee has exercised its authority delegated by the Board for ensuring the integr ity of the Group’s publ ished financ ial informat ion by discuss ing and challeng ing the judgements and disclosures made by management, and the assumptions and estimates on which they are based. The Committee has exercised judgement in decid ing which of the issues it considered to be sign ificant in the financ ial statements, includ ing Cl imate, and this report sets out the material matters that it has considered in these deliberat ions. As a result of the Committee’s work in 2022, assurance has been provided to the Board on the quality and appropriateness of the Group’s financial report ing, and on internal audit, compliance and regulatory matters, to continue to safeguard the interests of the Group’s broader stakeholders. The following pages provide ins ight and context into the Committee’s work and activ it ies during the year. Phil Rivett Chair of the Audit Committee #### Audit Committee #### “As you would expect, the challenging external environment and lingering impacts of COVID-19 have been significant #### focus areas for the Committee this year.” Committee composit ion 8 / 8 Phil Rivett (Chair) 2 / 2 Jackie Hunt 3 8 / 8 David Conner 5 / 5 Shir ish Apte 2 8 / 8 Christ ine Hodgson, CBE 8 / 8 Maria Ramos 8 / 8 Carlson Tong Scheduled meetings 1 Byron stepped down from the Committee on 30 November 2022 2 Shir ish joined the Comm ittee on 4 May 2022 3 Jackie jo ined the Comm ittee on 1 October 2022 7 / 7 Byron Grote 1 ![]() 164 Standard Chartered – Annual Report 2022 Directors’ report Corporate governance #### Activities during the year Financ ial reporting • Satisf ied itself that the Group’s accounting polic ies and pract ices are appropriate. • Reviewed the clarity and completeness of the disclosures made with in the publ ished financ ial statements, in particular, that they are fair, balanced and understandable. • Monitored the integr ity of the Group’s publ ished financ ial statements and formal announcements relating to the Group’s financ ial performance, rev iew ing the s ign ificant financial judgements, est imates and accounting issues. • Considered any changes in disclosures aris ing from best pract ice in applying the UK Finance Code for Financ ial Report ing Disclosure, recommendations from the Taskforce on Disclosures on Expected Credit Losses (ECL), high-quality practices with regard to implementat ion of ECL suggested by the Prudent ial Regulation Authority (PRA) and Financ ial Report ing Council (FRC) publicat ions on aspects of UK reporting and disclosure requirements from the Financ ial Stab il ity Board’s Task Force on Cl imate-Related Financ ial D isclosures (TCFD). Sign ificant account ing judgements considered during 2022 are shown below. The Committee can confirm that the key judgements and sign ificant issues reported are consistent with the disclosures of key estimat ion uncerta int ies and cr it ical judgements as set out in Note 1 starting on page 348. Key area Action taken Impairment of loans and advances Reviewed and challenged, on a quarterly basis, reports detail ing the composit ion and cred it quality of the loan book, concentrations of risk and provis ion ing levels. Reviewed, considered and challenged judgemental Post Model Adjustments (PMAs) and management overlays in both the wholesale and retail portfolios on a quarterly basis that were required to estimate ECL. Careful considerat ion, review and challenge were placed on the China CRE overlay. In the case of PMAs, some models’ performance breached monitor ing standards or val idat ion standards necessitat ing adjustments. In the case of management overlays mainly to deal with the impact of COVID-19, the COVID-19 overlay for Corporate, Commercial and Institut ional Bank ing (CCIB) has been fully released and for Consumer, Private and Business Banking (CPBB) has been sign ificantly reduced, as the outlook has improved during 2022. As well as the expectation of elevated losses in industr ies and locat ions, paid particular attention to the China CRE sector and certain sovereigns, includ ing Sri Lanka, Pakistan and Ghana, which have deteriorated during 2022. In respect of high-risk credit grade exposures, the Committee was also briefed on business plans, includ ing remed ial actions and management assessment of the recoveries and collateral available. The Committee challenged the completeness of these overlays and reviewed and considered when such management overlays would be released. Reviewed the appropriateness of management’s economic forecasts and the adjustments to provis ions to incorporate the effect of multiple economic scenarios. The Committee was briefed on the redevelopment of the Group’s Monte Carlo model in Q4 2022 to incorporate a wider range of scenario outcomes than the previous model with the effect of increas ing non-l inear ity in the model output. The Committee reviewed and challenged the judgement to release the previously held PMA for the CCIB portfolios and retain the PMA for CPBB as a result of the output of these model changes. The Committee reviewed the Group’s high-level quantitat ive assessment of the impact of Climate Risk on the Group’s ECL and considered the material ity of the impact and the judgement to disclose a potential range of impact rather than adjust the ECL given the lim ited impact. The Committee was briefed on the performance of the International Financ ial Reporting Standard (IFRS) 9 models and the remediat ion plans in place to address material non-performance issues, where these had been ident ified. The Committee considered the appropriateness of the staging of higher-risk loans. Goodwill impa irment Reviewed management’s annual assessment of goodwill impa irment, cover ing key assumptions (includ ing forecasts, d iscount rate and sign ificant changes from the previous year), headroom availab il ity and sensit iv it ies to poss ible changes in key assumptions and related disclosures. ![]() 165 Standard Chartered – Annual Report 2022 Directors’ report Carrying value of investments in associates Reviewed and challenged management’s carrying value assessments on the Group’s investment in Bohai, consider ing carefully key assumpt ions and their potential sensit iv ity to changes. Given Bohai is a public company, with lim ited forecasted profit informat ion, the Group is required to prepare its own forecasts, making prudent estimates of future profitab il ity. The Committee considered the basis of the preparation of the Value-in-Use (VIU) assessment, and the challenges and uncertainty in the outlook for the banking industry and property markets in China that may impact credit losses in the VIU assessment and reviewed the related disclosures for Bohai. The Committee also reviewed and challenged management’s assessment that the Group mainta ined s ign ificant influence and satisf ied itself that it remained appropriate to continue to equity account for the investment. Recoverabil ity of parent company’s investment in subsid iar ies Discussed and received confirmat ion from management that it had adequately assessed the recoverabil ity of investments in subsid iar ies, together with any intercompany indebtedness. IT – user access management Received an update from management and EY on new and pre-exist ing IT observations ident ified by EY and GIA, relat ing to user access management, includ ing pr iv ileged access, user access rev iews and other user access controls. The Committee sought and received assurance this matter is receiv ing sen ior management attention, and also discussed EY’s audit response. Valuation of financial instruments held at fair value Received reports and updates at each reporting period detail ing the key processes undertaken to produce and validate valuations of financ ial instruments, includ ing any changes in methodology from prior years and sign ificant valuat ion judgements. The Committee received regular updates on the level of unsold posit ions in the syndicat ions portfol io and the valuation of these posit ions and plans for sell down. The Comm ittee also reviewed credit valuation adjustments, debit valuation adjustments, funding valuation adjustments and own credit adjustments and considered the explanation and rationale for any sign ificant movements. Other areas of focus: Impairment of aircraft Reviewed and challenged, on a quarterly basis, management’s assessments of impa irment losses on a ircraft operating lease assets, includ ing the assumpt ions used to determine asset VIU and market valuations. The Committee reviewed detailed sensit iv ity analysis on the factors that would impact the VIU assessments includ ing res idual values, remarketing periods after lease terminat ions, reduct ions in market rental rates and discount rates while assessing the impa irment calculat ions for the aircraft. Classif icat ion of assets as held for sale Reviewed management’s assessment of whether certain assets or disposal groups should be reclassif ied as held for sale. Th is included review ing the facts and circumstances for the proposed sale of the business exits in the AME region, the proposed sale of the aircraft leasing business, shipp ing assets and rema in ing Princ ipal F inance investments. Restructuring costs Reviewed and considered, on a quarterly basis, income statement charges and credits classif ied as restructur ing. Taxation Reviewed and considered management’s judgements and assumptions with respect to tax exposure risks, includ ing uncerta in tax posit ions, and ensured adequate disclosure in the financ ial statements has been made. Th is included understanding the Group’s effective tax rate, the quantum and basis of recognit ion of deferred tax assets, and the UK bank levy charge for the year. Provis ions for legal and regulatory matters Considered advice presented on the current status of sign ificant legal and regulatory matters, and considered management’s judgements on the level of provis ions and the adequacy of d isclosure, as set out in Note 26 on page 420. #### Activities during the yearcontinued ![]() 166 Standard Chartered – Annual Report 2022 Directors’ report Corporate governance Going concern assessment and viab il ity statement • Reviewed management’s process, assessment and conclusions with respect to the Group’s going concern assessment and viab il ity statement, includ ing the forward-look ing Corporate Plan cashflows, the results of stress tests that explore the resil ience of the Group to shocks to its balance sheet and business model, princ ipal and emerg ing risks, liqu id ity and capital posit ions and key assumpt ions. The Committee also ensured that the going concern assessment and viab il ity statement is consistent with the Group’s Strategic report and other risk disclosures. Further details can be found on pages 350, 219 and 231 Fair, balanced and understandable • The Committee considered, satisf ied 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 ion necessary for shareholders to assess the Group’s pos it ion and performance, business model and strategy, and the 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 ions of the Group’s bus iness as set out in the Strategic report are consistent with those used for financ ial report ing in the Group’s financ ial statements. Examples of deeper discuss ions into specif ic top ics • EY regional partner overviews: Received country/regional overviews from EY’s local regional partners from China, Hong Kong, Korea and Taiwan. These overviews provided ins ight into the challenges faced in the Group’s markets from a statutory audit perspective; and provided the Committee with the local audit partner’s views on internal controls, as well as perspectives on how the Group compares against local peers. The overviews also provided ins ight into local regulatory developments, engagement with local regulators and areas of focus for 2022. This year, a technical discuss ion on IFRS 9 ECL – Cred it Update was also held, with EY’s Special ist Partners prov id ing perspect ive and peer comparison. These EY regional partner overviews and technical topics will continue in 2023 and beyond. • UK audit and corporate governance reforms implementat ion approach: Received and discussed papers setting out the key components of the proposed UK audit and corporate governance reforms, the work completed by the Group and the work to be undertaken to strengthen the control environment with in F inance in advance of the final rules being published. Discuss ion focused on the importance of end-to-end controls gap analysis, includ ing clear hand-offs and hand- ins and the changes that will need to be managed as a result of a strengthened control environment. The proposed approach for an Audit and Assurance Policy was also discussed, with the Committee provid ing feedback on th is. • Financ ial regulatory report ing: Received and discussed updates on the Group’s Financ ial Regulatory Reporting Remediat ion Programme. D iscuss ion focused on the challenges involved with resourcing, given the special ist sk ills required and financ ial/l iqu id ity reporting in the Group’s network. • Aspire programme: Discussed an update on the Group’s Aspire programme (a programme launched in 2018 to deliver a modern technology systems and data landscape for financ ial management and reporting). Discuss ion focused on resources, t imel ines and the impacts of migrat ion to the cloud. • Internal financial controls: Received and discussed a paper setting out the approach taken to safeguard the production of the Group’s financ ial books and records. • IFRS 9 models: Received and discussed updates on the Group’s use of IFRS 9 ECL models. • Finance resourcing: Reviewed and discussed a paper provid ing assurance that the Account ing and Financ ial Report ing function is adequately and appropriately resourced; the qualif icat ions, experience and train ing of colleagues is appropriate; and the budget allocated is suffic ient to ma inta in external reporting obligat ions, includ ing cl imate disclosures. • Tax update: Received and discussed a paper setting out an update on internat ional tax reform and a review of tax exposures and deferred tax assets. EY’s Tax Partner was inv ited to join th is discuss ion to add perspective. • Information technology access controls: Received and discussed reports on the work under way to improve the Group’s IT access controls in light of weaknesses ident ified dur ing prior years’ audits. The Committee discussed how management is working to remediate the observations raised by EY and sought assurance that this matter is receiv ing sen ior management attention. We had the benefit of EY’s Technology Risk Partner jo in these d iscuss ions, to prov ide independent perspective and peer comparison. This will continue to be an area of focus for 2023. • Data management: Received and discussed papers on the Group’s Data Management Framework, following on from discuss ions held in 2021. The H1 2022 discuss ion focused on the report ing on of timel ines, w ith feedback provided as to how this would be more useful for the Committee to track progress. The H2 2022 discuss ion focused on what had gone well and less well throughout the year, and challenges involved with cross-border data transfer in the Group’s footprint and managing competing national requirements. Further feedback was provided on the reporting of timel ines wh ich will return to the Committee in 2023. • Conduct: Received and discussed an annual report on the Group Conduct Programme. • Use of Private Communicat ion Channels: Several discuss ions were held on the r isks faced by the Group from inappropr iate use of pr ivate communicat ion channels such as WhatsApp and WeChat, the act ions being taken, the reliance on colleagues’ personal judgement and the increased regulatory scrutiny on this. Data sovereignty changes, for example, in China, were discussed. The Committee counselled on the need to undertake a prior it ised approach, to ensure that train ing and Group-w ide communicat ions are clear and the importance of managing the expectations of clients. • FCA Consumer Duty: Reviewed, discussed and scrutin ised Standard Chartered Bank’s implementat ion plans. Particular focus was placed on vulnerable customers and how this legislat ion m ight impact the Group’s wider footprint. Phil Rivett was appointed as the FCA Consumer Duty Board Champion. • Major disputes, sign ificant regulatory and government invest igat ions: Received and discussed two updates on major disputes and sign ificant regulatory government invest igat ions facing the Group. #### Activities during the yearcontinued ![]() 167 Standard Chartered – Annual Report 2022 Directors’ report 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 ified by EY’s aud it planning, seeking and receiv ing assurance that these risks have been addressed properly in the audit strategy • satisf ied itself that EY has allocated suffic ient and su itably experienced resources to address these risks and reviewed the find ings from the aud it 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 iary aud it committees, the Group Management Team, regional/country chief financial officers, members of the Group F inance Leadership Team and the GIA senior leadership. The results of this input were discussed by the Committee. Overall, it was felt that EY is considered to be effective, object ive 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 2023 Annual General Meeting (AGM). This recommendation was made without any influence from a third party and free from any contractual obligat ion to do so, includ ing for the avo idance 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 im review reports • received and discussed a paper setting out EY’s control themes and observations from the 31 December 2022 year-end audit, as well as an update on these matters later in the year • reviewed and discussed EY’s 2022 approach to the private Written Auditor Report to the PRA for the year ended 31 December 2022. 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 ion (Mandatory Use of Competit ive Tender Process and Aud it Committee responsib il it ies) Order 2014. EY has been the Group’s Statutory Auditor for three years. In accordance with the Audit Practices Board’s requirements, the lead audit engagement partner has held the role for three years. The lead engagement partner, David Canning-Jones, has a background of audit ing banks and understands the markets in which the Group operates. Following the 2017 audit tender, EY was appointed as the Group’s Statutory Auditor for the financ ial year ended 31 December 2020. EY has been re-appointed as the Group’s Statutory Auditor for the financ ial year ended 31 December 2022 at the 2022 AGM. Non-audit services • Responsible for setting, review ing and mon itor ing the appropr iateness of the provis ion of non-aud it services, applying the Group’s policy on the award of non-audit services to EY, while taking into account the relevant ethical guidance. • In 2022, the Group spent $4.7 mill ion on non-aud it services provided by EY and $5.5 mill ion on aud it- 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 448 and the Group’s approach to non-audit services on page 229 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 ing summary h ighl ights of the most s ign ificant matters ident ified by GIA and areas of thematic interest that have arisen as part of the audits and warrant the Committee’s attention. On a period ic bas is, GIA reports on any overdue remediat ion of findings. The Board R isk Committee and the Culture and Sustainab il ity Committee discussed separate reports from the Group Head, Internal Audit on GIA’s appraisal of controls across key risks, subject to each Committee’s oversight. Further details on internal controls can be found on pages 222 and 223 #### Activities during the yearcontinued ![]() 168 Standard Chartered – Annual Report 2022 Directors’ report Corporate governance Group Internal Audit Provides independent assurance on the effectiveness of controls that support first line’s risk management of business activ it ies, and the processes mainta ined by the second l ine. GIA adopts a risk-based audit approach that focuses on the key risks that impact its clients, businesses and regulators. This supports the long-term objectives of the Group and its stakeholders and increases GIA’s productiv ity by creat ing an integrated and collaborative Audit Plan that is aligned to both the Group’s strategic object ives and ind iv idual country requirements (includ ing regulatory obl igat ions), and that is effective and effic ient in deliver ing an op in ion on the Group’s key r isks and controls. Changes to the Audit Plan were approved by the Audit Committee on a quarterly basis. In 2022, for the most sign ificant matters ident ified by GIA, management was inv ited to attend Comm ittee meetings to provide updates on the steps being taken to enhance the control environment and address internal audit find ings. The Committee: • assessed the role and effectiveness of the GIA function, and reviewed and monitored GIA’s progress against the 2022 Audit Plan and the review and monitor ing of post-aud it themes, trends and sign ificant issues. Sign ificant changes to the Aud it Plan were also discussed by the Committee • reviewed and approved GIA’s 2023 Audit Plan, resourcing and budget, and is satisf ied that these are appropriate • 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 ised any long overdue GIA issues and requested management to develop risk reduction plans for items with long closure periods to be monitored by GIA • reviewed and approved GIA’s functional strategy, includ ing GIA’s m iss ion, v is ion and pr ior it ies. The Committee is satisf ied w ith the independence and object iv ity of the GIA function. Over the course of the year, Phil Rivett met regularly with the Group Head, Internal Audit and the GIA Management Team. The Group Head of Internal Audit also met privately with the Committee. Conduct, Financ ial Crime & Compliance Regular compliance reporting to the Committee sets out the work carried out by the CFCC function, sign ificant compl iance and regulatory risks and issues facing the Group, and key actions being taken to address and mit igate these matters. In 2022, the Committee was updated on and discussed: • regulators’ supervisory focus areas, regulatory updates and forward-looking themes, the status of the Group’s core college regulatory relationsh ips and enforcement matters • topical compliance issues, for example, the Committee was updated on transaction reporting, recognis ing progress made to date and issues faced by the Group • the importance of continu ing to strengthen the Group’s r isk culture • the function’s operating model, includ ing an overv iew of the CFCC budget and organisat ional changes to simpl ify the funct ion. The Committee reviewed a paper on compliance resourcing and confirmat ion was rece ived from management that the function is adequately resourced and that a close watch was being kept on this, given the buoyant external hir ing market in some of the Group’s territor ies. The Committee also reviewed the 2023 Compliance strategy, budget and prior it ies. Phil Rivett met regularly throughout the year with the Group Head, CFCC. Speaking Up Speaking Up is the Group’s confident ial and anonymous wh istleblow ing programme (the Programme). The Programme has been designed to comply with the Group’s UK lead regulators, the PRA and the FCA Whistleblow ing Rules. Our wh istleblow ing channels are ava ilable to anyone – colleagues, contractors, suppliers and members of the public – to raise concerns confident ially 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 ing Rules. Focus was placed on the level of colleague confidence in the Programme, key areas of enhancement and the focus areas for 2023. In 2022, the Committee Chair received updates on Speak Up issues and inc idents as necessary. Further details on Speaking Up can be found on page 120 #### Activities during the yearcontinued ![]() 169 Standard Chartered – Annual Report 2022 Directors’ report Interaction with regulators Phil Rivett attended a trilateral meeting with EY and the PRA and also met with the PRA in his capacity as Audit Committee Chair. Linkages with subsid iary aud it committees There are strong linkages and interact ions in place between the Committee, regional hub audit committees and banking subsid iary aud it committees. In 2022, Phil Rivett attended a Standard Chartered Bank (Hong Kong) Lim ited (SCB Hong Kong) aud it committee meeting. The audit committee chair of SCB Singapore attended one Standard Chartered PLC Audit Committee meeting. This practice will continue in 2023 to reinforce these important linkages. Phil Rivett hosted an annual video-conference with the chairs of subsid iary aud it committees and INEDs in March 2022. Details of the call can be found on page 161 Committee effectiveness review During 2022, an external Board and Board Committee effectiveness review was facil itated by Independent Board Evaluat ion. Key observations from the 2022 external effectiveness review The feedback on the Committee’s function ing and effectiveness was posit ive and it specif ically h ighl ighted: • In terms of composit ion, it was felt that there is a good level of financial and account ing knowledge among Committee members • The contribut ions from EY and F inance were well rated • Non-Committee members feel well informed of the key issues and areas of discuss ion. 2023 Action Plan The 2023 Action Plan for the Committee reflects suggestions from the evaluation and continues to build on the solid progress made last year: • Consider spending more time on internal controls and on the interface with the Board Risk Committee • Consider how some long-standing high-risk control issues could be remediated more quickly by management to reduce the level of risk. #### Activities during the yearcontinued ![]() 170 Standard Chartered – Annual Report 2022 Directors’ report Corporate governance I am pleased to present the Board Risk Committee’s report for the year ended 31 December 2022. The Committee has been immersed in a broad range of financial and non-financial r isk management issues pertinent to the Group, set against the backdrop of a volatile, challenging and complex operating environment. Cognisant of this evolving external landscape, the Committee has paid attention to key macroeconomic issues, geopolit ical and emerg ing risks, as well as key evolving regulatory themes. The current and future impl icat ions for the Group have been discussed and challenged, includ ing the act ions being taken and planned by management to mit igate these r isks. The Committee has carefully considered the challenges posed by inflat ion, commodity prices, interest rates, FX and the linger ing effects of COVID-19, includ ing lockdowns in China and Hong Kong. The impacts of this on sovereign risk and credit risk, in particular, China CRE, have been reviewed and challenged regularly, to ensure that all associated risks are being adequately managed. We have also continued to seek assurances that sufficient resources are in place to manage these complex risks. There have been a number of changes to the composit ion of the Committee in 2022. Naguib Kheraj stepped down as Chair on 30 April, upon which Phil Rivett was appointed Interim Chair. Following receipt of the necessary regulatory approvals, I became Chair on 1 August. Shir ish Apte and Robin Lawther jo ined the Comm ittee on 4 May and 1 July respectively. I would like to convey the Committee’s gratitude to Naguib for his immense contribut ion and leadersh ip as both a member and Chair. Mark Smith, our GCRO, retired from the Group at the end of the year, and I would like to express our thanks to Mark for his dedicat ion and valuable contribut ions to the Comm ittee’s deliberat ions and to the Group more broadly, over the last seven years. Mark’s replacement, Sadia Ricke jo ined the Group on 1 February, (currently awa it ing regulatory approval), after successfully completing a rigorous selection process. She brings a broad range of financ ial and r isk experience, as well as a good understanding of our footprint markets. I also want to thank our regulators, for their constructive approach, advice and sharing of best practice, which assists to make the Group more resil ient. Resolvabil ity has been a key area of focus. At the beg inn ing of the year, we held a dedicated meeting to focus on the Group’s Resolution self-assessment report, ahead of approval by the Board and submiss ion to the PRA and Bank of England (BoE). Furthermore, regular discuss ions on Resolvabil ity have taken place throughout the year. The Comm ittee and Board remained focused on Resolvabil ity and enhancements have been made to our Resolution capabil it ies, in terms of addressing shortcomings and developing our areas of enhancement. We have also paid close attention as to how the expectations of the UK regulators are being met. Board and Committee engagements have taken place via formal discuss ions and tra in ing sess ions, includ ing a s imulat ion exercise, which was useful to understand the various impl icat ions for the Group and a number of its key subsid iar ies. Resolvabil ity w ill remain a key agenda item throughout 2023. ICS Risk management is presented to the Committee by management four times a year. While sign ificant progress has been made, we acknowledge that there is still more work to be done to reach our desired sustainable control environment and defensive posit ion. We have had the benefit of Sir Iain Lobban, our Board independent adviser, attend all ICS discuss ions to prov ide independent and special ist perspective. The Committee reviewed the Group’s ICS Strategy ahead of approval by the Board; and we also reviewed the find ings of the CBEST Threat Intelligence-Led exercise. Given the evolution of ICS Risk, this will remain an area of focus for 2023. With the retirement of the Board Financ ial Cr ime Risk Committee on 1 April 2022, we have placed focus on FC Risk to ensure that this continues to receive suffic ient overs ight and scrutiny. The Committee received reports from CCIB and CPBB on their strategy, top risks and how these are being mit igated and managed w ith focused discuss ion on FC risk. We have placed increased attention on stress testing and tail risks, for example running scenarios on stagflation, sovereign default and commodity prices as well as our key regulatory stresses, such as during the 2022 BoE Stress Test results. We have reviewed and discussed geopolit ical r isks, includ ing Ch ina and Russia. We are mindful of the need to continue to probe into the dark corners, and as the economy shows signs of recovery, to mainta in the Group’s cred it disc ipl ine. As a result, we have had a renewed focus on implement ing an appropr iate Risk Appetite framework. The following pages provide ins ight and context into the Committee’s work and activ it ies during the year. Maria Ramos Chair of the Board Risk Committee Who else attended Committee meetings in 2022? The Group Chairman; Group Chief Executive; Group Chief Financ ial Officer; Group Ch ief Risk Officer (GCRO); Group General Counsel; Group Treasurer; Group Head, Conduct, Financ ial Cr ime & Compliance; Group Head, Internal Audit; the Group’s Statutory Auditor and Group Company Secretary. Sir Iain Lobban, independent adviser to the Board, regularly attends discuss ions on Informat ion and Cyber Security (ICS) Risk, technology and Financ ial Cr ime (FC) Risk-related matters. Paul Khoo, an independent adviser to the Board, attends discuss ions on FC Risk-related matters. EY attended all Committee meetings in 2022. As part of, and in addit ion to scheduled Comm ittee meetings, the Committee held private members-only meetings. The Committee’s membership comprises INEDs who have a deep and broad experience of banking and the risk factors affecting the Group, includ ing geopol it ical, econom ic, IT, FC and general business risks. Biograph ical deta ils of the Committee members can be viewed on pages 138 to 142 What are the main responsib il it ies of the Comm ittee? The Committee is responsible for exercis ing overs ight, on behalf of the Board, of the key risks of the Group. It reviews the Group’s Risk Appetite Statement and Enterprise Risk Management Framework (ERMF) and makes recommendations to the Board. Its responsib il it ies also include review ing the appropriateness and effectiveness of the Group’s risk management systems, consider ing the impl icat ions of material regulatory change proposals, review ing reports on pr inc ipal risks, includ ing Cl imate Risk, to the Group’s business, and ensuring effective due dil igence on mater ial acquis it ions and disposals. The Committee Chair reports to the Board on the Committee’s key areas of focus following each meeting. The Committee has written Terms of Reference that can be viewed at sc.com/termsofreference #### Board Risk Committee “The Committee has carefully considered the challenges posed by inflation, commodity prices, interest rates, #### FX and the lingering effects of COVID-19” 1 Naguib stepped down from the Committee on 30 April 2022 2 David was unable to attend one ad hoc meeting due to a prior business commitment 3 Shir ish joined the Comm ittee on 4 May 2022 4 Robin jo ined the Comm ittee on 1 July 2022 Committee composit ion 6 / 6 Maria Ramos (Chair) 6 / 6 David Conner 6 / 6 Phil Rivett Scheduled meetings 6 / 6 Gay Huey Evans, CBE 2 / 2 6 / 6 David Tang 2 1 / 2 3 / 3 Shir ish Apte 3 1 / 1 2 / 2 2 / 2 1 / 1 6 / 6 Carlson Tong 2 / 2 3 / 3 Robin Lawther, CBE 4 N/A 2 / 2 Ad hoc 2 / 2 Naguib Kheraj 1 ![]() 171 Standard Chartered – Annual Report 2022 Directors’ report #### Activities 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 ipal R isk Type. Considered and recommended the Group’s Risk Appetite to the Board for approval. Annual review of Risk Appetite: After review and recommendation by the Committee, the Board approved a revised set of Risk Appetite metrics which provided a sharper focus on the strategic measures of risk and streamlined the number of metrics reported to the Board. Some metrics were moved for oversight to the Group Risk Committee, ensuring a comprehensive coverage of risk is mainta ined. Monitored actual exposures relative to Risk Appetite lim its us ing regular Board Risk Information reports. Tracked a broad range of risk metrics that are reported to the Committee period ically. Attended a Risk Appetite teach-in session ahead of the annual review discuss ion, wh ich was helpful in provid ing ded icated time and space to discuss the suffic iency of the Group’s R isk Appetite, statements and metrics in detail. This will be an annual pre-brief discuss ion go ing forward. Further details of the Group’s Risk Appetite are set out on page 297 Enterprise Risk Management Framework (ERMF) The ERMF sets out the princ iples and standards for r isk management across the branches and subsid iar ies of the Group. The Committee: • reviewed proposed material changes to the ERMF, aris ing from the 2022 annual rev iew, and recommended these changes to the Board for approval • considered the approach and key outcomes of the 2022 annual effectiveness of the ERMF. Affirmat ion was received from the Interim GCRO (in situ at the time of the review as the new GCRO awaited regulatory approval) that the Group’s risk management and internal control framework is materially effective and improvement areas were highl ighted for management attent ion. Princ ipal R isk Types The Group’s Princ ipal R isk Types are reported on at each scheduled Committee meeting, through a Board Risk Information report, which accompanies the GCRO’s report. In addit ion, the Comm ittee had deeper discuss ions on the top ics set out below. Princ ipal r isks are risks inherent in the Group’s strategy and business model. Princ ipal R isk Types are formally defined in the ERMF, which provides a structure for monitor ing and controll ing these risks through the Board-approved Risk Appetite. Further details on Princ ipal R isk Types are set out on pages 298 and 301 to 319 Operational and Technology Risk The Group defines Operational and Technology Risk as the potential for loss resulting from inadequate or failed internal processes, technology events, human error, or from the impact of external events (includ ing legal risks). The Committee: • discussed Technology Risk reduction and the in it iat ives under way to manage and reduce Technology Risk and obsolescence • discussed a status report on Operational and Technology Risk • discussed an update on the embedding of Risk and Control Self-Assessment for effective management of key risks • discussed the Operational Risk issues in the transit ion to becom ing a dig itally focused bank. Model Risk Model Risk is the potential loss that may occur as a consequence of decis ions or the r isk of mis-estimat ion that could be princ ipally based on the output of models, due to errors in the development, implementat ion or use of such models. The Committee: • reviewed and discussed the key risks and issues relating to Model Risk management • provided review and challenge on the Group Model Risk Appetite • received updates on the Group Model Risk profile, includ ing a breakdown of act ive models across model famil ies, assoc iated model risk ratings and model validat ion outcomes • received updates on the progress of model risk strategic in it iat ives • reviewed and discussed progress on Group-related regulatory model submiss ions and any ongo ing regulatory dialogue relating to the progress in establish ing a robust model r isk management framework • attended a teach-in session on Model Risk, focusing on the framework and key regulatory capital related model types. ![]() 172 Standard Chartered – Annual Report 2022 Directors’ report Corporate governance Princ ipal R isk Types continued ICS Risk ICS Risk is the risk to the Group’s assets, operations and ind iv iduals due to the potential for unauthorised access, use, disclosure, disrupt ion, mod if icat ion or destruction of informat ion assets and/or informat ion systems. The Committee: • discussed regular reports from management with in the first, second and th ird lines of defence, on the work underway 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 it ies. Relevant management was inv ited to these d iscuss ions to prov ide on-the- ground perspective and detail on any challenges faced • discussed regular reports on the Group’s Transformation and Remediat ion Portfol io and ICS Risk profile. Reports are received and discussed by the Committee at least four times and a year • discussed and monitored the progress of key risk reduction in it iat ives across key control doma ins • 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 iency of fund ing and resource to support the Group’s ICS programme • reviewed and discussed the find ings from the CBEST Threat Intell igence-Led Assessment. Sir Iain Lobban jo ined Comm ittee meetings for these discuss ions, together w ith the Chief Transformation, Technology & Operations Officer; the Group Chief Information Security Officer, the Group Chief Information Security Risk Officer and representation from Group Internal Audit (GIA). Committee members also regularly attend meetings of the Group’s Cyber Security Advisory Forum. Treasury Risk Treasury Risk is the potential for insuff ic ient capital, liqu id ity or funding to support our operations, the risk of reductions in earnings or value from movements in interest rates impact ing bank ing book items and the potential for losses from a shortfall in the Group’s pensions plans. The Committee receives the Group Treasurer’s report, at each scheduled meeting, which covers market developments, capital, liqu id ity 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 id ity posit ion and the regulatory environment, includ ing the approval of the Group’s Internal Cap ital Adequacy Assessment Process (ICAAP) submiss ion to the PRA, in order to satisfy itself that the Group’s approach to capital planning is comprehensive, rigorous and consistent with both the current regulatory requirements and the likely antic ipated outlook. The Committee considered and discussed the Group’s Internal Liqu id ity Adequacy Assessment Process (ILAAP) for submiss ion to the PRA, wh ich considers the Group’s liqu id ity posit ion, its framework and whether sufficient l iqu id ity resources are being mainta ined to meet l iab il it ies as they fall due (see sect ion on stress testing for further details). The Committee also reviewed, discussed and challenged the Group’s stress test results for the BoE’s Annual Cyclical Scenario (ACS). The Committee’s work on Resolvabil ity is set out on page 173 Further details on Treasury Risk are set out on pages 306 and 307 Credit Risk Credit Risk is the potential for loss due to failure of a counterparty to meet its agreed obligat ions to pay the Group. The Committee received and discussed updates on Credit Risk. These discuss ions were further enhanced through deep dives into various country and business/client segments, details of which are set out in examples of deeper discuss ions on spec if ic top ics. Traded Risk Traded Risk is the potential for loss resulting from activ it ies undertaken by the Group in Financ ial Markets. The Committee received and discussed a paper setting out the major Traded Risk developments and changes which had occurred in the Financ ial Markets bus iness over the last year. Focus was placed on sufficiency of resources and fund ing to support the enhanced infrastructure; and assurance was received that Financ ial Market’s growth asp irat ions are be ing managed safely. A discuss ion was also held on Treasury Portfolios and changes which had occurred over the last year. #### Activities during the yearcontinued ![]() 173 Standard Chartered – Annual Report 2022 Directors’ report Princ ipal R isk Types continued Financ ial Cr ime Risk Financ ial Cr ime Risk is the potential for legal or regulatory penalties, material financ ial loss or reputat ional damage resulting from the failure to comply with applicable laws and regulations relating to internat ional sanctions, anti-money laundering, anti-bribery and corruption and fraud. Given the progress made on the Board Financ ial Cr ime Risk Committee’s (BFCRC) purpose with respect to Financ ial Cr ime Risk management, the Board reallocated the work of the BFCRC to the Audit Committee, Board Risk Committee and Board with effect from 1 April 2022. The reallocation of BFCRC oversight enables a more holist ic and efficient exam inat ion and d iscuss ion of r isks that are closely linked. The Committee discussed Financ ial Cr ime issues as part of its regular business deep dives. It also considered a paper setting out emerging Financ ial Cr ime threats for the Group and what is being done to mit igate and manage these threats. Specif ic r isks related to sanctions, particularly in relation to Russia, were also discussed. Stress testing The objective of stress test ing 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 sufficient financial resources to w ithstand severe but plausible scenarios • has the financial flex ib il ity 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 ihood of occurr ing – and ident ifies, as requ ired, actions to mit igate the likel ihood or impact as required. The Committee provided oversight, challenge and, where required, approval for: • the scenario and stress test results for the 2022 Group ILAAP stress test • the scenarios and results for the 2022 Group ICAAP stress test and reverse stress test • the results for the BoE ACS stress test • the results for the Group’s Recovery Plan stress test • the Group’s Recovery Plan • a number of internal management defined scenarios were reviewed. Further details of stress testing are set out on pages 298 and 299 Internal controls Discussed reports from the Group Head, Internal Audit which provided summaries of GIA’s appraisals of controls across key risks, subject to the Committee’s oversight, together with the key risk issues ident ified by GIA’s work and management actions put in place to address the find ings. The Audit Committee and the Culture and Sustainab il ity Committee discuss separate reports from the Group Head, Internal Audit on GIA’s appraisal of controls across key risk types, subject to each respective Committee’s oversight. Remuneration as a risk management tool Considered advice provided by the Interim GCRO to the Remuneration Committee concerning the risk factors to be taken into account by the Remuneration Committee in determin ing incent ives 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 tool is set out in the Directors’ remuneration report. Regulatory Resolvabil ity The Committee held a number of discuss ions on Resolvab il ity over the course of the year, includ ing scheduling an ad hoc meeting earlier in the year to review and challenge the Group’s Resolution self- assessment report, ahead of Board approval and submiss ion to the PRA and BoE. Non-Comm ittee members attended this ad hoc meeting, as well as the Group’s external consultants. Resolvabil ity is discussed at most Committee meetings with representation from the three lines of defence, so that the Committee receives a holist ic overv iew of progress being made and items being worked on. The Committee has also had the benefit of enhanced reporting and metrics to assist its oversight. Furthermore, there have been more informal train ing sess ions and brief ings held at Board-level to ensure that Comm ittee members have the opportunity to discuss some of the more complex issues that Resolvabil ity presents for the Group. The Committee Chair, Group Chairman and Audit Committee Chair also partic ipated in a number of addit ional meet ings related to Resolvabil ity w ith the internal team, external advisers and regulators. Resolvabil ity w ill remain a key prior ity for 2023. Climate Bienn ial Exploratory Scenar io (CBES) stress test The Committee reviewed, discussed and challenged the Group’s CBES response, ahead of submiss ion to the BoE. In particular, focus and challenge was placed on the assumptions made by management and the supporting numbers. Later in the year, the Committee received a paper setting out the results of the Group’s first set of management scenarios, focused on the impact of Climate Risk on the Group’s portfolio and the next steps. Further detail on Climate Risk can be found on pages 316 and 317 #### Activities during the yearcontinued ![]() 174 Standard Chartered – Annual Report 2022 Directors’ report Corporate governance Regulatory continued Operational resil ience – Important Bus iness Services and Impact Tolerance Statements In line with regulatory object ives, the Comm ittee reviewed and recommended to the Board for approval: • changes to the Group’s Important Business Services aris ing from the annual rev iew • changes to the Group’s Impact Tolerance Statements aris ing from the annual rev iew • the Group’s Operational Resil ience self-assessment. IBOR transit ion Received updates from an industry and Group perspective on the IBOR transit ion. The Comm ittee continues to seek assurance that this transit ion programme rema ins on track, delivery risks are adequately managed and that it is suffic iently resourced. Th is will continue to be reviewed and discussed throughout 2023. BCBS 239 Princ iples In May 2022, the Committee received and discussed an update on the outcome of the BCBS 239 self- assessment as of end 2021 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 ing the progress made and challenges faced. The Committee will receive an update on the level of compliance (as at 31 December 2022), once the outcome of the self-assessment is available on 28 February 2023. Group regulator communicat ions The Committee discussed key communicat ions from the PRA and FCA, where r isk and Resolvabil ity were the main themes. Examples of deeper discuss ions into specif ic top ics • Blue Sky Think ing/Hor izon Scanning: Held a horizon scanning session where risk perspectives were sought from three Group senior colleagues. There were a number of outputs from this session, which were incorporated into our rolling agenda. • CCIB Risk deep dive: Received and discussed papers covering the CCIB Risk review, and ICS Risk and FC Risk in CCIB. The top risk issues for CCIB were discussed, with specif ic focus placed on ICS and FC r isks. • Stressed Assets Risk (SAR): Reviewed and discussed the transfer of responsib il ity from the second line of defence to the first line. The Committee monitored how this transit ion is working and its overall effectiveness. • Review of the Commodity Traders Framework: Reviewed and provided feedback on the workplan responding to the PRA’s observations. • Credit Portfolio Management (CPM) Annual Review: Reviewed and discussed the risks relating to CPM activ it ies and the progress made in optim is ing asset quality and liqu id ity and the effective use of distr ibut ion. • Cloud governance: The Committee has received regular updates on cloud material deployments and enhanced reporting was discussed and agreed. • Reputational and Sustainab il ity Risk: Discussed a paper setting out the Group’s approach to Environmental, Social and Governance risk and key enhancements made and planned. • CPBB Risk review: Received and discussed papers covering the CPBB Risk review and managing risks aris ing from partnersh ip-driven business models. Focus was placed on partnership governance, the risks aris ing from and assoc iated with partnerships and controls in Business Banking. A separate paper on ICS Risk and FC Risk was received and discussed, to ensure that these important risks are receiv ing sufficient focus and attention. • Change Management: Received a paper on change management. Discuss ion focused on effect ive prior isat ion. • Safety and Security Risk: Received an update on safety and security issues over the last 12 months. • Credit Risk review: Reviewed progress reports from the Credit Risk review function, which set out key themes from the 2022 reviews and the review plan for 2023. Discuss ion focused on the sufficiency of resources and the importance of site-vis its now that COVID-19-related restr ict ions are l ift ing in many of the Group’s markets. • Chief Risk Officer Treasury report: Discussed a paper from the Treasury Chief Risk Officer following the establishment of the function with in Enterpr ise Risk Management in January 2022. This included risk observations and recommendations around the current balance sheet and management of capital and liqu id ity. • SC Ventures Risk and Governance: Discussed the paper setting out an overview of the business activ it ies, risk profile and governance model of the SC Ventures business unit. • Taiwan: Discussed a paper on Taiwan tensions, impact analysis and stress testing and reviewed the actions that had been proposed by management. • Appointment of new GCRO: The Committee carefully reviewed, scrutin ised and challenged the appointment of the new GCRO, ahead of recommendation to the Board for approval. #### Activities during the yearcontinued ![]() 175 Standard Chartered – Annual Report 2022 Directors’ report Committee effectiveness review During 2022, an external Board and Board Committee effectiveness review was facil itated by Independent Board Evaluat ion. Key observations from the 2022 external effectiveness review The feedback on the Committee’s function ing and effect iveness was posit ive and it specif ically h ighl ighted: • The Committee has a broad remit with a potentially long list of issues • The risks associated with the change in GCRO and Committee Chair were acknowledged; however, the Committee feels that these have been mit igated by the cont inu ity of Committee members and strong Finance and Risk teams. 2023 Action Plan The 2023 Action Plan for the Committee reflects suggestions from the evaluation and continues to build on the solid progress made last year: • Consider how best to reduce the volume of the Committee pack, with more succinct papers and better use of appendices and non-essential reading materials • Keep under review how FC Risk features in the rolling agenda, given the retirement of the Board Financ ial Cr ime Risk Committee in April 2022 • Strengthen the focus on Risk Appetite work to be more forward-looking and continued focus on Resolvabil ity • Consider how ind iv idual Committee members might take responsib il ity for leading on particularly complex issues, includ ing regulatory matters, so as to improve the Committee’s deliberat ions • Schedule a Blue Sky Think ing sess ion for the Board Risk Committee and Audit Committee to consider which key risks could derail the Group’s strategy. Risk informat ion prov ided to the Committee The Committee is authorised to invest igate or seek any informat ion relat ing to an activ ity w ith in its Terms of Reference, receives regular reports 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 ical outlook, mater ial events and disclosures and ongoing risks. Coverage of Princ ipal R isk Types and regulatory matters are also included in this report. Regular updates on COVID-19 impacts, country risk and geopolit ical tens ions have been reported on and discussed throughout the year. The Committee has the authority to request and receive relevant informat ion cons istent with the requirements of BCBS 239 that will allow the Committee to fulfil its governance mandate relating to risks to which the Group 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 iv idually with the GCRO regularly in between formal Committee meetings. These meetings allow open discuss ion of any matters relat ing to issues aris ing from the Comm ittee’s formal discuss ions 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 ions in such instances. The Committee Chair also meets ind iv idually with senior leaders of the Risk function. Interaction with regulators Maria Ramos attended meetings with the PRA and the BoE over the course of the year. Interaction between Board 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 Board Committees where the remit of these other Committees clearly covers risk-related matters. For example, the Audit Committee reviews the Group’s internal financ ial controls and has oversight of regulatory compliance and the Culture and Sustainab il ity Committee has oversight of culture and sustainab il ity-related matters. The interact ion ass ists the Committee in ensuring that it is well informed on discuss ions held, and the close collaboration of the Committee Chairs helps to ensure that there are no gaps and any potential for unnecessary duplicat ion is avoided. Risk function resourcing The Committee has sought and received assurance that the Risk function is adequately resourced to perform its function effectively. The Committee reviewed and discussed a paper setting out an overview of the changes to the Risk function in 2022, management’s assessment of the adequacy of people resources with in the funct ion and the forward-looking view of the Risk function. Linkages with subsid iary board r isk committees Maria Ramos hosted an annual video-conference with the chairs of subsid iary board r isk committees and INEDs in October 2022. Maria Ramos also attended a board risk committee of Standard Chartered Bank (Hong Kong) Lim ited as an observer. Details of the video-conference can be found on page 161 ![]() 176 Standard Chartered – Annual Report 2022 Directors’ report Corporate governance At the 2022 AGM, the Group pledged to follow a roadmap that aims to see it achieve its net zero goal by 2050 and the Committee, alongside the Board, is tracking progress against this roadmap. The Group is well placed to assist clients in transit ion ing away from carbon-intens ive industr ies. Th is is particularly pertinent as a number of countries in the Group’s footprint do not yet have a net zero pledge. I am pleased to report that this programme is on track, with the milestones outlined in the Group’s public net zero roadmap having been met for 2022. In my last report I described the latest chapter of the Group’s transformation agenda, which includes a focus on becoming truly purpose-led by taking three Stands: Accelerating Zero, Lift ing Partic ipat ion and Resetting Globalisat ion. Dur ing this year, the Committee monitored progress on how the Stands were coming to life across the organisat ion, includ ing deep d ives with business leaders who shared the in it iat ives currently in place and plans for the future. This year, the Committee has overseen the redefin ing of the Group’s culture aspirat ion to better reflect the des ire for high performance and excellence, the need for transparent management of risk and a ‘One Bank’ mindset. The new cultural defin it ion is framed around ambit ion, act ion and accountabil ity. Exemplary leadership with in the Group is essential to the Committee’s agenda, such as embedding the Group’s culture and ensuring we deliver on our Purpose. It’s therefore important for the Committee to oversee the work that the Group is doing to engage our leaders at all levels to aspire, insp ire and execute. The Comm ittee heard from a Leadership Council member who gave first-hand experience of how investment in our leaders is being implemented in practice and, more importantly, the impact this was having. The Committee is responsible for the Board workforce engagement programme and this year kicked off a review of the current framework, to determine if an alternate model could enhance the Board-colleague connection. This will be concluded and implemented in 2023. Focus on the Group’s divers ity and inclus ion in it iat ives cont inued, and the Committee was pleased with progress across all three strands of work: Best Place to Work (colleagues), Best Place to Bank (clients) and Prosperous Communit ies (supply cha in and communit ies). The Committee asked the team to increase focus on ethnic divers ity to ensure our leadership is representative of our client base and footprint. We continued our practice of inv it ing external speakers to challenge our think ing. Th is year, the Committee hosted a thought-provoking session on how sustainab il ity is viewed in China, delivered by a pre-eminent industry leader. All Board directors were inv ited to th is session. This will be my last report from the Committee as I stand down from the Board at the 2023 AGM. It has been a real pleasure to chair this Committee (and its previous incarnat ion) over e ight years, during which time our agenda has developed very meaningfully along with the Group’s strategy and the wider environment. I’d like to thank all my colleagues past and present who should feel proud of what they have achieved. Particular thanks to Christ ine Hodgson, who stood down from the Board and the Committee on 31 January 2023, for her unwavering dedicat ion and s ign ificant contr ibut ion to the Committee’s evolution over the past nine years. Finally, I’d like to welcome the two new members of the Committee, Robin Lawther and Jackie Hunt, who have already started to make a posit ive impact in the Committee’s deliberat ions, and I w ish them well as they take the Committee forward. The following report provides further ins ight into the Committee’s work during the year. Jasmine Whitbread Chair of the Culture and Sustainab il ity Committee Who else attended Committee meetings in 2022? The Group Chairman; Group Chief Executive; Group Head, Human Resources; Group Head, Corporate Affairs, Brand and Marketing; Chief Sustainab il ity Officer, Group General Counsel and Group Company Secretary. Biograph ical deta ils of committee members can be found on pages 138 to 142 What are the main responsib il it ies of the Comm ittee? The Committee was formed by the Board to oversee the Group’s culture and sustainab il ity prior it ies. The Committee has written Terms of Reference that can be viewed at sc.com/termsofreference #### Culture and Sustainability #### Committee “The Committee has overseen the redefining of the Group’s culture aspiration to better reflect the desire for #### high performance and excellence.” Committee composit ion 4 / 4 Jasmine Whitbread (Chair) 1 / 1 Robin Lawther, CBE 2 4 / 4 Christ ine Hodgson, CBE 1 / 1 Jackie Hunt 2 3 / 3 David Conner 1 Scheduled meetings 1 David stepped down from the Committee on 1 October 2022. 2 Jackie and Robin jo ined the Comm ittee on 1 October 2022. 4 / 4 David Tang ![]() 177 Standard Chartered – Annual Report 2022 Directors’ report #### Activities during the year Sustainab il ity and environmental, social and governance (ESG) matters The Committee: • Continued to oversee the Group’s progress on the net zero pledge made at the 2022 AGM, and while the Group has a number of challenges due to its diverse footprint, the ambit ion is progressing • Monitored the assessment of the Group’s performance by the various external agencies on its approach to ESG matters, focusing on the agencies that the investors prior it ised • Received a progress update on the current five-year Global Community Engagement Strategy, `Futuremakers’ and the prior it ies due by the end of 2023; and a look forward to the Futuremakers Phase 2 Strategy for 2024 to 2030, which will be presented to the Committee in March 2023 • Welcomed the Group’s inaugural Chief Sustainab il ity Officer as a standing attendee, who presented a refreshed Sustainab il ity Strategy to the Board in Q4. Stands Following the launch of the three stands of focus: Accelerating Zero, Lift ing Part ic ipat ion and Resetting Globalisat ion in 2021, there were two deep dives at which business leaders presented to the Committee on how the Stands were being ‘lived’ in practice: • The first was from CPBB and focused on four key areas: mass market to lift partic ipat ion; in it iat ives in small and medium enterprises (SME); ESG Products/Sustainable Finance; and Talent development in it iat ives. A number of in it iat ives were ongo ing and a progress update from CPBB will be given to the Committee in 2023 • The second was from the new Chief Sustainab il ity Officer and focused on the work taking place on the Accelerating Zero Stand, consolidat ion of the Group’s susta inab il ity aspirat ions and the Group’s performance against the Group Sustainab il ity Scorecard Metrics. More deep dives are planned for 2023. Culture and Divers ity and Inclusion The Committee: • Oversaw the redefining of the Group’s cultural asp irat ion to ensure that it suffic iently reflects the need for high performance and excellence in all we do • Reviewed the Group’s approach to divers ity and inclus ion and d iscussed the various strands of divers ity and the progress that was being made for each • Worked with Group Internal Audit to establish an approach to assessing behavioural risk during audit activ it ies and received the first report of the output of this enhanced audit approach at the meeting in December 2022. Board workforce engagement and workforce polic ies and practices The Committee has responsib il ity for overseeing the Board’s workforce engagement programme and ensuring workforce polic ies and pract ices remain consistent with the Group’s valued behaviours. The Committee is overseeing a review of the exist ing framework and cons ider ing certa in adjustments aimed to enhance Board workforce engagement. During the year, the Committee has overseen the following activ ity: • The annual employee engagement survey, My Voice, and probed the results to understand what was driv ing the scores and challenged the team on areas for improvement. More informat ion on l isten ing to our employees can be found on pages 60 to 63 • Monitored the impact of hybrid working on team members, particularly in relation to learning and career development for more junior team members and how changes in working patterns could be affecting mental health • The continued implementat ion of a Leadersh ip Agreement, which all leaders will need to pledge to in 2023. More informat ion on the Leadersh ip Agreement can be found on page 61 • Reviewed the in it iat ives for the development and assessment of leaders throughout the Group • Reviewed the in it iat ives ongo ing to improve psychological safety across the Group and the importance of strong leadership from both the top and throughout the layers of management • An informal lunch, hosted by the Board, with the UAE talent which provided an opportunity for the Board to hear directly from staff on how the Group’s direct ion and strategy was l ived and embedded in different parts of the Group • An interact ive UAE townhall , hosted by the Group Cha irman with members of the Board and Management Team. Over 500 colleagues attended in person and were encouraged to ask questions directly to the panel. In addit ion, it was live-streamed and facil itated by an onl ine question and answer platform to enable engagement across the business. Further detail regarding Board workforce engagement can be found on page 162 ![]() 178 Standard Chartered – Annual Report 2022 Directors’ report Corporate governance Committee effectiveness review During 2022, an external Board and Board Committee effectiveness review was facil itated by Independent Board Evaluat ion. Progress against the 2022 Action Plan: • Following a challenge by the Committee, Group Internal Audit has enhanced its audit approach to include a behavioural risk assessment with the development of testing plans and the recruitment of a special ist in this field; and by the end of 2022 had started reporting on the outcomes of this enhanced audit approach. • In June, the Committee hosted a session on developments in China that was delivered by a pre-eminent industry expert in this field. All Board directors were inv ited to th is session. • The Committee has been tracking the Group’s progress against the net zero milestones. Key observations from the 2022 external effectiveness review The feedback on the Committee’s function ing and effectiveness was posit ive and it specif ically h ighl ighted: • The Committee Chair was rated as highly effective, and members noted that meetings ran to time and had an inclus ive and part ic ipat ive tone. The Chair took a keen interest in the agenda and was felt to be extremely well qualif ied for the role • Members report that the topics discussed at the Committee were both interest ing and challeng ing. They noted that the committee Chair had done a good job of bring ing r igour and data to potentially nebulous subjects and that debates were well founded and balanced as a result. 2023 Action Plan The 2023 Action Plan for the Committee reflects suggestions from the evaluation and continues to build on the solid progress made last year: • Review strengthening the links between the Committee and the business • Consider the remit of the Committee and the overlap between the Board and other Board Committees • Review of the Board/employee engagement tool • Continue to focus on the net zero strategy and milestones. ![]() 179 Standard Chartered – Annual Report 2022 Directors’ report This year has seen a number of sign ificant changes to the compos it ion of the Board, following the retirement of a number of our long- standing and valued independent non-executive directors. I would like to thank Naguib Kheraj, former Deputy Chairman and Chair of the Board Risk Committee who retired from the Board in April for his dedicat ion and s ign ificant and impactful contribut ions to the Board and Committee discuss ions. My thanks also go to Byron Grote who retired from the Board in November for his many contribut ions to the Board and its Committees. I would also like to thank Christ ine Hodgson, former Senior Independent Director and Chair of the Remuneration Committee for her ins ightful contr ibut ions as well as for agreeing to remain on the Board until 31 January 2023 to ensure a smooth transit ion to a new Remunerat ion Committee Chair, Shir ish Apte. Before recommending the short extension beyond her nine-year term, the Committee conducted a robust assessment of her independence. We also announced that Jasmine Whitbread would not be seeking re-election at the 2023 AGM and would retire from the Board at that time. The Committee has been focused on planning for the transit ion of our long-standing non-executive directors, ensuring that the Board remains well balanced with a strong pipel ine of cand idates with the appropriate skillsets, experience and capabil it ies, specif ically across banking and financ ial serv ices; executive and non-executive global listed experience; remuneration committee experience; and broad market and gender divers ity. Over the course of 2022, and w ith the assistance of an external search firm we shortlisted and recommended to the Board the appointment of four experienced independent non-executive directors, Shir ish Apte, Rob in Lawther, Jackie Hunt and Linda Yueh, each of whom bring elements of these key attributes to the Board discuss ion. Deta ils on each of the new directors can be found on pages 139, 141 and 142. As well as focusing on the search for new directors, we also spent a great deal of time refreshing the committees’ succession, notably the Chairs of the Board Risk and Remuneration Committees. This resulted in the appointment of Maria Ramos and Shir ish Apte tak ing on the respective roles. Maria Ramos also took on the Senior Independent Director role from Christ ine Hodgson upon her reach ing her nine-year tenure. Earlier in the year, the Committee considered the sign ificant progress which had been made by the Board Financ ial Cr ime Risk Committee in the area of financ ial cr ime risk since it was formed, and in line with the recommendations of the 2020 Board effectiveness review, recommended to the Board that its work was reallocated to a combinat ion of the Board R isk Committee, Audit Committee and the Board, signall ing a s ign ificant m ilestone in this area for the Group. Detail of the Committee’s annual review of the Board Divers ity Pol icy and its assessment of progress against it can be found on pages 180 to 182. Following the sign ificant real ignment of the Policy a couple of years ago, only one material change was recommended in 2022, to increase the representation of women on the Board to at least 40 per cent, reflecting the Board’s continued commitment to further balancing female representation on the Board and to align to the Financ ial Conduct Author ity’s (FCA) changes to the List ing Rules in this area. As part of the Committee’s governance oversight role, we continued to receive updates from the three regional CEOs who each have responsib il ity for the subsid iary governance processes across the ir regions and provide a holist ic v iew of the governance framework and challenges faced across the Group’s footprint. This was further reinforced with the return of the Global Subsid iary Conference in Dubai in November, attended by members of the Board and Management Team and the Chairs and selected INEDs from across the Group’s diverse footprint. This conference provided an important opportunity for creating and mainta in ing appropriate linkages with the Group’s subsid iar ies, as well as sharing best practice. The Committee also paid sign ificant attent ion to enhancing the effectiveness of the Board and its committees. An externally facil itated Board effect iveness review was commiss ioned in the autumn which concluded that the Board continues to operate effectively while also signall ing several areas for improvement, details of which can be found on page 156. Dr José Viñals Chair of the Governance and Nominat ion Comm ittee Who else attended Committee meetings in 2022? The Group Chief Executive; Group Head, HR; and Group Company Secretary. Biograph ical deta ils of the committee members can be viewed on pages 138 to 142 What are the main responsib il it ies of the Comm ittee? The Committee has responsib il ity for keeping the size, structure and composit ion 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 ion. 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 iv idual directors assess their effectiveness; keeps the divers ity of the Board under review and monitors progress towards achiev ing its objectives in this area; considers any potential situat ional conflicts of interest declared by Board members; considers the impact of material changes to corporate governance regulation and legislat ion affect ing the Group; and has oversight of the Group’s approach to subsid iary corporate governance. 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 #### Governance and Nomination #### Committee #### “The Committee has been focused on planning for the transition of our long- standing non-executive #### directors, ensuring that the Board remains well balanced.” Committee composit ion 4 / 4 José Viñals (Chair) 4 / 4 Christ ine Hodgson, CBE 3 Scheduled meetings 2 / 2 Naguib Kheraj 1 2 / 2 3 / 4 Jasmine Whitbread 4 1 / 2 2 / 2 1 / 1 4 / 4 Phil Rivett 2 / 2 N/A Ad hoc 1 / 1 Maria Ramos 2 Shir ish Apte observed a number of meet ings in 2022 ahead of his appointment to the Committee on 1 January 2023 1 Naguib stepped down from the Committee on 30 April 2022 2 Maria jo ined the Comm ittee on 1 August 2022 3 Christ ine stepped down from the Comm ittee on 31 December 2022 4 Jasmine was unable to attend one scheduled meeting and one ad hoc held on 8 November 2022 and 21 July 2022 respectively as a result of long-standing external board commitments ![]() 180 Standard Chartered – Annual Report 2022 Directors’ report Corporate governance #### Activities during the year Board and senior talent succession planning • Engaged Russell Reynolds, a signatory to the voluntary code of conduct for executive search firms who also supplies senior resourcing to the Group, to review the market for future INED candidates with deep global banking and financ ial serv ices experience, strong understanding of the remuneration environment, sign ificant commerc ial experience and with representation from our key markets. • Discussed the composit ion of the Board and cons idered the orderly succession of current INEDs and the skills, knowledge, experience, divers ity ( in the widest sense) and attributes required of future INEDs, both immed iately and in the medium to longer term. In consider ing the Board’s success ion, 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 ify potent ial candidates with a diverse range of skills, experience, knowledge and perspectives. This process resulted in the Committee recommending to the Board the appointments of Shir ish Apte, Rob in Lawther, Jackie Hunt and Linda Yueh. • Mainta ined overs ight of the progress made by Shir ish Apte, aga inst his tailored Board and committee induct ion programmes. • Provided oversight of the detailed executive and senior management (level below Management Team) succession plans, alongside other crit ical roles, includ ing the overs ight of a process of external market mapping of key management roles. • Reviewed succession plans for the committee chair roles, ident ify ing appropriate ind iv iduals with the necessary skills and attributes to provide emergency cover as required, as well as on a longer term basis, includ ing acknowledg ing and addressing where gaps exist. Following this process, the Committee recommended to the Board the appointment of: – Maria Ramos as Senior Independent Director, Chair of the Board Risk Committee and a member of the Governance and Nominat ion Comm ittee – Shir ish Apte as a member and subsequently Cha ir of the Remuneration Committee and a member of the Governance and Nominat ion Comm ittee – David Conner as a member of the Remuneration Committee – Robin Lawther as a member of the Remuneration Committee and Culture and Sustainab il ity Committee – Jackie Hunt as a member of the Culture and Sustainab il ity Committee and Audit Committee. Board composit ion as at 31 December 2022 Gender divers ity Board Female 6 Male 8 Executive Female 0 Male 2 Number of senior of posit ions (CEO, CFO, SID and Chair) Female 1 Male 3 43 % (2021: 31%) 25 % (2021: 25%) 0 % (2021: 0%) International experience Banking, risk, finance and accounting experience among INEDs and Chair Representation from key markets Experience National ity The national ity of our d irectors does not in itself demonstrate the divers ity of the Board’s composit ion. Between them, the directors have sign ificant experience of either liv ing, work ing or managing operations across the markets in which we operate. Ethnic ity Our aspirat ion is for our Board to reflect the divers ity of our footpr int. Our global ethnic ity categor ies represent the breadth of divers ity across our markets. Twenty-one per cent of the Board were from an ethnic minor ity background as at the end of the year. 93 % 36 % 83 % 1 2 3 Further details on the work of the Governance and Nominat ion Committee can be found below INED tenure (includ ing Cha ir) 0–1 year 3–6 year 25 % 25 % 1–3 years 6–9 years 9+ years 17 % 25 % 8 % 1. White 11 directors 2. Chinese 2 directors 3. South Asian 1 director 3 3 3 1 2 ![]() 181 Standard Chartered – Annual Report 2022 Directors’ report Board and committees’ effectiveness review • Considered and recommended the appointment of Ffion Hague of Independent Board Evaluation to conduct the 2022 external evaluation of the Board and its committees. Provided oversight of the Board and committees’ evaluation, and monitored progress against the 2022 Action Plan, which addressed the key observations from the 2021 effectiveness review. • Discussed the observations and recommendations which flowed from the 2022 externally facil itated Board and committees’ review and discussed the shape of the Board’s 2023 Action Plan. Details of this year’s Board and committees’ external evaluation, includ ing the process wh ich we followed, observations from the review and the resulting 2023 Action Plan can be found on page 156 Board Divers ity Policy • Reviewed progress made in 2022 against the agreed commitments set out in the Board Divers ity Pol icy. • Conducted a review of the Board Divers ity Pol icy to ensure that it continued to drive divers ity in its broadest sense, while continu ing to take account of best pract ice, specif ically in the area of gender, social and ethnic backgrounds, knowledge, personal attributes, skills and experience. • Discussed the Board’s commitment to ensuring female representation on the Board and increased its target from a min imum of 33 per cent to at least 40 per cent female in order to align with the changes to the UK List ing Rules in this area. • Reviewed the outcome of the FCA consultation on changes to the UK List ing Rules and D isclosure Guidance and Transparency Rules (DTRs) in relation to divers ity and inclus ion on company boards and considered the Company’s current and projected compliance against the new targets. Further details of progress the Board has made against the key object ives set out in the Board Divers ity Pol icy are set out on page 182 Independent advisers • Recommended to the Board the extension, for a further 12 months, of Sir Iain Lobban’s appointment as independent adviser to the Board and its committees on cyber security and cyber threats. • Recommended to the Board the extension, for a further 12 months, of Paul Khoo’s appointment as independent adviser to the Board and its Committees on Financ ial Cr ime. Conflicts of interest • Conducted an annual review of the directors’ exist ing and prev iously authorised potential and actual situat ional confl icts of interest and considered whether any circumstances would necessitate the authorisat ion be ing revoked or amended. Also noted directors’ other directorsh ips and bus iness interests taken during the year in the context of time commitment, overboarding and the PRA lim its on directorsh ips as well as other regulatory requ irements in this area. Assessment of the non-executive directors’ independence • Conducted a robust assessment of Christ ine Hodgson’s independence ahead of taking the decis ion that she remain on the Board for a short period beyond her nine-year tenure, to enable her to lead the shareholder consultation required in the wake of a sign ificant m inor ity vote aga inst the remuneration policy in 2022, and to facil itate an orderly trans it ion to Sh ir ish Apte as the incom ing Remunerat ion Committee Chair. • Considered the independence of each of the non-executive directors, taking into account any circumstances likely to impa ir, or wh ich could impa ir, the ir independence. Noted the thorough process undertaken to assess ind iv idual director performance and effectiveness, taking these reviews into account along with tenure and succession plans in making its recommendation to appoint the INEDs for a further year. Subsid iary governance • Received updates from the three regional CEOs on the Group’s approach to subsid iary governance. Received assurance of effective oversight and compliance with the Group’s Subsid iary Governance Pol icy and discussed material regulatory trends, in it iat ives, and cons iderat ions l ikely to impact the current or future governance of the Group’s banking subsid iar ies; the key actions aris ing from bank ing subsid iary board effectiveness reviews; and linkages between banking subsid iar ies and the Group. • Approved the appointments of a new Chair and an independent non-executive director of Standard Chartered (Hong Kong) Lim ited. Terms of Reference • Considered the progress made by the Board Financ ial Cr ime Risk Committee, discussed the proposed future oversight of Financ ial Cr ime and recommended that its remit was allocated into a combinat ion of the Audit Committee, Board Risk Committee and the Board’s Terms of Reference. • Conducted a review of the Committee’s Terms of Reference during the year, taking into account the responsib il it ies, obl igat ions and best pract ice princ iples it has in the UK and Hong Kong. Implementation of the Board Divers ity Pol icy The Committee conducted its annual review of the Board Divers ity Pol icy (the Policy) during 2022, to ensure that it continues to promote and drive divers ity in its broadest sense, while continu ing to take account of best pract ice in it iat ives. We strive to mainta in a d iverse Board, recognis ing the benefits of having a Board made up of ind iv iduals 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 ions in relation to its employees and its values and to posit ion the Group as a global leader in these areas. This divers ity prov ides a range of perspectives which we believe contribute to the effective Board dynamics. We made good progress in improv ing the balance of female directors on the Board this year, with female representation on the Board at 43 per cent, above the new target being incorporated into the UK List ing Rules in 2023, of 40 per cent. However, this will continue to move around in the short term as the composit ion of the Board cont inues to change. While acknowledging the importance of gender divers ity around the board table and ultimately gender parity on the Board, we also recognise the importance of balancing gender divers ity w ith in the broader context of d ivers ity, wh ich is particularly relevant given the diverse markets in which the Group operates. #### Activities during the yearcontinued ![]() 182 Standard Chartered – Annual Report 2022 Directors’ report Corporate governance Aligned to the Policy’s broad ambit ion, th is year we report on the progress made against the seven object ives, includ ing the updated commitments on female representation made at the end of 2022, which the Board remains committed to in order to further enhance progress in this area: • increas ing the representat ion of women on the Board with an aim to have a min imum of 40 per cent female representation • adopting an ethnic ity asp irat ion of a m in imum of 30 per cent from an ethnic minor ity background • ensuring that our Board divers ity better reflects the d iverse markets in which we operate • ensuring that the Board is comprised of a good balance of skills, experience, knowledge, perspective and varied backgrounds • ensuring that we consider the Group’s aspirat ions in relation to disab il ity, sexual orientat ion, gender ident ity and gender expression • only engaging search firms that are signed up to the Voluntary Code of Conduct for Executive Search firms • reporting annually on the divers ity of the execut ive pipel ine as well as the divers ity of the Board, includ ing progress being made on reaching the Board’s gender and ethnic ity aspirat ions. Details of the Board’s diverse composit ion are set out on pages 138 to 142 of this report, and that of the Management Team can be found on pages 143 to 145 Details of the Group’s wider divers ity and inclus ion strategy, includ ing gender balance across the Group and targets for ethn ic representation, can be found on pages 60 to 63 of this report A copy of the full Board Divers ity Pol icy can be viewed at sc.com/boarddivers itypol icy and further details on the Group’s approach to Divers ity and Inclus ion can be viewed at sc.com/divers ity-and- inclus ion Progress made in 2022 against the key object ives set out in the Board Divers ity Pol icy is set out below. Board Divers ity Pol icy object ives Progress Increasing the representation of women on the Board with an aim to have a min imum of 33 per cent female representation Increasing gender representation on the Board remains an important focus of the Board’s succession planning process, ensuring that female candidates are fairly represented on long and short lists. A number of changes to the composit ion of the Board were announced during 2022: the appointment of Shir ish Apte, Rob in Lawther, Jackie Hunt and Linda Yueh as well as the retirement of Naguib Kheraj, Byron Grote, Jasmine Whitbread and Christ ine Hodgson. The Board cont inues to strive to ensure that female representation continues to increase and the Committee recommended rais ing the Board’s target for women’s representat ion to 40 per cent, in line with the forthcoming changes to the List ing Rules. Compl iance against new targets under the List ing Rules can be seen on page 180. Adopting an ethnic ity asp irat ion of a min imum of 30 per cent from an ethn ic minor ity background Despite changes to the composit ion of the Board dur ing the year, representation from ethnic minor ity background rema ined steady at 21 per cent. We remain committed to our ethnic ity asp irat ion and to ensur ing a broad representation. Compliance against new targets under the List ing Rules can be seen on page 180. Ensuring that our Board reflects the diverse markets in which we operate What sets Standard Chartered apart is our divers ity of people, cultures and networks. The Board has representation from across the regions in which we operate, includ ing the UK, the EU, North Amer ica, Asia and Africa. Many of the INEDs have addit ional exper ience of having worked and lived in many of the Group’s markets. As part of the Committee’s succession planning in 2022, it has considered a sign ificant number of potent ial future INED candidates who are representative of some of our key regions and markets. Ensuring that the Board is comprised of a good balance of skills, experience, knowledge, perspective and varied backgrounds Throughout the year, the Committee has focused on ident ify ing the collective experience, skills and attributes required both immed iately and in the medium to longer term. The Committee has systematically reviewed candidate long and short lists to ident ify potent ially suitable INED candidates. Areas of particular focus in 2022 included: • Corporate inst itut ional and commercial banking • Technology risks • Remuneration • Previous CEO/CFO experience • ASEAN experience • Regulatory understanding. Ensuring that we consider the Group’s aspirat ions in relation to disab il ity, sexual orientat ion, gender ident ity and gender expression We remain committed to all aspects of divers ity 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. We worked with Russell Reynolds to assist us in ident ify ing and build ing a pipel ine of h igh-quality potential INED candidates for a number of assignments. Russell Reynolds is signed up to the Voluntary Code and is committed in supporting our ambit ions to w iden all aspects of divers ity on the Board. Reporting annually on the divers ity of the executive pipel ine as well as the d ivers ity of the Board, includ ing progress be ing made on reaching the Board’s gender and ethnic ity asp irat ions. The Committee takes an active role in review ing the success ion 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 ing perspect ives and enhancing discuss ion. Progress in enhancing divers ity along w ith the Board’s gender and ethnic ity asp irat ions w ill continue to be developed in line with the forthcoming changes to divers ity report ing in the UK List ing Rules. ![]() 183 Standard Chartered – Annual Report 2022 Directors’ report Committee effectiveness review This year’s Committee Effectiveness Review was conducted simultaneously with that of the Board and comprised an externally facil itated evaluat ion conducted by Ffion Hague of Independent Board Evaluation. Broadly, members and other contributors felt that the Committee is well chaired, methodical and dil igent in its work. There has been sign ificant focus on deliver ing more Board appo intments during the year, although there was a sense that the process could be speeded up over the coming year as well as ensuring an orderly succession of key Board roles over the next few years. A summary of the key observations and the subsequent actions can be found below. Progress against the 2022 Action Plan: The 2022 Action Plan set out a number of actions from the internally facil itated Comm ittee evaluation conducted in 2021. The 2022 Action Plan was reviewed during the year and good progress had been made against the actions. Key observations from the 2022 external effectiveness review The feedback on the Committee’s function ing and effectiveness was posit ive and it specif ically h ighl ighted: • Members continued to feel that the Committee was well Chaired and the Board was kept well informed of its activ it ies • There was a sense from exist ing and new INEDs that the recruitment process could be streamlined and more pace and efficiency injected into the process • Members supported greater flexib il ity in the tenure of INEDs on the Board, to create greater option in succession planning • Confidence in the quality of the new jo iners is high, but it is inev itable that some of the Board is in induct ion mode at present • The succession plans for the years ahead should be discussed more widely. 2023 Action Plan The 2023 Action Plan for the Committee reflects suggestions from the Board evaluation and continues to build on the solid progress made last year: • Increase the pace of the INED appointment process • Focus on increas ing the level of technology experience on the Board • Improve divers ity by increas ing representat ion from across our markets • Continue to enhance the comprehensive induct ion programmes for new Board and Committee members, by includ ing add it ional wr itten informat ion and schedul ing a follow-up induct ion at the end of the first year • Continue to oversee the development of the executive talent pipel ine w ith a view to increas ing the proportion on senior internal appointments. ![]() 184 Standard Chartered – Annual Report 2022 Directors’ report Directors’ remuneration report Summary of 2022 remuneration decis ions • The current economic environment remains challenging, with ris ing inflat ion across large parts of our network. In order to support our staff, especially junior colleagues, we are implement ing salary increases in April 2023, at a global average of 6.6 per cent. • Salary increases for executive directors and senior management, at 3.4 per cent, are 50 per cent lower than the average increase for other UK employees. • Group performance in 2022 was strong, across financ ial and non-financial metr ics, as measured through the Group balanced scorecard. As such, the approved aggregate discret ionary remunerat ion for the year is USD1,589 mill ion, up 16 per cent on 2021. • Annual incent ive awards for execut ive directors, Bill Winters (CEO) and Andy Halford (CFO), were assessed at 70 per cent of the maximum for Bill and at 69 per cent of the maximum for Andy. • Reward for all Group employees, includ ing execut ive directors, continues to be aligned to the Group’s strategic prior it ies, through the annual and long-term incent ive scorecards. I am pleased to present our directors’ remuneration report for the year ended 31 December 2022. I joined the Comm ittee on 1 August 2022 and assumed responsib il ity as Committee Chair on 1 January 2023, after receiv ing all necessary regulatory approvals. I have the honour of taking over as Chair of the Remuneration Committee from Christ ine Hodgson, who has been the Committee Chair from May 2015 until December 2022. I would like to thank Christ ine for the s ign ificant contribut ion she has made to the Comm ittee as Chair and for working with me through a very comprehensive handover process. The Group has performed well in 2022, despite continu ing challenges in the external environment, such as the ongoing impact of the pandemic, the Russia-Ukraine conflict and ris ing inflat ion. Th is report provides an overview of the Committee’s work during 2022 with respect to remuneration for executive directors and the wider workforce. The decis ions we have taken were based upon careful considerat ion of a broad range of factors such as ris ing inflat ion in several of our markets, economic diff icult ies faced by our colleagues, and the need for appropriate and fair reward for our workforce. The directors’ remuneration policy has been operated as intended, to incent iv ise performance linked to the Group’s strategy and to be aligned with shareholder interests. Response to 2022 AGM remuneration votes 2022 directors’ remuneration policy The Committee engaged with shareholders during 2021 and early 2022 and feedback from this consultation was used as an input into the development of the 2022 directors’ remuneration policy. At the AGM, the directors’ remuneration policy received the support of 69 per cent of shareholders. In view of the number of opposing votes, the Committee continued to engage with shareholders to understand their concerns. 1 Shir ish joined the Comm ittee on 1 August 2022 and was appointed as Committee Chair on 1 January 2023. 2 David jo ined the Comm ittee on 1 October 2022. 3 Byron stepped down from the Committee on 30 November 2022. 4 Christ ine stepped down as Comm ittee Chair on 31 December 2022 and from the Committee on 31 January 2023. 5 Robin jo ined the Comm ittee on 1 October 2022. Who else attended Committee meetings in 2022? The Group Chairman; Group Chief Executive (CEO); Group Chief Financ ial Officer (CFO); Group Ch ief Risk Officer; Group Head, HR; Global Head, Performance, Reward and Benefits; Group General Counsel; Group Head, Conduct, Financ ial Cr ime and Compliance; Group Company Secretary. Biograph ical deta ils of the Committee members can be viewed on pages 139 to 141 What are the main responsib il it ies of the Comm ittee? The Committee is responsible for setting the governance framework for remuneration for all employees, ensuring alignment with our culture, the requirements of the UK Corporate Governance Code and any other relevant regulations. Key responsib il it ies of the Comm ittee include: • Oversight of our Fair Pay Charter includ ing the development and implementat ion of remunerat ion polic ies and pract ices that are consistent with sound and effective risk management to support the Group’s strategic prior it ies and enable long-term sustainable success. • Approval of Group discret ionary remunerat ion, includ ing adjustment for risk, control and conduct matters. • Determin ing and agree ing the remuneration framework and polic ies for the Group Cha irman, executive directors and other senior executives, using the Fair Pay Charter princ iples, tak ing 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 #### Directors’ remuneration report 2 /2 Shir ish Apte 1 (Chair) 5 / 5 Maria Ramos 1 /1 1 /1 Robin Lawther, CBE 5 5 /5 Christ ine Hodgson 4 , CBE 5 / 5 Jasmine Whitbread Scheduled meetings 5 / 5 Byron Grote 3 David Conner 2 #### Proportionate remuneration outcomes in the context of strong #### Group performance Committee composit ion ![]() 185 Standard Chartered – Annual Report 2022 Directors’ report During this engagement, it was clear that the key issue impact ing the vote outcome was the prov is ion wh ich provides the Committee the flexib il ity to disapply time proration on the vesting of long-term incent ive plan (LTIP) awards for ret ir ing executive directors. While we recognise that this provis ion is not standard practice in the UK, we have confirmed to shareholders that its applicat ion, if used, will not be automatic. Each case will be considered on its own merit by the Committee taking into account the Group’s financ ial and non-financial performance and any other relevant circumstances. The directors’ remuneration report at that time will contain full disclosure on the Committee’s decis ion and rationale, and shareholders will then have the opportunity, through the AGM vote, to express their view on whether the specif ic d isappl icat ion was appropriately applied or not. The shareholders we met with confirmed that they would consider the circumstances and explanation very carefully if the provis ion is ever used and vote accordingly. 2021 directors’ remuneration report The resolution to approve the directors’ remuneration report for 2021 received the support of 73 per cent of shareholders. The main concern related to our response to the fine on the Group in December 2021 by the Prudential Regulation Authority (PRA) for liqu id ity reporting and governance fail ings. A detailed review of the issues connected with the fine had been undertaken at the end of 2019, when the matter was first ident ified and a further rev iew was carried out in 2021 when the fine was imposed. Remuneration actions were taken at a collective and ind iv idual level. We acknowledge that we should have provided more informat ion on the s ign ificant steps taken by the Committee since 2019 to address this matter. We will take this feedback into account in our disclosures going forward. Having reflected on the views expressed by shareholders during the engagement process, we remain satisf ied that the remuneration adjustments made were appropriate. The Committee continues to be updated on risk matters at all its meetings. Our performance in 2022 The Group delivered a strong set of results for the year. Underlying profit before tax is up 15 per cent on 2021, reflecting our resil ient and improv ing financial performance. Return on tangible equity (RoTE) is up 120 basis points to 8 per cent, and on track to meet our increased ambit ion of 11 per cent by 2024. The Group remains well capital ised w ith Common Equity Tier 1 (CET1) ratio at 14 per cent, the top of our stated range of 13-14 per cent. The formulaic outcome for Group performance, based on the balanced scorecard, was 71 per cent. Of this, 39 per cent (out of a possible 50 per cent) related to financ ial performance, includ ing strong underly ing income growth, income from new business and the increase in RoTE. The remain ing 32 per cent related to achiev ing non-financial goals, includ ing s ign ificant improvement in client satisfact ion, strong performance against our engagement, divers ity and inclus ion targets and progress on our Stands (more informat ion on our Stands can be found on page 24). Group-wide remuneration 2022 discret ionary annual incent ives Our strong performance in 2022, in the face of ongoing external challenges, is reflected in increased remuneration outcomes for the year. The Group scorecard assessment of 71 per cent is a starting point for determin ing d iscret ionary remunerat ion. In arriv ing at a distr ibutable pool, the Comm ittee considers addit ional factors such as share price performance, the impact of ris ing interest rates and overall affordabil ity. The Comm ittee also considers carefully all risk, control and conduct matters, includ ing ongo ing invest igat ions and any matters raised by regulators. As ever, the Committee’s assessment also takes into account our Fair Pay princ iples. Following its review of these factors, the Committee determined that a reduction of 4 percentage points from the in it ial scorecard outcome was appropriate. This resulted in a final Group scorecard outcome of 67 per cent for the purposes of discret ionary remunerat ion and an aggregate incent ive pool of USD1,589 mill ion, 16 per cent h igher than 2021 on a reported basis and 28 per cent higher on a same store basis. Further details can be found on page 187. 2023 salaries During 2022, we have seen high inflat ion in many of our markets due to global economic challenges. In response to this, we made targeted changes to salaries in 2022 to support colleagues in markets faced with the most extreme economic condit ions. As a result of ongoing cost of liv ing pressures in many of our markets, average global salary increases of 6.6 per cent are being awarded in 2023. Increases have been weighted towards our junior colleagues and colleagues in countries where cost of liv ing pressures are most s ign ificant. Execut ive director and senior management salary increases will be discounted by 50 per cent from the rate applicable in their respective market. Executive director remuneration in 2022 Annual incent ives for execut ive directors In 2021, the Committee approved a change to the executive directors’ scorecard by includ ing an ind iv idual performance assessment measure of 10 per cent. Financ ial measures continue to make up 50 per cent of the total scorecard, while strategic and non-financ ial measures make up the balance of 40 per cent. These changes were covered in the 2021 report. For the year 2022, the Committee approved scorecard outcomes, includ ing ind iv idual performance assessments, of 70 per cent of the maximum for Bill, and 69 per cent of the maximum for Andy. Applying these scores to the annual incent ive max imum, the Committee approved annual incent ives of GBP1,499,344 for B ill, a 26 per cent increase over 2021, and GBP944,803 for Andy, a 24 per cent increase over 2021. The Committee is satisf ied that these are appropr iate given the strong performance of the Group in 2022 and the sign ificant personal contr ibut ions from B ill and Andy. Further detail can be found on pages 194 to 196. ![]() 186 Standard Chartered – Annual Report 2022 Directors’ report Directors’ remuneration report 2020-22 LTIP awards vesting in March 2023 The 2020–22 LTIP awards are due to vest in March 2023 with the expected vesting currently at 22 per cent, based on performance against strategic measures. The final total shareholder return (TSR) performance will be assessed in March 2023. The projected values delivered by the 22 per cent outcome and included in the single total figures of remuneration for Bill and Andy are GBP1,024,408 and GBP634,488 respectively and are based on a share price of GBP5.78 (three-month average to 31 December 2022) compared with the share price on award of GBP5.20, an increase of 11 per cent. The Committee considered the question of windfall gains from awards granted in 2020. The share price when the awards were granted was 15 per cent lower than the grant price in the prior year. The Committee decided not to make any adjustment at grant for the lower share price at the start of the pandemic. Instead the Committee opted to review any potential windfall gains at the end of the performance period. Having considered the posit ion now, the Comm ittee is comfortable that the share price increase over the performance period has been broadly consistent with improvement in underlying financ ial performance. Single total figure of remuneration for 2022 The 2022 annual incent ive and expected 2020–22 LTIP vest ing results in a 2022 single figure for Bill of GBP5,483,442 and for Andy of GBP3,412,390. This represents a year-on-year increase of 16 and 13 per cent, respectively, reflecting the strong Group performance in 2022. 2022 single total figure of remuneration (£000) 5,483 4,740 3,926 2022 Bill Winters 2021 2020 3,412 3,032 2,452 2022 Andy Halford 2021 2020 0 1,000 2,000 3,000 4,000 6,000 5,000 Salary (cash and shares) Pension Benefits Annual incent ive LTIP A sign ificant port ion of both 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 ions of the ir pay continue to reinforce alignment of their incent ives w ith shareholder interests and the Group’s long- term performance. Both Bill and Andy continue to exceed their shareholding requirements (see page 199 for further details). Executive directors’ remuneration in 2023 In accordance with the approved remuneration policy, the Committee considers annual salary increases for executive directors taking account of any increase in scope or responsib il ity, market competit iveness, and salary increases across the Group. In line with our approach for all senior management, the Committee has awarded salary increases of 3.4 per cent to Bill and Andy, 50 per cent lower than the average increase awarded to the other UK employees. This increases their salaries in 2023 from GBP2,434,000 to GBP2,517,000 and from GBP1,556,000 to GBP1,609,000 respectively, effective from 1 April. In September 2022, the UK Government announced measures to remove the cap on banker incent ives imposed in 2014. On 19 December 2022, the PRA issued a consultative paper on this subject. Should the cap be removed as is expected we will consult extensively with shareholders before making changes to our remuneration policy. 2023-25 LTIP awards to be granted in March 2023 Having considered 2022 performance, the Committee has approved LTIP awards for the period 2023-25 of GBP3,212,880 and GBP2,053,920 to Bill and Andy respectively, representing 132 per cent of their salary. As in the past, these are performance linked awards, and vesting will depend upon achiev ing spec if ied performance targets by the end of the three year review period (2025). Following the review period, the shares will vest pro-rata from years three to seven. There is an addit ional retent ion period of 12 months after vesting. Performance will be assessed based on RoTE with a CET1 underpin, TSR relative to a defined peer group, and the achievement of sustainab il ity and other measures, includ ing our Stands, that are aligned with the Group’s strategic prior it ies. Discuss ions w ith shareholders were held in January 2023 on the development of these performance measures and targets and the input received was incorporated into the final decis ions by the Comm ittee. Further details on the 2023–25 LTIP awards and the performance measures and targets can be found on pages 199 and 200. In the rest of this report we present the disclosures required by regulations, as well as addit ional informat ion to expla in how remuneration for our executives aligns with our strategy, shareholder interests and wider workforce pay. In making remuneration decis ions for 2022 and beyond, we have also been mindful of the experience of our wider stakeholder group. I would like to thank Christ ine for her very s ign ificant contribut ions as Cha ir of the Committee. I would also like to thank my fellow Committee members for the work they have put into the Committee, and our shareholders for their ongoing support and engagement. Shir ish Apte Chair of the Remuneration Committee (All disclosures in the directors’ remuneration report are unaudited unless otherwise stated. Disclosures marked as audited should be considered audited in the context of the financ ial statements as a whole) ![]() 187 Standard Chartered – Annual Report 2022 Directors’ report #### Remuneration at a glance Financ ial KPIs Profit before tax $4,762 m 15% Return on tangible equity 8.0 % 120 bps Underlying basis Common Equity Tier 1 ratio 14.0 % 19 bps The top of our target range of 13-14% Total shareholder return 41.4 % 43.4ppt Executive directors’ remuneration Non-financial KPIs Divers ity and inclus ion: women in senior roles 32.1 % 1.4ppt Sustainab il ity Aspirat ions met or on track 85.7 % 2.8 ppt Group-wide remuneration 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2022 2021 2020 990 1,367 1,589 Total discret ionary remunerat ion, 2020–2022 ($m) Share ownership as % of salary (at 31 December 2022) 637% 441% 200% 250% Bill Winters Requirement Actual Andy Halford 1,499 2,142 945 1,369 Bill Winters (70% of maximum) Andy Halford (69% of maximum) Bill Winters (22% of maximum) Andy Halford (22% of maximum) Bill Winters (66% of maximum) Andy Halford (65% of maximum) 2022 annual incent ive (£000) 1,024 3,213 634 2,054 2020–22 LTIP outcome (£000) 5,483 8,314 3,412 5,256 2022 outcome 2022 single figure (£000) Maximum opportunity 2022 Group scorecard outcome Financ ials 39/50 % Clients 8/15 % Enablers 9/10 % Risk and controls 9/15 % 2022 Group scorecard outcome 67% Sustainab il ity 5/10 % Progress against our Stands #### +1ppt Discret ionary reduct ion to formulaic outcome #### -4ppt 1 1 Consider ing all factors, the Committee determined that a reduction of 4 percentage points (ppt) to the formulaic outcome (71 per cent) was appropriate, resulting in an outcome of 67 per cent for the purposes of discret ionary remunerat ion. ![]() 188 Standard Chartered – Annual Report 2022 Directors’ report Directors’ remuneration report The forward-looking remuneration policy for executive directors and independent non-executive directors (INEDs) was approved at the AGM held on 4 May 2022 and applies for three years from that date. A summary of the executive director policy, includ ing the key remunerat ion elements, is set out below and is provided for informat ion only. The full pol icy, includ ing recruitment and leaver provis ions, can be found on pages 161 to 166 of the 2021 Annual Report and on our webs ite. Our approach to remuneration is consistent for all employees and is designed to create alignment with our Fair Pay Charter princ iples, wh ich apply globally. However, our pay structures may vary according to location (to comply with local requirements) and, therefore, the table below explains the alignment between the executive directors and our UK workforce, being the most relevant market. The full policy is available on our website at sc.com Fixed remuneration Policy Alignment with UK employees Salary Set to reflect the role, and the skills and experience of the ind iv idual. • Delivered part in cash and part in shares. • To mainta in al ignment with shareholders, the share element is subject to a holding period of five years, with 20 per cent being released annually. • The process of setting and annually review ing salaries against market informat ion is the same for all employees. • For all other UK employees, salary is paid 100 per cent in cash in line with market practice. Pension To facil itate long-term retirement savings. • For current directors, an annual pension allowance or contribut ion of 10 per cent of salary is payable. • For new executive directors, 10 per cent of the cash element of salary only will be payable. • Pension is set at 10 per cent of salary for both the executive directors and other UK employees, aligned with the provis ions of the UK Corporate Governance Code. Benefits A competit ive benefits package to support executives to carry out their duties effectively. • A range of benefits is provided includ ing hol iday and sick pay, a benefits cash allowance, private medical insurance, life insurance, financ ial adv ice and tax return preparation. A car and driver or other car-related service is available to executive directors, which is a role-based provis ion due to security requirements. • Executive directors receive a lower cash benefits allowance than other UK employees as a percentage of their salary. • Core benefits are aligned with all employees. Some addit ional, role-spec if ic benefits are received by the current executive directors. • Employees are elig ible for tax return preparat ion in the year of an internat ional relocat ion. Variable remuneration Policy Alignment with UK employees Annual incent ive Remuneration based on measurable performance criter ia linked to the Group’s strategy and assessed over a period of one year. • Annual incent ive awards are del ivered as a combinat ion of cash and shares subject to holding requirements, and deferred shares. • The maximum value of an annual incent ive award cannot exceed 88 per cent of salary and can be any amount from zero to the maximum. • Awards are determined by the Committee, based on the assessment of the Group scorecard which contains financ ial (at least 50 per cent of the scorecard) and strategic measures, as well as the personal performance of the ind iv idual. • The annual incent ive plan is operated for all employees, paid in cash to certain lim its w ith the balance deferred over at least three years in shares and/or cash. • The same Group scorecard is used in assessing incent ives for execut ive directors and other UK employees. LTIP LTIP awards are granted to senior executives who have the abil ity to influence the long-term performance of the Group. Awards are performance dependent based on measurable, long-term criter ia. • LTIP awards are granted annually, based on performance in the relevant year. • The maximum value of an LTIP award cannot exceed 132 per cent of salary and can be any amount from zero to the maximum. • Following the grant of awards, performance is measured over three years with no award vesting before the third anniversary of the grant. • LTIP awards are delivered in shares and subject to holding requirements. • Members of the Management Team are also elig ible for LTIP awards, granted annually and assessed on the same performance measures and targets, with awards typically at a lower level. • LTIP awards may also be granted to other employees in the Group which may be subject to the same or different performance condit ions. #### Summary of the directors’ remuneration policy ![]() 189 Standard Chartered – Annual Report 2022 Directors’ report Other remuneration Policy Alignment with UK employees Sharesave Provides an opportunity for all employees to invest voluntarily in the Group. • Partic ipants are able to open a sav ings contract to fund the exercise of an option over shares. • The option price is set at a discount of up to 20 per cent of the share price at the date of the inv itat ion to partic ipate. • Savings per month of between £5 and the maximum set by the Group, which is currently £250. • All employees are elig ible to part ic ipate in the Sharesave plan, which enables employees to share in the success of the Group at a discounted share price. Shareholding requirements Provides alignment with the interests of shareholders during employment. • Executive directors are required to hold a specif ied level of shares, to be bu ilt up over a reasonable time frame from the date of appointment. • Under the policy, in 2022, the CEO and the CFO are required to hold 250 per cent and 200 per cent of salary in shares, respectively. • Post-employment shareholding requirement in place for two years following cessation of employment. The amount to be held is as described above or, if lower, the actual shareholding on departure. • Formal shareholding and post-employment shareholding requirements are operated for the executive directors only. • However, other employees hold shares as part of the deferral and retention requirements. Delivery of executive remuneration over time The diagram shows how a portion of Bill’s salary, annual incent ive and long-term incent ive is paid in shares which are released up to eight years following grant, with the final component of pay granted in 2023 being released in 2031. This creates strong alignment of interests between 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 ing those subject to performance cond it ions) and 33 per cent in cash. Annual incent ive and LTIP shares are subject to clawback for up to 10 years from grant 20% 20% LTIP Shares 2023 2024 2025 2026 2027 2028 2029 2030 2031 20% 20% Annual incent ive Cash and shares Vesting based on performance measured over 3 years LTIP shares vest pro rata over years 3 to 7 with addit ional 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 ive shares Salary shares Annual incent ive cash Salary cash 20% ![]() 190 Standard Chartered – Annual Report 2022 Directors’ report Directors’ remuneration report Alignment with our culture Our performance and reward framework supports us in embedding a high-performance culture and aligns with our princ iple that colleagues should share in the success of the Group. For example: • All remuneration decis ions are grounded in our Fair Pay Charter, with one consistent set of princ iples for the w ider workforce and executive directors (further details on our Fair Charter are on page 193). • Employee performance is assessed based on what is achieved and how it is achieved in line with our valued behaviours. Our remuneration structure and polic ies ensure that behaviours consistent with these values are appropriately recognised and rewarded. • To support this approach, the wider workforce and our executive directors partic ipate in continuous performance management and feedback. • Our LTIP assessment measures include a conduct gateway to further support this. Alignment with our strategy Remuneration decis ions made across the Group, includ ing for our executive directors, align with our strategic prior it ies and our Stands, includ ing our comm itment to sustainable social and economic development through: • Performance measures in our Group and LTIP scorecards are designed to drive achievement of the financ ial and strategic goals that will deliver long-term sustainable value for our stakeholders. • Sustainab il ity and our Stands are key considerat ions for setting and measuring financ ial and strateg ic targets. Alignment with our approach to risk and control The determinat ion of remunerat ion policy and outcomes align with the Group’s risk and control framework (see page 211 for further details). In particular: • The Group and LTIP scorecards include risk and control measures. • In addit ion, the Comm ittee considers further discret ionary risk adjustment in respect of the Group scorecard outcome and has a track record of applying discret ion appropr iately. • The rules of the LTIP also give the Committee necessary discret ion to further adjust vest ing outcomes if the Committee considers that the outcome is incons istent w ith underlying business performance. • Long-term sustainable performance is supported through the abil ity to make adjustments to var iable remuneration for risk, control and conduct behaviours, the deferral of variable remuneration, and the abil ity to apply malus and clawback where appropriate. • The incent ives for employees engaged in Audit, Risk and Compliance functions are set independent of the businesses they oversee. #### Remuneration alignment How does our directors’ remuneration policy address other key features set out in the UK Corporate Governance Code? Proportional ity • In line with our commitment to pay for performance, a sign ificant proport ion of executive director pay is delivered through incent ives based on performance metrics aligned with our strategy. • Executive directors’ interests are further aligned with long-term shareholder interests through the deferred release of salary, annual incent ive and LTIP awards over a period ranging from one to eight years. Incentive awards are also subject to clawback provis ions for up to 10 years from grant. • Addit ional sharehold ing requirements are in place for executive directors requir ing them to bu ild and mainta in a s ign ificant sharehold ing in Company shares while in employment and, for a period of two years post-employment. Both executive directors currently exceed their respective shareholding requirements. Predictab il ity • The range of possible rewards to ind iv idual executive directors is set out in the scenario charts on page 203 where we also demonstrate the impact of a 50 per cent share price appreciat ion over the three-year performance period of the LTIP. • Maximum awards levels for all incent ives are capped at 220 per cent of salary and cannot exceed regulatory lim its. Other than vest ing levels which are driven by performance outcomes, the only source of variat ion in final payouts is that a sign ificant part of incent ive awards is delivered in shares and is linked to the share price. Simpl ic ity and clarity • Simpl ic ity is a key driver for the structure of our executive pay, subject to regulatory requirements aris ing from operat ing as a UK regulated bank. • Addit ional informat ion is included on the alignment of executive and wider workforce pay on pages 188 and 189 in the summary of the directors’ remuneration policy in support of our commitment to clarity. ![]() 191 Standard Chartered – Annual Report 2022 Directors’ report The Committee is responsible for setting the princ iples, parameters and governance framework for the Group’s remuneration policy and overseeing its implementat ion. Th is includes determin ing the framework and pol ic ies for the remuneration of the Group Chairman, the executive directors and other senior management. The Committee also oversees the alignment of reward, culture, the strategic prior it ies and our Stands. 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 the AGM in May 2022 on remuneration related matters. For Against Withheld Advisory vote on the 2021 remuneration report 408,108,378 73.24% 149,094,072 26.76% 55,027,858 Bind ing vote to approve the 2022 directors’ remuneration policy 404,531,068 68.81% 183,344,607 31.19% 24,340,637 1 Number of votes is equal to number of shares held The Remuneration Committee engaged extensively with shareholders on the development of the directors’ remuneration policy in 2021 and early 2022. Subsequently, following the voting outcome at the AGM, the Committee re-engaged with shareholders as explained on pages 184 and 185 and in our update statement in September 2022. Advice to the Committee The Committee was assisted in its considerat ions by PwC, who were formally re-appointed as the Committee’s remuneration adviser in 2021. It is the Committee’s practice to undertake a detailed review of potential advisers every three or 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 ing assurance, adv isory, 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 ing. The Comm ittee is satisf ied that the adv ice it receives is objective and independent. The total fee paid to PwC (on an agreed fee basis) was £104,208, which includes advice to the Committee relating to executive directors’ remuneration and regulatory matters. The Group Chief Financ ial Officer and Group Ch ief Risk Officer provided the Committee with regular updates on finance and risk matters. The Committee recognises and manages any conflicts of interest when receiv ing v iews from executive directors or senior management on remuneration proposals and no ind iv idual is involved in decid ing the ir own remuneration. Committee effectiveness review The feedback from the externally conducted 2022 Committee effectiveness review was posit ive. The key po ints raised and the action plan for 2023 are summarised below. #### The Remuneration Committee Key observations from the 2022 external effectiveness review The key points highl ighted by the rev iew include: • The Committee is recognised for dealing with diff icult and sensit ive issues, and the work the Committee Chair does in consulting with investors and attending subsid iary RemCo meetings is appreciated. • The close coordinat ion of remunerat ion and sustainab il ity issues, strengthened by cross-membership of the Remuneration Committee and Culture and Sustainab il ity Committee provides helpful alignment. • Posit ive commentary was g iven on the support received from internal special ists (e.g. human resources, finance, risk) and PwC (the external advisers). • Non-Committee members feel well informed of the key issues and areas of discuss ion. 2023 Action Plan The 2023 Action Plan for the Committee reflects the recommendations from the effectiveness review and continues to build on the progress made last year: • Consider how PwC can best provide further ins ight on how the Group’s more sensit ive remunerat ion proposals will be received by investors. • Consider how non-Committee members can become more informed on the Committee’s debate, while protecting confident ial ity. ![]() 192 Standard Chartered – Annual Report 2022 Directors’ report Directors’ remuneration report Committee activ it ies in the year 19 Jan 31 Jan 27 Jul 29 Sep 24 Nov Executive directors’ remuneration Review of the directors’ remuneration policy and implementat ion Fixed and variable remuneration Senior management remuneration Joiners and leavers Fixed and variable remuneration All employee remuneration Group-wide discret ionary remunerat ion Outcomes from the annual performance and reward review Incentive performance measures, targets and outcomes Group-wide reward, and the Fair Pay Charter Reward governance Considerat ion of r isk, control and conduct matters Identif icat ion of material risk takers Engagement with stakeholders and regulatory, investor and polit ical matters The Committee held an addit ional strategy meet ing to discuss the progress of the Group’s Future of Work in it iat ive, its Employee Value Proposit ion and to ident ify ongo ing areas of focus and further development. The Committee considered the changes to tradit ional ways of work ing and discussed approaches to attracting and retain ing future talent to dr ive a high-performance culture. Understanding the views of our workforce The Committee recognises the importance of seeking feedback from colleagues on remuneration to inform decis ion- making. This year, 87 per cent of colleagues responded to the Group’s engagement survey, which sought to understand colleague sentiment in respect of performance management, the process of giv ing and rece iv ing feedback and reward. Key ins ights were presented to the Comm ittee for discuss ion, and results were shared w ith the workforce along with a summary of actions being taken. The Board engages with and listens to the views of employees. In 2022, the Board hosted informal events with employees which provided an opportunity for the Board to understand how the Bank’s strategy and culture are being lived and embedded across the Group. Further informat ion on our workforce engagement framework is included in our Culture and Sustainab il ity Committee report on pages 176 to 178. ![]() 193 Standard Chartered – Annual Report 2022 Directors’ report Our Fair Pay Charter The Fair Pay Charter is the compass for our performance and reward strategy and outlines how we aim to ensure fairness in our approach to reward. It sets out the princ iples that underp in our performance and reward strategy and associated decis ions – includ ing prov id ing a sufficient level of financial secur ity, being competit ive aga inst the market, paying for performance, ensuring consistency and transparency in outcomes, supporting flexib il ity and wellbeing of colleagues, and rewarding colleagues in a way that is free from unjust bias. Together with broader human resources in it iat ives support ing divers ity and inclus ion, organ isat ional and ind iv idual development and the recognit ion of h igh performance, we are build ing a culture of excellence where, through innovat ion and continuous improvement, each and every one of our colleagues can fulfil their potential. Full details of the Charter can be found in our Fair Pay Report here: sc.com/fairpayreport Key highl ights include: Financ ial secur ity during the cost of liv ing cr is is During 2022, supporting colleagues’ financ ial secur ity in the face of widespread cost of liv ing challenges has been a prior ity. We have taken a number of act ions to support this, includ ing interven ing in markets faced by the most extreme economic circumstances, such as Sri Lanka, Pakistan and Zimbabwe, to address the challenges facing our more jun ior employees in particular. We have also set aside addit ional funding for 2023 salary increases, again prior it is ing junior colleagues. Redefining our approach to manage and reward performance In 2022, we launched a new approach to motivate outperformance and deliver a culture of excellence by redefining how we manage, recogn ise and reward performance across the Group. With this approach we are creating a more transparent, real-time feedback culture underpinned by continuous feedback, coaching, and open two-way performance and development conversations with people leaders. We also introduced our Leadership Agreement, designed to set clear expectations of the leadership standards needed to drive and accelerate our performance, focused around behaviours that aspire, insp ire and dr ive execution. Divers ity and pay Since 2017, we have published gender pay gap analysis for the UK, Hong Kong, Singapore, UAE and the US. In 2022, for the first time, we have extended our divers ity pay analys is to include ethnic ity pay gap report ing in the UK and US. These analytics, which are included in our Fair Pay Report, combined with local ins ights on the un ique dynamics and talent context of each market, enable us to better understand the strengths and gaps in the organisat ion, and to develop act ion plans to tap into the potential of a truly diverse and inclus ive workforce. Fair Pay Charter princ iples 1 We commit to pay a liv ing wage in all our markets and seek to go beyond compliance with min imum wage requirements. 2 We provide an appropriate mix of fixed and variable pay and a core level of benefits to ensure a min imum 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 their personal circumstances, and provide colleagues with the opportunity to select the combinat ion and level of benefits that is right for them. 4 Pay is well admin istered w ith colleagues paid accurately, on time and in a way that is convenient for them. 5 We provide a competit ive total fixed and var iable 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 im inat ion on the bas is of divers ity, as set out in our Group Code of Conduct. 8 We ensure pay decis ions reflect the performance of the ind iv idual, the business they work in and the Group, and recognise the potential, conduct, behaviours and values demonstrated by each ind iv idual. 9 We set clear expectations for how colleagues are rewarded and the princ iples gu id ing dec is ions, includ ing clear personal objectives and feedback. 10 We provide clear communicat ion of pay and performance decis ions, and seek feedback and input from colleagues on our pay structures and outcomes. #### Group-wide remuneration ![]() 194 Standard Chartered – Annual Report 2022 Directors’ report Directors’ remuneration report #### Directors’ remuneration in 2022 This section, which is subject to an advisory vote at the 2023 AGM, sets out how remuneration was delivered to the executive directors in 2022 under the remuneration policy approved by shareholders in 2022. It also sets out the 2022 fees paid to the Group Chairman and the INEDs. Annual incent ive awards for the execut ive directors (audited) Annual incent ive awards for execut ive directors are based on the assessment of the Group scorecard and personal performance, embedded into the scorecard assessment for the executive directors in 2022, in line with the remuneration policy. The personal element accounts for a maximum weight ing of 10 per cent, w ith financ ial measures cont inu ing to make up to 50 per cent and the strategic measures accounting for up to 40 per cent. The Committee has also considered progress demonstrated against our Stands in the determinat ion of the overall scorecard outcome. The Group scorecard is used for all elig ible employees, includ ing the execut ive directors, to mainta in al ignment and a shared sense of purpose. For Bill and Andy, the Committee considered Group performance, ind iv idual performance, and risk, control and conduct-related matters (with input from Risk and other control functions). The Committee considered that each director had exhib ited an appropriate level of conduct and was deemed to have met the gateway requirement to be elig ible for an incent ive. The annual incent ive scorecard outcome for B ill and Andy is summarised below: Executive director scorecard outcomes Weight ing Bill Winters outcome Andy Halford outcome Financ ial 50% 39% 39% Strategic 40% 25% 25% Personal performance 10% 9% 8% Our Stands 1% 1% Total 74% 73% Committee adjustment (see page 185 for further details) (4%) (4%) Final scorecard for determin ing annual incent ives 70% 69% Maximum annual incent ive opportun ity (£000) 2,142 1,369 Annual incent ive outcome (£000) 1,499 945 Set out below are the assessments of performance in 2022 for the Group (financ ial, strateg ic and our Stands) and for Bill and Andy. Assessment of the 2022 scorecard – financial measures 1 Weight ing Threshold (0%) Target Maximum (100%) Achievement Outcome Income 10% $15.6bn $14.4bn $15.0bn $16.3bn 10% Costs 2 10% $9.9bn $10.7bn $10.2bn $10.4bn 4% Operating profit 5% $4.4bn $3.6bn $4.0bn $4.8bn 5% RoTE 3 with a CET1 4 underpin of the higher of 13% or the min imum regulatory requirement 20% 7.0% 5.8% 6.4% 8% 20% Growth of high-quality liab il it ies m ix 5 5% $11.5bn $3.8bn $7.7bn $(17.8)bn 0% 1 Total 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 irment and result ing operating profit relating to ident ifiable bus iness 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 ions to d ispose of assets, as well as residual income, direct costs and impa irment of related legacy assets of those ident ifiable bus iness units, products or portfolios. See Note 2 on page 350. 2 Cost achievement has been adjusted by USD0.2 bill ion, to exclude add it ional performance related pay in relation specif ically to overach ievement of profit target, which was highl ighted in our Q1 earnings release. 3 Underlying RoTE represents the ratio of the current year’s profit available for distr ibut ion to ordinary shareholders, to the weighted average ordinary shareholders’ equity less the average goodwill and intang ibles for the report ing period. Underlying RoTE normally excludes regulatory fines but, for remuneration purposes, this would be subject to review by the Committee. 4 The CET1 underpin was set at the higher of 13 per cent or the min imum regulatory level at 31 December 2022. In add it ion, the Comm ittee has the discret ion 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. 5 Init iat ive that targets growth of effic ient and regulatory fr iendly deposits to improve quality of our funding mix (liab il it ies) to support the Group’s growth aspirat ions. The definit ion of high quality liab il it ies w ith in the 2022 scorecard excludes term depos its, therefore the achievement of USD(17.8)bill ion excludes the migrat ion to Term Depos its from CASA balances driven by the high interest rate environment. ![]() 195 Standard Chartered – Annual Report 2022 Directors’ report Assessment of the 2022 scorecard – strategic measures 1,2 Clients (network, affluent, mass) Target Assessment • Improve client satisfact ion rat ing. • Deliver growth in qualif ied cl ients across Affluent, Private Banking, and Wealth Management activ ity across top 11 affluent countries and increase the number of active personal clients. • Deliver network income growth in Corporate, Commercial & Institut ional Bank ing. • Grow value of Dig ital Ventures. • Client satisfact ion outperformed across all bus inesses. • Affluent and Wealth Management adversely impacted by the pandemic restrict ions, the onset of the Russ ia-Ukraine conflict and increases in interest rates to tackle inflat ion. • Network income growth exceeded targets. • Dig ital Ventures impacted by market volatil ity and delays in external approvals. Weight ing 12% Outcome 7% Sustainab il ity Target Assessment • Progress against the Group’s aim to achieve net zero by 2050. • Improve community engagement through employee volunteering partic ipat ion. • Net zero targets progressing well with delivery of green and transit ion finance on track. • Outperformance of community engagement from all markets includ ing reg ional campaigns. Weight ing 8% Outcome 4% Enablers (innovat ion, new ways of work ing and people) Target Assessment • Grow proportion of dig itally in it iated transactions and dig ital sales adoption. • Improve end-to-end speed to deliver change (from idea formation to commercial isat ion). • Develop human capital by improv ing employee engagement, divers ity and inclus ion. • Dig ital adopt ion below target impacted by external approvals and go live delays. • Speed to deliver targets achieved. • Improved employee inclus ion and engagement outcomes and an increase in number of females in senior roles by 1.4ppt. Weight ing 8% Outcome 7% Risk and controls Target Assessment • Improve risk and control governance effectiveness. • Successfully deliver milestones with in the cyber r isk management plan. • Non-financial r isk index improved in 2022, reflecting a reduction in non-financ ial r isk exist ing in the Bank. • Progress made in reducing risk across key informat ion and cyber security domains. Weight ing 12% Outcome 7% 1 A maximum/min imum performance threshold was set for each performance measure. For strateg ic measures, the Committee used its judgement to determine scorecard outcomes with in th is 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). 2 The Committee considered the performance against the ESG metrics with in the people and purpose element of the annual incent ive scorecard and 2020–22 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 ive structures do not raise ESG risks by motivat ing irrespons ible behav iour. Assessment of the 2022 scorecard – our Stands Our Stands: Accelerating Zero; Lift ing Part ic ipat ion; Resetting Globalisat ion A holist ic assessment of the embedd ing of our Stands showed good progress has been made across the Group. See page 24 for further details and examples of the in it iat ives and programmes that have been implemented. 1% Assessment of the 2022 scorecard – personal performance The Committee considers areas of responsib il ity together with progress against key object ives for the year and personal contribut ion to the Group scorecard outcome. Th is element focuses on measures that reflect real personal impact, such as transformation of processes and improv ing the culture w ith in the Bank. Key ach ievements against Bill’s and Andy’s personal objectives are summar ised in the table below. Bill Winters Bill has continued to deliver as an authentic and trusted leader. The strong financ ial and strateg ic performance delivered by the Bank in 2022, our best performance over the past five years despite challenging circumstances, has been sign ificantly influenced by Bill’s personal drive and contribut ion throughout the year. Goal Assessment Execution and prior it isat ion • Champion new ways of working across the Group to maxim ise product iv ity gains • Bill has taken action throughout the year to simpl ify and champ ion new, collaborative ways of working and to drive ambit ion and execut ion. • His personal focus results in success for the Group with proven examples includ ing performance in China, UAE, India and Korea. • He also led the strategic effort to realign the bank’s Africa and Middle East footprint by exit ing some markets and entering or increas ing our presence in high potential markets, such as Saudi Arabia and Egypt. • He has overseen and influenced many enhancements in our internal capabil it ies which are contribut ing to improved performance. • For example, Bill set up a Global Strategy Delivery Squad, comprised of senior and experienced leaders from across the organisat ion, to accelerate progress aga inst our strategic object ives and find solut ions to embed other enterprise-wide strategic enablers. ![]() 196 Standard Chartered – Annual Report 2022 Directors’ report Directors’ remuneration report Culture and transformation • Simpl ify processes and inst il a h igh-performance culture. • Increase divers ity and inclus ion profile and promote action, both internally and externally. • Bill drives our culture, promoting the core values of the bank, includ ing d ivers ity and inclus ion, susta inab il ity and our Stands. • He was instrumental in the development of our new performance management process, driv ing our amb it ion for a truly high-performance environment. • Bill has been a key advocate of our drive towards a culture of excellence, leading by example and mainta in ing a focus on risk and control issues, ensuring risk ownership across the business. • Our Group Management Team is more than 50% female with Mary Huen jo in ing in 2022 and Sadia Ricke join ing as Chief Risk Officer in 2023. • Through our employee survey, we have seen our Manager Net Promotor Score (mNPS) at its highest ever; there has also been an increase in the employee Net Promoter Score (eNPS) and scores related to the Bank exceeding employees’ expectations. Innovation • Drive innovat ion in new and core businesses. • Bill has driven innovat ion in new and core businesses, both in our new ventures and in the success of our dig ital assets. • 30+ ventures in the portfolio across 10+ markets, 7 of which were commercial ised in 2022. Examples include the successful launch of Nexus (Indonesia), Solv (Kenya) and Trust Bank (Singapore). • Dig ital capab il it ies have been launched in CPBB to support wealth education. • During 2022, both Zodia Custody and Zodia Markets commenced business as a key step in provid ing inst itut ional client support for dig ital assets. Key stakeholder interact ion • Spend more time with clients and investors to increase impact • Fulfil external roles to improve credentials on global issues. • Bill has successfully increased his level of engagement with key clients, investors and other stakeholders throughout the year. Investors are very supportive of him as evidenced by a recent investor perception survey. • Bill holds roles in various important external fora which enhances the Bank’s internat ional image and reputation, posit ion ing us as a thought leader and relevant actor in sustainable finance, innovat ion and d ig ital assets, in particular. • He currently co-chairs the B20 India Taskforce on Financ ing for Global Econom ic Recovery and is UK Chair of the India-UK Financ ial Partnersh ip. Sustainab il ity • Promote our sustainab il ity credentials. • Bill takes a leadership posit ion in various banking and markets efforts to address the climate challenge. • He has mainta ined a h igh-profile focus on sustainab il ity generally and on carbon markets in particular. Partnerships include Advanced Market Commitment for the African Carbon Markets Init iat ive (ACMI), acting as a princ ipal in the Glasgow Financ ial All iance for Net Zero (GFANZ) and involvement in the Indonesian and Vietnamese Just Energy Transit ion Partnersh ips (JETPs). • Bill created the Group’s Chief Sustainab il ity Officer role and played a key role in hir ing Mar isa Drew for the posit ion, and in refreshing our sustainab il ity strategy. Weight ing 10% Outcome 9% Andy Halford During 2022, Andy has continued to be a strong partner to Bill, the Management Team and the Board. The strong financ ial results delivered by the Bank in 2022, despite challenging condit ions, have been s ign ificantly influenced by Andy’s focus and commitment to improve the bank. Goal Assessment Transformation and execution • Deliver major programmes. • Andy led on the implementat ion of the strateg ic actions we set out publicly in February 2022. • Sign ificant progress made w ith in our strategy funct ion resulting in an enhanced focus on strategy across the Group. • He was instrumental in the assessment that resulted in the decis ion to streaml ine the bank’s African presence. • Andy has personally driven the implementat ion of a mult i-year programme to fundamentally upgrade the quality of the financ ial systems be ing used across the Group. Stakeholder management • Increase investor confidence in the Group’s refreshed strategy. • Andy played a key role in sharpening the externally communicated goals and the progress of the Bank both with the investor community and the external media, build ing trust and confidence externally. • He has been an active board member contribut ing on mult iple fronts both with in and outs ide his core areas of finance expertise, includ ing process improvements and effic ienc ies and governance and financ ial control improvements for new businesses in and around SC Ventures. Risk and controls • Delivery of regulatory reporting remediat ion programme. • Deliver the Resolvabil ity Assessment Framework. • Andy has given considerable attention to upgrading the quality of the Group’s regulatory reporting, with notable improvements in the overall financ ial control env ironment. • He has coordinated a sign ificant mult id isc ipl inary team to ensure that the Group is compliant with its Resolution responsib il it ies. • Andy created a new team to manage the verif icat ion and reporting of many of the new ESG metrics. Financ ial performance • Contribute to delivery of Group financial performance, includ ing through management of cost base. • Andy actively managed the Group’s cost base throughout the year, which enabled the rate of income growth to exceed the rate of cost growth by the largest margin in recent years. • Through his chair ing of the Group Asset and L iab il ity Committee during an unparalleled period of economic volatil ity, Andy ensured that the bank appropr iately managed the resultant risks and realised many of the opportunit ies. Weight ing 10% Outcome 8% ![]() 197 Standard Chartered – Annual Report 2022 Directors’ report Performance outcome for 2020–22 LTIP awards (audited) The single total figure of remuneration table on page 198 shows that LTIP awards will vest in March 2023 with an estimated value of GBP1,024,408 and GBP634,488 for Bill and Andy, respectively. These LTIP awards were granted in 2020 with a face value of 120 per cent of fixed pay, to incent iv ise the achievement of the Group’s refreshed strategic prior it ies over the three-year period 2020 to 2022. The awards are share-based and were subject to the satisfact ion of stretch ing RoTE, TSR and strategic performance measures over three years. The targets for these measures were set at the beginn ing of 2020 and have not been adjusted to reflect the challenges caused by the onset of the pandemic. A conduct gateway requirement must be met before any awards vest. The Committee concluded that Bill and Andy exhib ited appropr iate 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 2023 but is estimated not to have been achieved. The Committee considered performance against the strategic proof points set out in the table below and determined that vesting of 22 per cent was appropriate. The share price used to estimate the value of vesting of the 2020–22 LTIP awards is higher than the share price on the award date of GBP5.196 and the value attributable to share price growth for Bill and Andy can be seen in the single total figure of remuneration on the next page. The Committee considered carefully the vesting of the LTIP awards, taking account of the share price at grant, which was 15 per cent lower than the share price of the awards made in the previous year. The stretching targets set at the beginn ing of 2020 were not adjusted to reflect the impact of the pandemic, and the share price increase to the end of the performance period has been broadly consistent with the improvement in underlying performance. Therefore, the Committee considers the values to be delivered remain appropriate, and are not a windfall. The awards will vest pro rata over 2023 to 2027 and the shares will be subject to a 12 month retention period post-vesting. Malus and clawback provis ions apply. Measure Weight ing Performance for min imum vest ing (25%) Performance for maximum vesting (100%) Assessment of achievement Vesting outcome RoTE 1 in 2022 with a CET1 underpin One-third 8.5% 11.0% RoTE 8% and CET1 14% 0% Relative TSR performance against peer group One-third Median Upper quartile Performance currently estimated below median. TSR performance will be measured in March 2023 0% Strategic measures One-third Improved performance against our strategic prior it ies 22% Total 2020–22 LTIP awards vesting outcome 22% Strategic measure Proof point Assessment Deliver our network and grow our affluent business Improve client satisfact ion rat ing Client satisfact ion metr ics across Corporate, Commercial & Institut ional Bank ing and Consumer, Private & Business Banking have met or exceeded targets in each year of the plan. Deliver network growth in target segments Exceeded targets in 2022, with good performance in areas of strategic focus, following slower progress in 2021 and 2020. Deliver affluent growth in target markets Progress made in 2022 but metric impacted by the pandemic restrict ions and the onset of the Russia-Ukraine conflict during the performance period. Transform and disrupt with dig ital Successfully deliver key dig ital partnerships, platforms and technologies Dig ital ventures adversely impacted in 2022 by market volatil ity and delays in external approvals. Strong performance in earlier years. Improve data analytics to develop new products and attract new clients Strong performance across the three year period, with targets achieved in advance of the performance period end. Purpose and people Improve divers ity, employee engagement and culture of inclus ion Improved employee inclus ion and engagement outcomes in 2022. Increase in the number of females in senior roles by 3.6ppt over the three years. Successfully embed sustainable and responsible practices in relation to climate, infrastructure, environment and community engagements Sign ificant outperformance in sustainable finance revenues deliver ing USD500m in challenging markets, making material progress towards USD300bn target. Delivered on 2022 net zero public commitment milestones, fulfilled leading roles in key industry in it iat ives/standards sett ing and received A- ‘leadership status’ from CDP, recognis ing Standard Chartered among very few banks for its climate action. Risk and controls Successfully deliver milestones with in the r isk management plan A sign ificant push in 2022 to improve risk and controls following two years of slower progress. Non-financial r isk reduction reflects a strong performance in 2022 against stretching targets and an improvement on previous years. Information and cyber security remedial actions from earlier years were extended in subsequent periods; however, an improvement in 2022 with risk reduction across key control domains. Audit targets were achieved in all years. Enhance compliance control effectiveness Mainta in r isk profile with in Group’s risk appetite 1. RoTE 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 investment transactions driven by strategic intent and infrequent/exceptional transactions that are sign ificant or mater ial 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 imum regulatory level as at 31 December 2022 (taking into account any transit ion rules or mater ial changes in regulatory rules). ![]() 198 Standard Chartered – Annual Report 2022 Directors’ report Directors’ remuneration report Single total figure of remuneration for 2022 (audited) The following table sets out the single total figure of remuneration for 2022 for the CEO and the CFO. The single figure consists of salary, pension, benefits and annual incent ives rece ivable in respect of 2022 and the estimated values of 2020–22 LTIP awards vesting. The LTIP value is based on the outcome of awards made in 2020 and does not include the forward-looking awards to be made in March 2023, due to vest in early 2026. The single figure for Bill and Andy represents a year-on-year increase of 16 and 13 per cent respectively, reflecting the improved performance achieved. £000 Bill Winters Andy Halford 2022 2021 2022 2021 Salary 2,418 2,370 1,546 1,515 Pension 245 237 154 152 Benefits 297 165 133 107 Total fixed remuneration 2,960 2,772 1,833 1,774 Annual incent ive award 1,499 1,189 945 760 Vesting of LTIP award Value of vesting awards based on performance 921 779 570 498 Value of vesting awards based on share price growth 103 64 Total variable remuneration 2,523 1,968 1,579 1,258 Single total figure of remuneration 5,483 4,740 3,412 3,032 Notes to the single total figure of remuneration table Salary • 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. • Bill and Andy’s salaries were increased 2.7 per cent effective 1 April 2022. Pension • Pension is set as a percentage of salary and can be delivered as a contribut ion to the UK pens ion fund or paid as a cash allowance. • Pension for Bill is delivered as a cash allowance and a GBP4,000 contribut ion to the UK pens ion fund, and for Andy the pension is delivered as a cash allowance. Benefits • Bill has the use of a vehicle and driver. This is a role-based provis ion g iven the executive role and the associated security and privacy requirements. • Bill is entitled to a contribut ion to the preparat ion 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 2021/22 and 2020/21 respectively. • The increase in benefits compared with 2021 reflects the resumption of business travel to pre-pandemic levels, an increase in tax preparation assistance given the complexity in fil ings and an increase in benefit premiums. Fixed remuneration • Fixed remuneration is the total of salary, pension and benefits. Annual incent ive • Executive directors’ annual incent ive awards are del ivered 50 per cent in cash and 50 per cent in shares, subject to a min imum 12 month retent ion period. • The detail of how directors’ annual incent ive awards are determ ined is set out on pages 194 to 196. Vesting of LTIP awards • Further details on the performance outcome for the 2020–22 LTIP are provided on page 197. • The values of the LTIP 2019–21 vesting awards for 2021 have been restated based on the actual share price of £5.09 when the awards vested in March 2022. No payments were made to, or in respect of, past directors in the year in excess of the min imum threshold of GBP50,000, set for this purpose. ![]() 199 Standard Chartered – Annual Report 2022 Directors’ report Executive directors’ shareholdings and share interests includ ing share awards (aud ited) Shares that count towards the executive director shareholding requirements are benefic ially owned shares, includ ing vested share awards subject to a retention period, and unvested share awards for which performance condit ions have been sat isf ied (on a net-of-tax basis). As of 31 December 2022, both Bill and Andy sign ificantly exceeded the ir shareholding requirement. Shares purchased voluntarily from their own funds are equivalent to 79 and 58 per cent of salary for Bill and Andy, respectively. The following table summarises the executive directors’ shareholdings and share interests: Shares held beneficially 1,2,3 Unvested share awards not subject to performance measures (net of tax) 4,5 Total shares counting towards shareholding requirement Shareholding requirement as a percentage of salary Salary Value of shares counting towards shareholding requirement as a percentage of salary 1 Unvested share awards subject to performance measures Bill Winters 2,315,677 175,196 2,490,873 250% £2,434,000 637% 2,315,512 Andy Halford 989,936 111,527 1,101,463 200% £1,556,000 441% 1,465,157 1 All figures are as of 31 December 2022. There were no changes to any executive directors’ interests in shares between 31 December 2022 and 15 February 2023. No director has either: (i) an interest in company preference shares or loan stocks of any subsid iary or assoc iated undertaking of the Group; or (i i) any corporate interests in Company ordinary shares. The closing share price on 31 December 2022 was £6.224. 2 The beneficial interests of directors and connected persons in the shares of the Company are set out above. The executive directors do not have any non-beneficial interests in the Company’s shares. None of the executive directors used shares as collateral for any loans. 3 The salary and shares held beneficially include shares awarded to deliver the executive directors’ salary shares. 4 As Bill and Andy are both UK taxpayers, zero per cent tax is assumed to apply to Sharesave (as Sharesave is a UK tax qualif ied 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 ions at 2 per cent) – rates may change. 5 The figures reported in the 2022 half year report were calculated assuming 48.25 per cent tax (marginal combined PAYE rate of income tax at 45 per cent and employee social security contribut ions at 3.25 per cent). As the Health and Soc ial Care Levy was cancelled on 6 November 2022 the tax rate assumed to apply to unvested share awards of 47 per cent has been used. LTIP awards for the executive directors to be granted in 2023 The size of the LTIP award has been determined based on Group and ind iv idual performance during the year. Awards for the 2022 performance year will be granted to Bill and Andy in March 2023 with a value of 132 per cent of salary (GBP3.2 mill ion and GBP2.1 mill ion, respect ively), the maximum amount under the 2022 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 it ies, and continue to incorporate measures that reflect our three Stands. The sustainab il ity measures have been selected based on their level of impact for the Group and wider society and abil ity to dr ive financ ial returns in the medium term. Details of the sustainab il ity and other strategic measures and targets are shown in the table below and are disclosed prospectively, except where the internal targets are considered commercially sensit ive. Deta ils of achievement against targets will be disclosed retrospectively at the end of the performance period. The RoTE target range for the awards is increased to 10 to 12.5 per cent, from 7 to 11 per cent for the 2022–24 awards. A narrower range of 2.5 ppts is considered appropriate due to the increase in target range which reflects the progress in RoTE achieved in 2022 and our increased ambit ion of 11 per cent by 2024. The peer group of companies selected for the calculation of the relative TSR performance are companies with generally comparable business activ it ies, size or geographic spread to Standard Chartered or companies with which we compete for investor funds and talent. The peer group is intended to be representative of our geographic presence and business operations. The TSR peer group for the 2023–25 LTIP awards will be the same as for the 2022–24 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 it the award of d iv idend equ ivalent shares on vesting. The number of shares awarded in respect of the LTIP will take into account the lack of div idend equ ivalents (calculated by reference to market consensus div idend y ield) such that the overall market value of the award is mainta ined. These awards will vest in five annual tranches beginn ing after the th ird anniversary of the grant (i.e. March 2026 to March 2030) subject to meeting the performance measures set out below at the end of 2025. All vested shares are subject to a 12 month retention period. The performance measures for the 2023–25 LTIP awards are set out in the table on page 200. Peer group for the TSR measure in the 2023–25 LTIP Banco Santander Credit Suisse KB Financ ial Group Bank of America DBS Group Oversea Chinese Banking Corporation Bank of China Deutsche Bank Société Générale Bank of East Asia HSBC Standard Bank Barclays ICBC State Bank of India BNP Paribas ICICI UBS Cit igroup JPMorgan Chase United Overseas Bank ![]() 200 Standard Chartered – Annual Report 2022 Directors’ report Directors’ remuneration report Performance measures for 2023–25 LTIP awards Measure Weight ing Amount vesting (as a % of total award) Threshold performance target Maximum performance target 1. RoTE 1 in 2025 with a CET1 2 underpin of the higher of 13% or the min imum regulatory requirement 30% Maximum – 30% Threshold – 7.5% Below threshold – 0% 10% 12.5% If RoTE reaches 10 per cent then 7.5 per cent of the award vests. If RoTE reaches 12.5 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 ioned immed iately above and below it and straight-line vesting applies. 3. Sustainab il ity 15% Maximum – 15% Min imum – 0% • Sustainable finance revenues in excess of $1bn by 2025 • Delivery of the net zero roadmap • Contribut ion to the advancement of the susta inab il ity ecosystem 4. Other strategic measures 25% Maximum – 25% Min imum – 0% Our Stands • Uplift ing part ic ipat ion: increase access to financ ial serv ices and lending to female entrepreneurs and SMEs • Resetting globalisat ion: create d ivers ity and inclus ion suppl ier plans; bank an increased proportion of our clients’ internat ional and domest ic networks of suppliers and buyers Clients • Improve client satisfact ion rat ing evidenced in surveys and internal benchmarks • Deliver growth in affluent wealth client activ ity • Deliver network income growth in Corporate, Commercial & Institut ional Banking • Increase China onshore and offshore profit before tax in line with externally disclosed targets • Drive dig ital ventures growth w ith meaningful value from dig ital creat ions Enablers (Ways of working and people) • Ways of working: organisat ional effect iveness - reducing complexity • People: improve employee net promoter score; increase divers ity; increase our culture of inclus ion Risk and controls • Reduction in non-financ ial r isk, evaluating the elevated residual risks to allow for effective prior it isat ion and g ive credit for risk reduction • An assessment of the proportion of audit issues ident ified by the business/region/function compared to total issues raised, reflecting drive to improve risk awareness and culture across the Bank 1 Underlying RoTE represents the ratio of the current year’s underlying operating profit attributable to ordinary shareholders to the weighted average ordinary shareholders’ equity less the average goodwill and intang ibles for the report ing period. Underlying RoTE normally excludes regulatory fines and certain other adjustments but, for remuneration purposes, such adjustments are subject to review by the Committee. 2 The CET1 underpin will be set at the higher of 13 per cent or the min imum regulatory level as of 31 December 2025. In add it ion, the Comm ittee has the discret ion 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. Total variable remuneration awarded to directors in respect of 2022 (audited) Bill Winters Andy Halford 2022 2021 1 2022 2021 1 Annual incent ive (£000) 1,499 1,189 945 760 Annual incent ive as a percentage of salary 62% 50% 61% 50% LTIP award (value of shares subject to performance condit ions) (£000) 2 3,213 3,128 2,054 2,000 LTIP award as a percentage of salary 132% 132% 132% 132% Total variable remuneration (£000) 4,712 4,317 2,999 2,760 Total variable remuneration as a percentage of salary 194% 182% 193% 182% 1. 2021 variable remuneration figures have been recalculated as a percentage of salary, in line with the 2022 Directors’ remuneration policy approach. 2. LTIP awards for the 2022 performance year will be granted to executive directors in March 2023 and are based on 2022 salary. ![]() 201 Standard Chartered – Annual Report 2022 Directors’ report Service contracts for executive directors Copies of the executive directors’ service contracts are available for inspect ion at the Group’s reg istered 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 ion of the 2019 remuneration policy and the change to pension contribut ion. Execut ive directors are permitted to hold non-executive directorsh ip pos it ions in other organisat ions. Where such appo intments 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. Andy stepped down from the Board of Marks and Spencer Group plc on 31 December 2022. Date of Standard Chartered employment contract Details of any non-executive directorsh ip Fees retained for any non-executive directorsh ip (local currency) Bill Winters 1 January 2020 Novartis International AG CHF360,000 Andy Halford 1 January 2020 Marks and Spencer Group plc GBP104,298 Single figure of remuneration for the Chairman and INEDs (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 2022 and 2021. The INEDs’ 2022 benefit figures are in respect of the 2021/22 tax year and the 2021 benefit figures are in respect of the 2020/21 tax year to provide consistency with the reporting of sim ilar benefits in previous years and with those received by executive directors. Fees £000 Benefits £000 1 Total £000 Shares beneficially held as at 31 December 2022 2 2022 2021 2022 2021 2022 2021 Group Chairman José Viñals 1,250 1,250 45 17 1,295 1,267 45,000 Current INEDs Shir ish Apte 3 128 0 0 0 128 0 2,000 David Conner 4 233 255 1 1 234 256 10,000 Byron Grote 5 156 170 0 0 156 170 – Christ ine Hodgson, CBE 289 325 0 0 289 325 2,571 Gay Huey Evans, CBE 155 200 1 0 156 200 2,615 Jackie Hunt 6 43 0 0 0 43 0 2,000 Naguib Kheraj 7 96 328 1 0 97 328 – Robin Lawther, CBE 8 93 0 0 0 93 0 2,000 Maria Ramos 9 239 190 0 0 239 190 2,000 Phil Rivett 234 225 0 0 234 225 2,128 David Tang 170 170 1 1 171 171 2,000 Carlson Tong 183 205 0 0 183 205 2,000 Jasmine Whitbread 210 210 0 0 210 210 3,615 1. The costs of benefits (and any associated tax costs) are paid by the Group. 2. The beneficial 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-beneficial 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 iary or assoc iated undertaking of the Group; or (i i) any corporate interests in the Company’s ordinary shares. All figures are as of 31 December 2022 or on the retirement of a director unless otherwise stated. 3. Shir ish Apte was appo inted to the Board on 4 May 2022. 4. David Conner’s fee includes his role on the Combined US Operations Risk Committee. 5. Byron Grote stepped down from the Board on 30 November 2022 and we are no longer tracking his shareholding. His reported fee for 2022 of £156,000 is in respect of the period of 1 January 2022 to 30 November 2022. 6. Jackie Hunt was appointed to the Board on 1 October 2022. 7. Naguib Kheraj stepped down from the Board on 30 April 2022 and we are no longer tracking his shareholding. His reported fee for 2022 of £96,000 is in respect of the period of 1 January 2022 to 30 April 2022. His benefits for 2022 of £1,000 are in respect of the period from 6 April 2021 to 5 April 2022, in line with the approach to disclose INED benefits in respect of the relevant tax year. 8. Robin Lawther was appointed to the Board on 1 July 2022. 9. The increase in fees for Maria Ramos is due to changes in Board and Committee responsib il it ies dur ing the year. INEDs’ letters of appointment The INEDs have letters of appointment, which are available for inspect ion at the Group’s reg istered office. Details of the INEDs’ appointments are set out on pages 138 to 142. INEDs are appointed for a period of one year, unless terminated by either party with three months’ notice. ![]() 202 Standard Chartered – Annual Report 2022 Directors’ report Directors’ remuneration report Remuneration for the executive directors in 2023 will be in line with our directors’ remuneration policy, approved at the AGM in May 2022, as summarised on pages 188 and 189 of this report and set out in full on pages 161 to 166 of the 2021 Annual Report. The 2022 policy is also set out on our website: sc.com The key elements of remuneration for 2023 include salary (delivered in cash and shares), pension, benefits, an annual incent ive and an LTIP award. A port ion of the executive directors’ salaries is paid in shares to strengthen shareholder alignment. Bill’s pension is delivered as a contribut ion to a defined contribut ion 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 ing any changes to the scope or responsib il ity of the role, alignment with market- competit ive levels, and cons iderat ion of the average salary increases made across the Group. In response to the global cost of liv ing challenges, salary increases across the Group have been focused towards jun ior employees and are generally higher than in 2022. Taking into account the average 2023 salary increase awarded to the Group’s UK and global workforce, the Committee has determined that an increase is appropriate and has awarded salary increases of 3.4 per cent to Bill and Andy. In line with the approach used for all senior roles, these increases are 50 per cent lower than the average increase awarded to other UK employees. This increases their salaries from GBP2,434,000 to GBP2,517,000 and from GBP1,556,000 to GBP1,609,000 respectively. Details of fixed pay for Bill and Andy with effect from 1 April 2023 are set out below. £000 Bill Winters Andy Halford 2023 2022 % change 2023 2022 % change Salary 2,517 2,434 3.4 1,609 1,556 3.4 of which cash 1,258 1,217 3.4 1,078 1,043 3.4 of which shares 1,259 1,217 3.4 531 513 3.4 Pension 252 243 3.4 161 156 3.4 Total fixed pay 2,769 2,677 3.4 1,770 1,712 3.4 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 ion of the 2023 remunerat ion policy The charts below illustrate the potential outcomes under our directors’ remuneration policy (i.e. for awards that would be made in March 2023, based on 2022 performance and fixed remuneration with effect from 1 April 2023). The charts show potential remuneration outcomes for each executive director in four performance scenarios: min imum, on-target, maximum and maximum with 50 per cent share price appreciat ion, 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 2021 and 2022 single total figures of remuneration for Bill and Andy. #### 2023 policy implementation for directors ![]() 203 Standard Chartered – Annual Report 2022 Directors’ report Executive director remuneration (£000) Bill Winters 1,000 0 2,000 3,000 4,000 5,000 8,000 10,000 7,000 6,000 12,000 11,000 9,000 Fixed remuneration Annual incent ive LTIP Min imum 3,065 100% On-target 5,834 53% 19% 28% Maximum 8,603 35% 26% 39% 10,264 29% 22% 49% 2021 single figure 2022 single figure 4,740 59% 25% 16% 5,483 54% 27% 19% Maximum + 50% share price increase Andy Halford Min imum 1,903 100% On-target 3,673 52% 19% 29% Maximum 5,442 35% 26% 39% 6,504 29% 22% 49% 2021 single figure 2022 single figure 3,032 59% 25% 16% 3,412 53% 28% 19% Maximum + 50% share price increase Definit ions for the chart above 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 2023 • Benefits – based on 2022 single figure, actual fixed remuneration in 2023 will be dependent on the cost of benefits • Pension – 10 per cent of salary as of 1 April 2023 Incentives Min imum • No annual incent ive is awarded • No LTIP award vests On-target • Annual incent ive 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 ive 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 ive 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 ion in the value of the vested LTIP award since time of grant 2021 single figure Fixed remuneration • Salary – received in 2021 • Benefits – received in 2020/21 tax year • Pension – contribut ion/cash allowance rece ived in 2021 Incentives • Annual incent ive – rece ived in respect of 2021 performance year • LTIP – actual vesting of 2019–21 LTIP award 2022 single figure Fixed remuneration • Salary – received in 2022 • Benefits – received in 2021/22 tax year • Pension – contribut ion/cash allowance rece ived in 2022 Incentives • Annual incent ive – rece ived in respect of 2022 performance year • LTIP – expected vesting of 2020–22 LTIP award ![]() 204 Standard Chartered – Annual Report 2022 Directors’ report Directors’ remuneration report 2023 annual incent ive scorecard Our annual incent ive scorecard reflects our strateg ic prior it ies. The targets are set annually by the Committee and take into account the Group’s annual financial plan and strateg ic prior it ies for the next few years which reflect the evolving macroeconomic outlook. The Committee will also consider progress demonstrated against our Stands in the determinat ion of the overall scorecard outcome. From 2022, to simpl ify the process, the Comm ittee embedded the assessment of personal performance into the annual incent ive scorecard assessment, account ing for a maximum weight ing of 10 per cent. F inanc ial measures cont inue to make up 50 per cent of the annual incent ive scorecard. Strateg ic and personal measures are assessed by the Committee using a quantitat ive and qual itat ive framework. The Committee considers such targets to be commercially sensit ive and that it would be detrimental to the interests of the Group to disclose them before the end of the financ ial year. As such, targets w ill be disclosed retrospectively in the 2023 Annual Report alongside the level of performance achieved. Step 1: Conduct gateway requirement to be met in order to be elig ible for any annual incent ive Appropriate level of ind iv idual valued behaviours and conduct exhib ited dur ing the course of the year Step 2: Measurement of performance against financ ial and other strateg ic and personal measures Financ ial measures Weight ing Target Income 1 10% • Targets to be disclosed retrospectively Costs 10% RoTE 2 with a CET1 3 underpin of the higher of 13% or the min imum regulatory requirement 30% Other strategic measures Weight ing Target Clients (network, affluent, mass, ventures) 12% • Improve client satisfact ion and cl ient experience ratings. • Deliver growth in qualif ied cl ients across Affluent, Private Banking, and Wealth Management activ ity. • Deliver network income growth in Corporate, Commercial & Institut ional Bank ing. • Grow value of Dig ital Ventures. • Mass market Retail growth through new to bank personal customers. Sustainab il ity 8% • Progress against the Group’s sustainable finance revenue targets and its aim to achieve net zero by 2050. • Improve community engagement through employee volunteering partic ipat ion. Enablers (ways of working and people) 8% • Grow proportion of dig itally in it iated transactions and dig ital sales adopt ion. • Improve end-to-end speed to deliver change (from idea formation to commercial isat ion). • Improve organisat ional effect iveness. • Improve employee engagement, divers ity and inclus ion. Risk and controls 12% • Non-financial r isk reduction. • Self-ident ification of aud it issues. Personal performance measures Weight ing Target Bill - performance goals 10% • Continue personal push for innovat ion and s impl ification across the Group, and grow other sources of income in our footprint. • Further improve the Group’s risk and control framework, accelerating progress and embedding a robust preventative risk culture. • Continue drive for a high-performance culture, includ ing the development of internal talent and effective succession planning. Andy - performance goals • Drive collaboration with in the F inance function across segments and markets. • Continue to improve financ ial report ing procedures. • Deliver the focus on achiev ing target RoTE and other strateg ic object ives. 1 The Group’s statutory performance is adjusted for profits or losses of a capital nature, amounts consequent to investment transactions driven by strategic intent, other infrequent and/or exceptional transactions that are sign ificant or mater ial in the context of the Group’s normal business earnings for the period and items which management and investors would ordinar ily ident ify separately when assess ing underlying performance period by period. 2 Underlying RoTE represents the ratio of the current year’s underlying operating profit attributable to ordinary shareholders to the weighted average ordinary shareholders’ equity less the average goodwill and intang ibles for the report ing period. Underlying RoTE normally excludes regulatory fines and certain other adjustments but, for remuneration purposes, such adjustments are subject to review by the Committee. 3 The CET1 underpin will be set at the higher of 13 per cent or the min imum regulatory level as at 31 December 2023. In add it ion, the Comm ittee has the discret ion 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. ![]() 205 Standard Chartered – Annual Report 2022 Directors’ report INED fees The Board regularly reviews the fee levels, consider ing market data and the dut ies, time commitment and contribut ion expected for the PLC Board and, where appropriate, subsid iary boards, w ith the last increase taking place in 2019. The Chairman’s fee has remained unchanged since his appointment in 2016. In recent years, the demands made of our Chairman and INEDs has increased in line with greater regulatory expectations, and an increase in the amount of learning and train ing required. Consider ing th is alongside the high inflat ionary pressures be ing faced in a number of our markets the Board determined an increase in fee levels was appropriate. The revised fees are set out in the table below. The Chairman and the INEDs are elig ible for benefits in line with the directors’ remuneration policy. Neither the Chairman nor the INEDs receive any performance-related remuneration. 1 January 2022 £000 1 January 2023 £000 Group Chairman 1 1,250 1,293 Board Member 105 110 Addit ional respons ib il it ies Deputy Chairman 2 75 – Senior Independent Director 40 45 Chair Audit Committee 70 80 Board Risk Committee 70 80 Remuneration Committee 70 80 Board Financ ial Cr ime Risk Committee 3 60 – Culture and Sustainab il ity Committee 60 70 Membership Audit Committee 35 40 Board Risk Committee 35 40 Remuneration Committee 30 40 Board Financ ial Cr ime Risk Committee 3 30 – Culture and Sustainab il ity Committee 30 35 Governance and Nominat ion Comm ittee 15 17 1 The Group Chairman receives a stand-alone fee which is inclus ive of all serv ices (includ ing Board and Comm ittee responsib il it ies). 2 The Group does not currently util ise the role of Deputy Cha irman and does not plan to do so. 3 The Board Financ ial Cr ime Risk Committee was retired during 2022, with responsib il it ies reallocated to a comb inat ion of the Board, Aud it and Board Risk Committees. ![]() 206 Standard Chartered – Annual Report 2022 Directors’ report Addit ional remunerat ion disclosures #### Additional remuneration disclosures The following disclosures provide further informat ion and context in relation to executive director remuneration and remuneration for the wider workforce as required by company reporting regulations, financ ial serv ices regulations, corporate governance guidance and inst itut ional investor guidel ines. 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 ited. Appropriateness of executive directors’ remuneration Our approach to remuneration is consistent for all employees and is designed to help ensure pay is competit ive and in line with the princ iples of our Fa ir 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 pages 188 and 189. 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 ional banks to ensure that it remains appropriately competit ive. Market data used in benchmarking is based on the latest published report and accounts. • In addit ion, we cons ider 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 addit ion, we rev iew annually the year-on- year percentage change in remuneration for the executive directors and the wider employee population. • Our incent ive plans have a clear l ink to Group and business performance, through published scorecards. The same Group scorecard is used in the assessment of incent ives for colleagues includ ing the execut ive directors. • Incentive decis ions for colleagues, includ ing the execut ive directors, are also driven by the assessment of ind iv idual performance includ ing ach ievements against personal object ives and conduct. • The remuneration structure for executive directors was considered as part of the 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 ion, we rev iew the median ratio against UK FTSE and industry peer averages. The relationsh ip between the remunerat ion 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 – £000 Pay ratio P25 P50 P75 P25 P50 P75 2022 A 5,483 95 145 228 58:1 38:1 24:1 2021 A 4,740 92 139 215 52:1 34:1 22:1 2020 A 3,926 84 128 199 46:1 31:1 20:1 2019 A 5,360 83 128 212 65:1 42:1 25:1 2018 A 6,287 78 124 208 80:1 51:1 30:1 2017 A 4,683 76 121 203 61:1 39:1 23:1 The ratio will depend materially on long-term incent ive outcomes each year for the CEO, and accord ingly may fluctuate. Therefore, the Committee also discloses the pay ratios covering salary and salary plus annual incent ive, as the majority of UK employees do not typically receive LTIP awards. Addit ional rat ios of pay based on salary and salary plus annual incent ive Salary CEO £000 UK employee – £000 Pay ratio P25 P50 P75 P25 P50 P75 2022 2,418 72 87 138 34:1 28:1 18:1 2021 2,370 68 100 136 35:1 24:1 17:1 2020 2,370 63 93 116 38:1 25:1 20:1 2019 2,353 65 90 128 36:1 26:1 18:1 2018 2,300 59 86 142 39:1 27:1 16:1 2017 2,300 55 81 124 42:1 28:1 19:1 Salary plus annual incent ive 2022 3,917 84 123 202 47:1 32:1 19:1 2021 3,559 79 122 186 45:1 29:1 19:1 2020 2,756 74 104 175 37:1 26:1 16:1 2019 3,604 73 109 187 49:1 33:1 19:1 2018 3,691 72 105 183 52:1 35:1 20:1 2017 3,978 69 103 182 58:1 39:1 22:1 ![]() 207 Standard Chartered – Annual Report 2022 Directors’ report • 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, joiners 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 ial year and variable remuneration relating to the performance year) and data for insured benefits are based on notional premiums. No other calculation adjustments or assumptions have been made. • CEO pay is as per the single total figure of remuneration for 2022 and restated for 2021 to take account of the actual LTIP vesting in 2022. Further informat ion on the s ingle total figure is on page 198. The 2022 ratio will be restated in the 2023 directors’ remuneration report to take account of the final LTIP vesting data for elig ible employees and for the CEO. • The Committee has considered the data for the three ind iv iduals ident ified at the lower quart ile, median and upper quartile for 2022 and believes that it is a fair reflection of pay among the UK employee population. Each ind iv idual ident ified was a full-time employee during the year and received remuneration in line with the Group remuneration policy, and none received exceptional pay. • 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 and shareholder interest. Partic ipat ion is 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 ified th is year are not partic ipants in the LTIP. 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 ical levels of remunerat ion of the CEO over the 10 years ended 31 December 2022 for comparison. The FTSE 100 provides a broad comparison group against which shareholders may measure their relative returns. 0 1 2 3 4 5 6 7 8 9 10 Jan 23 Jan 22 Jan 21 Jan 20 Jan 19 Jan 18 Jan 17 Jan 16 Jan 16 Jan 15 Jan 14 Jan 13 0 20 40 60 80 100 120 140 160 180 200 Value of £100 invested on 31 December 2012 CEO total remuneration (£ mill ion) CEO total remuneration (Peter Sands) CEO total remuneration (Bill Winters) Standard Chartered FTSE 100 Comparator median The table below shows the single figure of total remuneration for the CEO since 2013 and the variable remuneration delivered as a percentage of maximum opportunity. 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Single figure of total remuneration £000 Peter Sands (CEO until 10 June 2015) 4,378 3,093 1,290 – – – – – – – Bill Winters (appointed CEO on 10 June 2015) – – 8,399 3,392 4,683 6,287 5,360 3,926 4,740 5,483 Annual incent ive as a percentage of max imum opportunity Peter Sands 50% 0% 0% – – – – – – – Bill Winters – – 0% 45% 76% 63% 55% 18.5% 57% 70% Vesting of LTIP awards as a percentage of maximum opportunity Peter Sands 33% 10% 0% 0% – – – – – – Bill Winters – – – – – 27% 38% 26% 23% 22% • Bill’s single figure of total remuneration in 2015 includes his buyout award of £6.5 mill ion to compensate for the forfe iture of share interests on jo in ing from his previous employment. • The 2021 single figure for Bill has been restated based on the actual vesting and share price when the 2019–21 LTIP awards vested in March 2022. ![]() 208 Standard Chartered – Annual Report 2022 Directors’ report Addit ional remunerat ion disclosures Annual percentage change in remuneration of directors and UK employees In line with our Fair Pay Charter, we monitor year-on-year changes in salary, benefits and annual incent ives for the CEO and the wider workforce. In addit ion, as requ ired under the Shareholder Rights Direct ive (part of UK Compan ies 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 iv iduals employed by Standard Chartered PLC (the parent company). As no ind iv iduals are employed by Standard Chartered PLC (they are employed by legal entit ies wh ich 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 ive % change 2022 2021 2020 2022 2021 2020 2022 2021 2020 CEO Bill Winters 1 2.0 0.0 0.7 79.8 (26.5) (2.9) 26.1 208.1 (69.2) CFO Andy Halford 2.0 0.7 3.7 23.9 (5.6) 30.2 24.3 208.9 (68.2) Group Chairman José Viñals 1 0.0 0.0 0.0 170.2 (61.5) (11.7) – – – Current INEDs – – – Shir ish Apte 2 – – – – – – – – – David Conner (8.8) (6.7) (0.6) 11.1 5.9 (57.5) – – – Byron Grote 2 – 0.0 0.0 – 0.0 0.0 – – – Christ ine Hodgson, CBE (11.0) 0.0 0.0 0.0 (100.0) 28.2 – – – Gay Huey Evans, CBE (22.5) 0.0 0.0 100.0 (100.0) 233.9 – – – Jackie Hunt 2 – – – – – – – – – Naguib Kheraj 2 – (9.0) 0.0 – (100.0) 7.9 – – – Robin Lawther, CBE 2 – – – – – – – – – Maria Ramos 3 25.9 – – 0.0 – – – – – Phil Rivett 3.9 – – 0.0 – – – – – David Tang 0.0 18.3 – 11.1 (82.3) – – – – Carlson Tong (11.0) 0.0 – 0.0 (100.0) – – – – Jasmine Whitbread 0.0 0.0 0.0 0.0 (100.0) (49.2) – – – Workforce Average FTE UK employee 4,5 3.3 3.1 3.8 (7.0) (2.0) 2.9 14.3 38.2 (22.1) 1. The increase in 2022 taxable benefits for Bill Winters and José Viñals are primar ily due to the resumpt ion of business travel to pre-pandemic levels. 2. In 2022, Naguib Kheraj and Byron Grote stepped down from the Board on 30 April and 30 November respectively. Shir ish Apte, Rob in Lawther and Jackie Hunt were appointed to the Board on 4 May, 1 July and 1 October respectively. 3. The increase in fees for Maria Ramos is due to changes in Board and Committee responsib il it ies dur ing the year. 4. Employee data is based on full-time equivalent pay for UK employees as of 31 December of the relevant year. This data excludes leavers, jo iners 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 2021 and implemented in 2022. 5. Average 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. For the CEO, CFO, the Group Chairman and INEDs, the data the changes relate to are set out on pages 198 and 201, respectively. The change in taxable benefits relates to the change in the values for the 2021/20, 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 2022 (set out on page 201), 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 ing execut ive directors, are not permitted to engage in any personal investment strategies with regards to their Company shares, includ ing hedg ing against the share price of Company shares. The main features of the outstanding shares and awards are summarised below: Award Performance measures Performance outcome Accrues notional div idends? 1 No. of tranches Tranche splits 2016–18 LTIP 33% RoE 33% TSR 33% Strategic 27% Yes 5 Tranche 1: 50% Tranches 2–5: 12.5% 2017–19 LTIP 38% Yes 5 5 equal tranches 2018–20 LTIP 26% No 5 5 equal tranches 2019–21 LTIP 33% RoTE 33% TSR 33% Strategic 23% No 5 5 equal tranches 2020–22 LTIP 22% No 5 5 equal tranches 2021–23 LTIP 30% RoTE 30% TSR 15% Sustainab il ity 25% Strategic To be assessed at the end of 2023 No 5 5 equal tranches 2022–24 LTIP To be assessed at the end of 2024 No 5 5 equal tranches 1 2016–18 and 2017–19 LTIP awards may receive div idend equ ivalent shares based on div idends declared between grant and vest. From 1 January 2017 remunerat ion regulations for European banks prohib ited the award of d iv idend equ ivalent shares. Therefore, the number of shares awarded in respect of the 2018–20, 2019–21, 2020–22, 2021–23 and 2022-24 LTIP awards took into account the lack of div idend equ ivalents (calculated by reference to market consensus div idend y ield) such that the overall value of the award was mainta ined. ![]() 209 Standard Chartered – Annual Report 2022 Directors’ report Change in interests during the period 1 January to 31 December 2022 (audited) Share award price (£) As of 1 January Awarded 1 Div idends awarded 2 Vested/ exercised 3,4 Lapsed As of 31 December Performance period end Vesting date Bill Winters 5 2016–18 LTIP 5.560 33,506 – 2,517 36,023 – – 11 Mar 2019 4 May 2022 33,507 – – – – 33,507 4 May 2023 2017–19 LTIP 7.450 45,049 – 3,380 48,428 – – 13 Mar 2020 13 Mar 2022 45,049 – – – – 45,049 13 Mar 2023 45,049 – – – – 45,049 13 Mar 2024 2018–20 LTIP 7.782 28,178 – – 28,178 – – 9 Mar 2021 9 Mar 2022 28,178 – – – – 28,178 9 Mar 2023 28,178 – – – – 28,178 9 Mar 2024 28,179 – – – – 28,179 9 Mar 2025 2019–21 LTIP 6.105 133,065 – – 30,604 102,461 – 11 Mar 2022 11 Mar 2022 133,065 – – – 102,461 30,604 11 Mar 2023 133,065 – – – 102,461 30,604 11 Mar 2024 133,065 – – – 102,461 30,604 11 Mar 2025 133,067 – – – 102,462 30,605 11 Mar 2026 2020–22 LTIP 5.196 161,095 – – – – 161,095 9 Mar 2023 9 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 2024 15 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 2022–24 LTIP 4.876 – 151,386 – – – 151,386 14 Mar 2025 14 Mar 2026 – 151,386 – – – 151,386 14 Mar 2027 – 151,386 – – – 151,386 14 Mar 2028 – 151,386 – – – 151,386 14 Mar 2029 – 151,388 – – – 151,388 14 Mar 2030 Andy Halford 4,5 2016–18 LTIP 5.560 20,008 – 1,502 21,510 – – 11 Mar 2019 4 May 2022 20,009 – – – – 20,009 4 May 2023 2017–19 LTIP 7.450 27,888 – 2,094 29,982 – – 13 Mar 2020 13 Mar 2022 27,888 – – – – 27,888 13 Mar 2023 27,890 – – – – 27,890 13 Mar 2024 2018–20 LTIP 7.782 17,448 – – 17,448 – – 9 Mar 2021 9 Mar 2022 17,448 – – – – 17,448 9 Mar 2023 17,448 – – – – 17,448 9 Mar 2024 17,448 – – – – 17,448 9 Mar 2025 2019–21 LTIP 6.105 85,094 – – 19,571 65,523 – 11 Mar 2022 11 Mar 2022 85,094 – – – 65,523 19,571 11 Mar 2023 85,094 – – – 65,523 19,571 11 Mar 2024 85,094 – – – 65,523 19,571 11 Mar 2025 85,096 – – – 65,524 19,572 11 Mar 2026 2020–22 LTIP 5.196 99,976 – – – – 99,976 9 Mar 2023 9 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 2024 15 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 2022-24 LTIP 4.876 – 96,772 – – – 96,772 14 Mar 2025 14 Mar 2026 – 96,772 – – – 96,772 14 Mar 2027 – 96,772 – – – 96,772 14 Mar 2028 – 96,772 – – – 96,772 14 Mar 2029 – 96,773 – – – 96,773 14 Mar 2030 2019 Sharesave 6 4.980 1,807 – – 1,807 – – – 1 Dec 2022 2022 Sharesave 6 4.230 – 2,127 – – – 2,127 – 1 Feb 2026 ![]() 210 Standard Chartered – Annual Report 2022 Directors’ report Addit ional remunerat ion disclosures 1. For the 2022-24 LTIP awards granted to Bill Winters and Andy Halford on 14 March 2022, the values granted were: Bill Winters: £3.1 mill ion; Andy Halford £2.0 mill ion. The number of shares awarded in respect of the LTIP took into account the lack of div idend equ ivalents (calculated by reference to market consensus div idend y ield) such that the overall value of the award was mainta ined. Performance measures apply to 2022-24 LTIP awards. The clos ing price on the day before grant was £4.876. 2. Div idend equ ivalent shares may be awarded on vesting for awards granted prior to 1 January 2018. On 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 idend for 2019. D iv idend equ ivalent shares allocated to the 2016-18 LTIP and 2017-19 awards vesting in 2022 did not include any shares relating to the cancelled div idend. 3. Shares (before tax) were delivered to Bill Winters and Andy Halford from the vesting element of LTIP awards. The number of shares and the closing share price on the day before the shares were delivered were as follows: 2016-18 LTIP: 6 May 2022, 36,023 shares delivered to Bill Winters and 21,510 shares delivered to Andy Halford. Previous day closing share price: £5.65. 2017-19 LTIP: 14 March 2022, 48,428 shares delivered to Bill Winters and 29,982 shares delivered to Andy Halford. Previous day closing share price: £4.876. 2018-20 LTIP: 10 March 2022, 28,178 shares delivered to Bill Winters and 17448 shares delivered to Andy Halford. Previous day closing share price: £4.931. 2019-21 LTIP: 21 March 2022, 30,604 shares delivered to Bill Winters and 19,571 shares delivered to Andy Halford. Previous day closing share price: £5.064. 4. Andy Halford chose to partic ipant in the 2022 Sharesave. This unvested option was granted on 28 November 2022 under the 2013 Plan – to exercise this option, Andy has to pay an exercise price of £4.23 per share, which has been discounted by 20 per cent. On 29 December 2022, Andy Halford exercised his 2019 Sharesave option under the 2013 Plan at an exercise price of £4.98 per share. The closing share price on the day before exercise was £6.292. 5. The unvested LTIP awards held by Bill Winters and Andy Halford are condit ional r ights. They do not have to pay towards these awards. Under these awards, shares are delivered on vesting or as soon as practicable thereafter. 6. The vesting date relates to the end of the savings contract and the start of the six month exercise window. As at 31 December 2022, none of the directors had registered an interest or short posit ion 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 ies and Futures Ord inance, or as otherwise notif ied to the Company and The Stock Exchange of Hong Kong L im ited pursuant to the Model Code for Securit ies Transact ions by Directors of Listed Issuers. Histor ical LTIP awards The current posit ion on projected vest ing for unvested LTIP awards from the 2020 and 2021 performance years based on current performance and share price as of 31 December 2022 is set out in the tables below. The TSR peer group for both awards is as set out on page 199. Current posit ion on the 2021–23 LTIP award: projected part ial vesting Measure Weight ing Performance for min imum vest ing (25%) Performance for maximum vesting (100%) 2021–23 LTIP assessment as of 31 December 2022 RoTE in 2023 plus CET1 underpin of the higher of 13% or the min imum regulatory requirement 30% 6.0% 10.0% RoTE between threshold and maximum therefore ind icat ive partial vesting Relative TSR performance against the peer group 30% Median Upper quartile TSR posit ioned between med ian and upper quartile therefore ind icat ive partial vesting Sustainab il ity 15% Targets set for sustainab il ity measures linked to the business strategy Tracking above target performance therefore ind icat ive partial vesting Strategic measures 25% Targets set for strategic measures linked to the business strategy Tracking above target performance therefore ind icat ive partial vesting Current posit ion on the 2022–24 LTIP award: projected part ial vesting Measure Weight ing Performance for min imum vest ing (25%) Performance for maximum vesting (100%) 2022–24 LTIP assessment as of 31 December 2022 RoTE in 2024 plus CET1 underpin of the higher of 13% or the min imum regulatory requirement 30% 7.0% 11.0% RoTE between threshold and maximum therefore ind icat ive partial vesting Relative TSR performance against the peer group 30% Median Upper quartile TSR posit ioned above upper quart ile therefore ind icat ive full vesting Sustainab il ity 15% Targets set for sustainab il ity measures linked to the business strategy Tracking above target performance therefore ind icat ive partial vesting Strategic measures 25% Targets set for strategic measures linked to the business strategy Tracking above target performance therefore ind icat ive partial vesting The Committee assesses the value of LTIP awards on vesting and has the flexib il ity to adjust if the formulaic outcome is not considered to be an appropriate reflection of the performance achieved and to avoid windfall gains. ![]() 211 Standard Chartered – Annual Report 2022 Directors’ report The approach used to determine Group-wide total discret ionary incent ives in 2022 is explained on page 185 of this report. The following tables show the income statement charge for these incent ives. Income statement charge for Group discret ionary incent ives 2022 $m 2021 $m Total discret ionary incent ives 1,589 1,367 Less: discret ionary incent ives that w ill be charged in future years (242) (195) Plus: current year charge for discret ionary incent ives from pr ior years 150 124 Total 1,497 1,296 Year in which income statement is expected to reflect discret ionary incent ives Actual Expected 2021 $m 2022 $m 2023 $m 2024 and beyond $m Discret ionary incent ives awarded for 2020 and earl ier 107 65 24 16 Discret ionary incent ives awarded for 2021 64 85 46 48 Discret ionary incent ives awarded for 2022 – 77 117 125 Total 171 227 187 189 Allocation of the Group’s earnings between stakeholders When consider ing Group var iable 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 ipl ined way over the past five years. The table below shows the distr ibut ion of earnings between stakeholders over the past five years. The amount of corporate tax, includ ing the bank levy, is included in the table because it is a sign ificant payment and illustrates the Group’s contribut ion through the tax system. Actual Allocation 2022 $m 2021 $m 2020 $m 2019 $m 2018 $m 2022 % 2021 % 2020 % 2019 % 2018 % Staff costs 7,618 7,668 6,886 7,122 7,074 80 84 85 74 75 Corporate taxation includ ing levy 1,486 1,138 1,193 1,720 1,763 16 12 15 18 19 Paid to shareholders in div idends 393 375 0 720 561 4 4 0 8 6 Approach to risk adjustment Remuneration is aligned with our long-term interests and the time frame over which financ ial r isks crystallise. All colleagues have a duty to do the right thing and understand which behaviours are acceptable and unacceptable. Risk, control and conduct behaviours are considered and assessed as part of continuous performance management. Risk adjustment What and how? When? Collective adjustments • At a collective level, the Group annual scorecard and LTIP performance criter ia include risk and control measures. • In addit ion, the Comm ittee carries out a detailed review of all risk, control and conduct matters includ ing ongo ing invest igat ions and any matters raised by regulators, and may use its discret ion to adjust scorecard outcomes or remuneration to reflect matters not adequately captured by the scorecards. • Material restatement of the Group’s financ ials • Sign ificant fa ilure in risk management. • Discovery of endemic problems in financ ial reporting. • Financ ial losses, due to a mater ial breach of regulatory guidel ines. • The exercise of regulatory or government action to recapital ise the Group follow ing material financ ial losses. Indiv idual adjustments • Indiv idual r isk adjustments to variable remuneration are considered based on the material ity of the issue. • At an ind iv idual level, risk adjustments can be applied through the reduction in the value of current year variable remuneration or the applicat ion of malus or clawback to unpa id or paid variable remuneration as appropriate, at the Committee’s discret ion. • 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 i) exhib ited inappropr iate behav iours, or (i i i) applied a lack of appropriate supervis ion and due dil igence. • The ind iv idual failed to meet appropriate standards of fitness and propriety. ![]() 212 Standard Chartered – Annual Report 2022 Directors’ report Addit ional remunerat ion disclosures Pillar 3 disclosures on material risk takers’ remuneration and disclosures on the highest paid employees Identif icat ion of material risk takers Indiv iduals have been ident ified as Mater ial Risk Takers (MRTs) in line with the qualitat ive and quant itat ive cr iter ia set by the Prudential Regulation Authority (PRA) and Financ ial Conduct Author ity (FCA). MRTs are ident ified on both a: ( i) Standard Chartered PLC (Group) basis; and (i i) solo level consol idated entit ies under Standard Chartered Bank UK (Solo) bas is. Qualitat ive cr iter ia The qualitat ive cr iter ia broadly ident ifies the follow ing colleagues as Group MRTs: • directors (both executive and non-executive) of Standard Chartered PLC • a member of senior management • senior colleagues with in the aud it, compliance, legal and risk functions • senior colleagues with in Mater ial Business Units (MBUs) • colleagues who are members of specif ic comm ittees • colleagues who are able to in it iate or approve credit risk exposures above a certain threshold and sign off on trading book transactions at or above a specif ic value at r isk lim it • colleagues whose professional activ it ies may have a sign ificant impact on the risk profile of a MBU and are above certain pay thresholds • traders and senior colleagues in Financ ial Markets who earn above certa in pay thresholds. Quantitat ive cr iter ia The quantitat ive cr iter ia ident ifies colleagues: • who have been awarded total remuneration of GBP660,000 or more in the previous financ ial year • whose total remuneration in the preceding year is with in the top 0.3 per cent of the Group or Solo ent ity. For the purpose of the Pillar 3 tables on pages 213 to 215, supervisory function is defined as non-executive directors of Standard Chartered PLC, management function is defined as executive directors of Standard Chartered PLC and other senior management is defined as senior managers under the Senior Manager and Certif icat ion Regime and members of the Group Management Team. Solo MRTs are ident ified based on s im ilar cr iter ia appl ied to the Solo entity. MRT remuneration delivery Remuneration for MRTs was delivered in 2022 through a combinat ion of salary, pens ion, benefits and variable remuneration. Variable remuneration for MRTs is structured in line with the PRA and FCA’s remuneration rules. For the 2022 performance year, the following structure applies: • At least 40 per cent of an MRT’s variable remuneration will be deferred over a min imum per iod of four years and a maximum of seven years depending on the applicable ident ification cr iter ia. • 60 per cent of an MRT’s variable remuneration will be deferred if variable remuneration exceeds GBP500,000. • Non-deferred variable remuneration will be delivered 50 per cent in shares, subject to a min imum 12 month retent ion 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 imum 12 month retention period (with the exception of deferred shares awarded to higher paid MRTs, which are subject to a six month min imum retent ion period in line with the regulations). • For some MRTs, part of their 2022 variable remuneration may be in LTIP share awards which are released after a min imum of four years, subject to the satisfact ion of performance measures and hold ing periods. • As explained on page 211, all variable remuneration is subject to remuneration adjustment provis ions. Th is provides the Group with the abil ity to reduce or revoke var iable 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. ![]() 213 Standard Chartered – Annual Report 2022 Directors’ report Remuneration awarded to MRTs for the financ ial year (REM1) Management body Other senior management $m Other ident ified staff $m Supervisory function $m Management function $m Fixed remuneration Number of ident ified staff 14 2 16 580 Total fixed remuneration 4.35 5.86 31.62 306.95 Cash-based 4.35 3.74 31.62 306.95 Shares or equivalent ownership interests – 2.12 – – Share-linked instruments or equivalent non-cash instruments – – – – Other instruments – – – – Other forms – – – – Variable remuneration Number of ident ified staff 14 2 16 580 Total variable remuneration – 9.52 45.64 315.74 Cash-based – 1.51 18.14 160.03 Of which deferred – – 9.01 82.78 Shares or equivalent ownership interests – 8.01 27.50 155.71 Of which deferred – 6.50 18.38 82.79 Share-linked instruments or equivalent non-cash instruments – – – – Of which deferred – – – – Other instruments – – – – Of which deferred – – – – Other forms – – – – Of which deferred – – – – Total remuneration 4.35 15.38 77.26 622.69 Special payments to staff whose professional activ it ies have a material impact on inst itut ions’ risk profile (MRTs) (REM2) No special payments were made during the period. ![]() 214 Standard Chartered – Annual Report 2022 Directors’ report Addit ional remunerat ion disclosures MRT deferred remuneration in 2022 (REM3) Deferred and retained remuneration Total amount of deferred remuneration awarded for previous performance periods $m Of which due to vest in the financial year $m Of which vesting in subsequent financial years $m Amount of performance adjustment made in the financial year to deferred remuneration that was due to vest in the financial year 1 $m Amount of performance adjustment made in the financial year to deferred remuneration that was due to vest in future performance years $m Total amount of adjustment during the financial year due to ex post impl ic it adjustments (i.e. changes of value of deferred remuneration due to the changes of prices of instruments) $m Total amount of deferred remuneration awarded before the financial year actually paid out in the financial year $m Total of amount of deferred remuneration awarded for previous performance period that has vested but is subject to retention periods $m Management body Supervisory function – – – – – – – – Cash-based – – – – – – – – Shares or equivalent ownership interests – – – – – – – – Share-linked instruments or equivalent non-cash instruments – – – – – – – – Other instruments – – – – – – – – Other forms – – – – – – – – Management body Management function 45.75 16.68 29.07 (6.33) 11.73 10.35 4.98 Cash-based – – – – – – – – Shares or equivalent ownership interests 45.75 16.68 29.07 (6.33) 11.73 10.35 4.98 Share-linked instruments or equivalent non-cash instruments – – – – – – – – Other instruments – – – – – – – – Other forms – – – – – – – – Other senior management 128.14 24.52 103.62 (11.48) 26.75 13.04 6.69 Cash-based 23.82 2.62 21.21 – – – 2.62 – Shares or equivalent ownership interests 104.32 21.90 82.41 (11.48) 26.75 10.42 6.69 Share-linked instruments or equivalent non-cash instruments – – – – – – – – Other instruments – – – – – – – – Other forms – – – – – – – – Other ident ified staff 505.15 159.06 346.09 (0.18) – 86.09 152.98 56.08 Cash-based 169.43 43.69 125.73 – – – 40.63 – Shares or equivalent ownership interests 296.05 104.80 191.26 (0.18) – 75.92 101.78 56.08 Share-linked instruments or equivalent non-cash instruments 39.67 10.57 29.10 – – 10.17 10.57 – Other instruments – – – – – – – – Other forms – – – – – – – – Total amount 679.04 200.26 478.78 (17.99) – 124.57 176.37 67.75 1 Includes LTIP award lapse following testing of performance condit ions ![]() 215 Standard Chartered – Annual Report 2022 Directors’ report Remuneration of 1 mill ion EUR or more per year (REM4) 1 Remuneration band EUR Number of employees 1,000,000 to below 1,500,000 148 1,500,000 to below 2,000,000 44 2,000,000 to below 2,500,000 20 2,500,000 to below 3,000,000 14 3,000,000 to below 3,500,000 8 3,500,000 to below 4,000,000 4 4,000,000 to below 4,500,000 – 4,500,000 to below 5,000,000 5 5,000,000 to below 6,000,000 2 6,000,000 to below 7,000,000 1 7,000,000 to below 8,000,000 – 8,000,000 to below 8,500,000 – 8,500,000 to below 9,000,000 1 9,000,000 to below 9,500,000 1 9,500,000 to below 10,000,000 – 10,000,000 to below 10,500,000 1 13,000,000 to below 13,500,000 1 Total 250 1 Data presented in EUR in accordance with the requirements of CRR Article 450, converted at the exchange rates used by European Commiss ion for financial programming and the budget for December of the reporting year, as published on its website Information on remuneration of staff whose professional activ it ies have a material impact on inst itut ions’ risk profile (MRTs) (REM5) Management body remuneration Business areas Supervisory function Management function Total Investment banking Retail banking Asset management Corporate functions Independent internal control functions All other Total Total number of ident ified staff 14 2 16 263 32 8 163 133 13 612 Of which: members of the management body 14 2 16 – – – 16 – – 16 Of which: other senior management – – – 3 1 – 9 3 – 16 Of which: other ident ified staff – – – 260 31 8 138 130 13 580 Total remuneration of ident ified staff $m 4.35 15.38 19.73 373.56 45.65 7.09 197.75 84.84 10.80 719.69 Of which: variable remuneration – 9.51 9.51 208.92 25.68 3.10 94.67 33.75 4.78 370.90 Of which: fixed remuneration 4.35 5.87 10.22 164.64 19.97 3.99 103.08 51.09 6.02 348.79 ![]() 216 Standard Chartered – Annual Report 2022 Directors’ report Addit ional remunerat ion disclosures Remuneration of the five highest paid ind iv iduals and the remuneration of senior management In line with the requirements of The Stock Exchange of Hong Kong Lim ited, the follow ing table sets out, on an aggregate basis, the annual remuneration of: (i) the five highest paid employees; and (i i) sen ior management for the year ended 31 December 2022. Components of remuneration Five highest paid 1 $000 Senior management 2 $000 Salary, cash allowances and benefits in kind 19,110 28,317 Pension contribut ions 349 1,417 Variable remuneration awards paid or receivable 31,235 42,254 Payments made on appointment – – Remuneration for loss of office (contractual or other) 3 – 243 Other – – Total 50,694 72,231 Total HKD equivalent 397,190 565,953 1 The five highest paid ind iv iduals include Bill Winters. 2 Senior management comprises the executive directors and the members of the Group Management Team at any point during 2022. 3 Value reported relates to contractual payments made for loss of office. Share award movements for the five highest paid ind iv iduals for the year to 31 December 2022 1 LTIP 2 Deferred /Restricted shares 2 Sharesave Outstanding at 1 January 2022 4,272,880 2,283,710 – Granted 3,4,5 1,454,130 1,347,609 4,246 Lapsed 1,064,794 – – Vested/Exercised 178,688 533,892 – Outstanding at 31 December 2022 4,483,528 3,097,427 4,246 Exercisable as at 31 December 2022 – – – 1 The five highest paid ind iv iduals include Bill Winters. 2 Granted under the 2021 Plan and 2011 Plan. Employees do not contribute to the cost of these awards. 3 1,448,057 (LTIP) granted on 14 March 2022, 4,989 (LTIP) granted as a notional div idend on 1 March 2022, 1,084 (LTIP) granted as a not ional div idend on 8 August 2022, 1,346,460 (Deferred/Restricted shares) granted on 14 March 2022, 774 (Deferred/Restricted shares) granted as a notional div idend on 1 March 2022, 375 (Deferred/Restricted shares) granted as a notional div idend on 8 August 2022 under the 2021 Share Plan. 4,246 (Sharesave) granted on 28 November 2022 under the 2013 Sharesave Plan. 4 LTIP and deferred/restricted shares were granted at a share price of £4.876, being the closing price on the last trading day preceding the grant date. The vesting period for these awards ranges from 1 to 7 years. 5 For Sharesave granted in 2022 the exercise price is £4.23 per share, a 20% discount from the closing price on 1 November 2022. The closing price on 1 November 2022 was £5.282. For details of awards and options for Bill Winters and Andy Halford refer to pages 209 and 210. For a view of share awards and options for all employees refer to page 436. The accounting standard adopted for share awards is IFRS2: please refer to page 434 for details. ![]() 217 Standard Chartered – Annual Report 2022 Directors’ report The table below shows the emoluments of: (i) the five highest paid employees; and (i i) sen ior management for the year ended 31 December 2022. Remuneration band HKD Remuneration band USD equivalent Number of employees Five highest paid Senior management 1 11,000,001 - 11,500,000 1,403,921 - 1,467,735 - 1 20,000,001 - 20,500,000 2,552,583 - 2,616,398 - 1 20,500,001 - 21,000,000 2,616,398 - 2,680,212 - 1 21,000,001 - 21,500,000 2,680,212 - 2,744,027 - 1 23,500,001 - 24,000,000 2,999,285 - 3,063,100 - 1 25,000,001 - 25,500,000 3,190,729 - 3,254,544 - 1 25,500,001 - 26,000,000 3,254,544 - 3,318,358 - 1 28,500,001 - 29,000,000 3,637,431 - 3,701,246 - 1 29,500,001 - 30,000,000 3,765,060 - 3,828,875 - 1 39,000,001 - 39,500,000 4,977,537 - 5,041,352 - 1 40,000,001 - 40,500,000 5,105,167 - 5,168,981 - 1 46,500,001 - 47,000,000 5,934,756 - 5,998,571 - 1 52,500,001 - 53,000,000 6,700,531 - 6,764,345 1 - 73,500,001 - 74,000,000 9,380,743 - 9,444,558 1 1 75,500,001 - 76,000,000 9,636,002 - 9,699,816 1 1 83,500,001 - 84,000,000 10,657,035 - 10,720,849 1 1 110,500,001 - 111,000,000 14,103,022 - 14,166,837 1 - Total 5 15 1 Senior management comprises the executive directors and the members of the Group Management Team at any point during 2022 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. 2022 2021 EUR 0.9520 0.8421 GBP 0.8106 0.7246 HKD 7.8352 7.7704 Shir ish Apte Chair of the Remuneration Committee 16 February 2023 ![]() 218 Standard Chartered – Annual Report 2022 Directors’ report Other disclosures #### Other disclosures The Directors’ report for the year ended 31 December 2022 comprises 134 to 231 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 il it ies of the d irectors in connection with that report shall be subject to the lim itat ions and restrict ions prov ided by such law. Other informat ion to be d isclosed in the Directors’ report is given in this section. In addit ion to the requ irements set out in the Disclosure Guidance and Transparency Rules relating to the Annual Report, informat ion requ ired by UK List ing 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 ing Rules 9.8.4) Relevant List ing Rule Pages LR 9.8.4 (1) (2) (5-14) (A) (B) N/A LR 9.8.4 (4) 197, 199 and 200 Princ ipal act iv it ies We are a leading internat ional bank ing 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 ity. 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 and Ventures in its footprint markets in Asia, Africa and the Middle East. The Group operates in the UK and overseas through a number of subsid iar ies, branches and offices. Further details on our business, includ ing key performance ind icators, can be found with in the Strategic report on pages 1 to 133. 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 provides the informat ion necessary for shareholders to assess the posit ion 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. UK Corporate Governance Code compliance The table below contains examples of where the Company has applied the princ iples of the UK Corporate Governance Code in this Annual Report. A copy of the UK Corporate Governance Code can be found at frc.org.uk Princ iples Pages/reference Board leadership and company purpose A – Promoting long-term sustainable success and value 2 to 133, 136 to 230 B – Purpose, value, strategy and alignment with culture 2 to 133, 136 to 230 C – Performance measures, controls and risk management 136, 147 to 150 and 163 to 175 D – Shareholder and other stakeholder engagement 54 to 124, 136, 149 and 158 to 162 E – Workforce polic ies and pract ices 60 to 124, 168 and 177 Div is ion of responsib il it ies F – Chair role and responsib il it ies 138, 150 and 152 G – Board roles and responsib il it ies 138 to 142, 150, 152, 157, 179 to 183 H – Non-executive directors role and capacity 150, 152, 157 and 181 I – Board effectiveness and effic iency 156 Composit ion, succession and evaluation J – Board appointments and succession plans 179 to 183 K – Board skills, experience, knowledge and tenure 138 to 142, 179 to 183 L – Board evaluation of composit ion, d ivers ity and effect iveness 154, 156, 169, 175, 178, 183, 191 Audit, risk and internal control M – Independence and effectiveness of internal and external audit functions, integr ity of financial and narrat ive statements 163 to 169 N – Fair, balanced and understandable assessment of the Company’s posit ion and prospects 218 O – Risk management and internal controls 147, 163 to 175 Remuneration P – Remuneration polic ies and pract ices 184 to 217 Q – Procedure for developing remuneration policy Committee terms of reference R – Independent judgement and discret ion when author is ing remunerat ion outcomes Committee terms of reference The Remuneration Committee has written terms of reference that can be viewed at sc.com/termsofreference ![]() 219 Standard Chartered – Annual Report 2022 Directors’ report Events after the balance sheet date For details on post balance sheet events, see Note 37 to the financial statements. Code for Financ ial Report ing Disclosure The Group’s 2022 financial statements have been prepared in accordance with the princ iples of the UK F inance Disclosure Code for Financ ial Report ing Disclosure. Disclosure of informat ion to aud itor As far as the directors are aware, there is no relevant audit informat ion of wh ich the Group statutory auditor, EY, is unaware. The directors have taken all reasonable steps to ascertain any relevant audit informat ion and ensure that the Group statutory auditors are aware of such informat ion. Viab il ity and going concern Having made appropriate enquir ies, the Board is satisf ied that the Company and the Group as a whole has adequate resources to continue in operation and meet its liab il it ies as they fall due for a period of at least 12 months from 16 February 2023 and therefore continues to adopt the going concern basis in preparing the financ ial statements. The directors’ viab il ity statement in respect to the Group can be found in the Strategic report on pages 132 and 133, while the directors’ going concern considerat ions of the Group can be found on page 350. Sufficiency of publ ic float As at the date of this report, the Company has mainta ined the prescribed public float under the rules governing the list ing of securit ies on The Stock Exchange of Hong Kong L im ited (the “Hong Kong List ing Rules”), based on the informat ion publ icly available to the Company and with in the knowledge of the directors. Research and development During the year, the Group invested $1.98 bill ion (2021: $1.89 bill ion) in research and development, of which $0.94 bill ion (2021: $0.94 b ill ion) was recogn ised as an expense. The research and development investment primar ily related to the planning, analysis, design, development, testing, integrat ion, deployment and in it ial support of technology systems. Polit ical donat ions The Group has a policy in place which prohib its donat ions being made that would: (i) improperly influence legislat ion or regulation, (i i) promote pol it ical v iews or ideolog ies, and (i i i) fund polit ical causes. In al ignment to this, no polit ical donations were made in the year ended 31 December 2022. Directors and their interests The membership of the Board, together with their biograph ical deta ils, are given on pages 138 to 142. Details of the directors’ benefic ial and non-beneficial interests in the ordinary shares of the Company are shown in the Directors’ remuneration report on pages 184 to 217. 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 ial statements The Company has received from each of the INEDs an annual confirmation of independence pursuant to Rule 3.13 of the Hong Kong List ing Rules and st ill considers all of the non- executive directors to be independent. At no time during the year did any director hold a material interest in any contracts of sign ificance w ith the Company or any of its subsid iary undertak ings. In accordance with the Companies Act 2006, we have established a process requir ing d irectors 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 ion Comm ittee reviews exist ing confl icts of interest annually to consider if they continue to be conflicts of interest, and also to revis it the terms upon which they were determined to be. The Board is satisfied that our processes in this respect continue to operate effectively. Subject to company law, the Articles of Associat ion and the authority granted to directors in general meeting, the directors may exercise all the powers of the Company and may delegate authorit ies to comm ittees. The Articles of Associat ion conta in provis ions relat ing to the appointment, re-election and removal of directors. Newly appointed directors retire at the AGM following appointment and are elig ible for elect ion. All directors are nominated for annual re-election by shareholders subject to continued satisfactory performance based upon their annual assessment. Non-executive directors are appointed for an in it ial 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 it ies to all of its directors on terms consistent with the applicable statutory provis ions. Qualify ing th ird-party indemn ity prov is ions for the purposes of section 234 of the Companies Act 2006 were accordingly in force during the course of the financ ial year ended 31 December 2022 and remain in force at the date of this report. Qualify ing pens ion scheme indemn it ies Qualify ing pens ion scheme indemn ity prov is ions (as defined by section 235 of the Companies Act 2006) were in force during the course of the financ ial year ended 31 December 2022 for the benefit of the UK’s pension fund corporate trustee (Standard Chartered Trustees (UK) Lim ited), and rema in in force at the date of this report. Sign ificant agreements The Company is not party to any sign ificant 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 or employment resulting from a takeover, except that provis ions 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. ![]() 220 Standard Chartered – Annual Report 2022 Directors’ report Other disclosures Future developments in the business of the Group An ind icat ion of likely future developments in the business of the Group is provided in the Strategic report. Results and div idends 2022: paid inter im d iv idend of 4 cents per ord inary share (2021: paid inter im d iv idend of 3 cents per ord inary share) 2022: proposed final div idend of 14 cents per ord inary share (2021: paid final div idend of 9 cents per ord inary share) 2022: total div idend of 18 cents per ord inary share (2021: total div idend, 12 cents per ord inary share) Share capital The issued ordinary share capital of the Company was reduced by a total of 184,369,245 over the course of 2022. 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 value of the ordinary shares represents 86.8 per cent of the total issued nominal value of all share capital. The remain ing 13.2 per cent compr ises preference shares, which have preferential rights to income and capital but which, in general, do not confer a right to attend and vote at our general meetings. Further details of the Group’s share capital can be found in Note 28 to the financial statements There are no specif ic restr ict ions on the s ize of a holding nor on the transfer of shares, which are both governed by the general provis ions of the Art icles of Associat ion and preva il ing legislat ion. There are no spec if ic restr ict ions on vot ing rights and the directors are not aware of any agreements between holders of the Company’s shares that may result in restrict ions on the transfer of securit ies or on vot ing 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 ion The Articles of Associat ion may be amended by spec ial resolution of the shareholders. A copy of the Company’s Articles of Associat ion can be found on our website here sc.com/investors Authority to purchase own shares At the AGM held on 4 May 2022, our shareholders renewed the Company’s authority to make market purchases of up to 302,578,862 ordinary shares, equivalent to approximately 10 per cent of issued ordinary shares as at 21 March 2022, and up to all of the issued preference share capital. 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 July 2022. These were util ised to reduce the number of ordinary shares in issue and as part of the Group’s approach to div idend growth and cap ital returns. The first share buy-back programme was launched on 21 February 2022 and ended on 19 May 2022. The second share buy-back programme was launched on 1 August 2022 and ended on 10 October 2022. A total of 184,369,245 ordinary shares with a nominal value of $0.50 were re-purchased for an approximate aggregate considerat ion pa id of $1,250 mill ion. A monthly breakdown of the shares purchased during the period includ ing the lowest and h ighest price paid per share is set out in Note 28 to the financ ial statements. All ord inary shares which were bought back were cancelled. In accordance with the terms of a waiver granted by The Stock Exchange of Hong Kong Lim ited (HKSE) as subsequently modif ied, the Company w ill comply with the applicable law and regulation in the UK in relation to holding of any shares in treasury and with the condit ions of grant ing the waiver by the HKSE. No treasury shares were held during the year. Further details can be found in Note 28 to the financ ial statements Authority to issue shares The Company is granted authority to issue shares by the shareholders at its AGM. The size of the authorit ies granted depends on the purposes for which shares are to be issued and is with in appl icable legal and regulatory requirements. Shareholder rights Under the Companies Act 2006, 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 in 21 days of becom ing 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 to require the Company to circulate 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 ify the resolut ion of which notice is to be given and must be authenticated by the shareholders making it. Shareholders are also able to put forward proposals to shareholder meetings and enquir ies to the Board and/or the Sen ior Independent Director by using the ‘contact us’ informat ion on the Company’s website sc.com or by email ing the Group Corporate Secretar iat at group-corporate.secretariat@sc.com Major interests in shares and voting rights As at 31 December 2022, Temasek Holdings (Private) Lim ited (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 ial Conduct Author ity’s (FCA) Disclosure and Transparency Rules (DTRs) is published on a Regulatory Information Service and on the Company’s website. ![]() 221 Standard Chartered – Annual Report 2022 Directors’ report As at 10 February 2023, the Company has been notif ied of the following informat ion, in accordance with DTR 5, from holders of notif iable interests in the Company’s issued share capital. The informat ion prov ided in the table below was correct at the date of notif icat ion; however, the date received may not have been with in 2022. It should be noted that these hold ings are likely to have changed since the Company was notif ied. However, notif icat ion of any change is not required until the next notif iable threshold is crossed. Ahead of join ing the Group in May 2022, Shir ish Apte stepped down as an independent non-executive director of Pierfront Capital Mezzanine Fund, a 90 per cent owned subsid iary of Temasek. Notif iable interests Interest in ordinary shares (based on voting rights disclosed) Percentage of capital disclosed Nature of holding as per disclosure Temasek Holdings (Private) Lim ited 474,751,383 16.00 Indirect BlackRock Inc. 183,640,172 5.55 Indirect (5.01%) Securit ies Lend ing (0.39%) Contracts for Difference (0.14%) Dodge & Cox 150,620,884 5.08 Indirect Related party transactions Details of transactions with directors and officers and other related parties are set out in Note 36 to the financ ial statements. Connected/continu ing connected transact ions 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 ing Rules and the Rules Govern ing the List ing of Securit ies on The Stock Exchange of Hong Kong L im ited (“HKEx”) (“the HK List ing Rules”) respect ively (together “the Rules”). The Rules are intended to ensure that there is no favourable treatment to Temasek or its associates to the detriment of other shareholders in the Company. Unless transactions between the Group and Temasek or its associates are specif ically exempt under the Rules or are subject to a spec if ic waiver, they may require a combinat ion of announcements, reporting and independent shareholders’ approval. On 12 November 2021, the HKEx 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 HK List ing Rules. Under the Waiver, the HKEx agreed to waive the announcement requirement, the requirement to enter into a written agreement and set annual caps, and the annual report disclosure (includ ing annual rev iew) requirements under Chapter 14A of the HK List ing Rules for the three-year period ending 31 December 2024 on the condit ions that: a) The Company will disclose details of the Waiver (includ ing 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 three years 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 ing Temasek) and would be impract ical and unduly burdensome. • It would be impract icable to est imate 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 group due to multiple factors includ ing market driven factors. • The revenues generated from revenue banking transactions were ins ign if icant. W ithout a waiver from the HKEx or an applicable exemption, these transactions would be subject to various percentage ratio tests which cater for different types of connected transactions and as such may produce anomalous results. For the year ended 31 December 2022, the Group provided Temasek with money market and foreign exchange revenue transactions that were revenue transactions in nature. As a result of the Passive Investor Exemption and the Waiver, the vast majority of the Company’s transact ions 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 ing for connected transaction issues. The Company confirms that: • The revenue banking transactions entered into with Temasek in 2022 were below the 5 per cent threshold for the revenue ratio test under the HK List ing Rules; and • It will continue to monitor revenue banking transactions with Temasek during the three years ending 31 December 2024 to ensure that the 5 per cent threshold for the revenue ratio will not be exceeded. The Company therefore satisf ied the cond it ions of the Wa iver. ![]() 222 Standard Chartered – Annual Report 2022 Directors’ report Other disclosures Non-revenue transaction with Temasek The following non-revenue transaction between Temasek and the Group was entered into and during the year ended 31 December 2022 and relevant announcement had been made by the Company on 3 November 2022 in accordance with the HK List ing Rules: On 3 November 2022, the Company’s wholly owned subsid iary, Standard Chartered Overseas Hold ings Lim ited (“SCOHL”), entered into a share subscript ion agreement w ith Partior Pte. Ltd. (“Partior”) (“Share Subscript ion Agreement”), pursuant to which SCOHL agreed to subscribe for 31,923 ordinary shares and 9,036,404 Series A preference shares in Partior (collectively the “Subscript ion Shares”) at a pr ice of US$2.573 per Subscript ion Share, and for a total subscr ipt ion price of US$23,332,806 in order to acquire 25% shareholding in Partior, subject to the satisfact ion of certa in condit ions. On completion of the Share Subscript ion Agreement, SCOHL will enter into a shareholders’ agreement (“Shareholders’ Agreement”) with Partior, Silverheels Investments Pte. Ltd. (“Silverheels”), DBS Finnovat ion Pte. Ltd. and JPMC Strateg ic Investments I Corporation (with the latter two collectively the “Other Transaction Parties”). The Shareholders’ Agreement contains terms and shareholder rights customary for transactions of this nature, includ ing as to board representation, voting, transfer restrict ions and ex it provis ions. Regarding the Other Transaction Parties, to the best of the Company’s knowledge, informat ion and bel ief having made all reasonable enquiry, save for DBS Finnovat ion Pte. Ltd. in which Temasek is an ind irect substant ial shareholder, JPMC Strategic Investments I Corporation and its ultimate benefic ial owner are both independent third parties of the Company and connected persons of the Company. Immediately before the sign ing of the Share Subscr ipt ion Agreement, Part ior’s shares were held by Silverheels and the Other Transaction Parties in equal proportion. The equity investment in Partior builds on the Company’s desire to shape the Future of Payments by assuring the Company could provide a payment foundation that is able to meet its clients’ emerging needs. It allows the Company to deepen its blockchain innovat ion capab il it ies and ramp up its commitment to build ing a more transparent, efficient and secure infrastructure for global value movement. As Temasek is a substantial shareholder of the Company as defined under the HK List ing Rules, Temasek is a connected person of the Company. By virtue of Temasek holding more than 30% of its issued share capital, via Silverheels, Temasek’s ind irect wholly-owned subs id iary, Part ior is also a connected person of the Company. Pursuant to Chapter 14A of the HK List ing Rules, SCOHL’s entry into the Share Subscript ion Agreement between SCOHL and Partior and the Shareholders’ Agreement between SCOHL, Partior, Silverheels and the Other Transaction Parties constitutes a connected transaction for the Company. As at 31 December 2022, Standard Chartered Overseas Holdings Lim ited had changed its name to Standard Chartered Strategic Investments Lim ited. Fixed assets Details of addit ions to fixed assets are presented in Note 18 to the financial statements. Loan capital Details of the loan capital of the Company and its subsid iar ies are set out in Notes 22 and 27 to the financ ial statements. Debenture issues and equity-linked agreements During the financ ial year ended 31 December 2022, the Company made no issuance of debentures or equity-linked agreements. Risk management 1 The Board is responsible for mainta in ing and review ing the effectiveness of the risk management system. An ongoing process for ident ify ing, evaluating and managing the sign ificant r isks that we face is in place. The Board is satisf ied that this process constitutes a robust assessment of all of the princ ipal r isks, topical and emerging risks and Integrated risks facing the Group, includ ing those that would threaten its business model, future performance, solvency or liqu id ity. 1 The Group’s Risk Management Framework and System of Internal Control applies only to wholly controlled subsid iar ies of the Group, and not to Associates, Joint Ventures or Structured Entit ies of the Group. Key areas of risk on financ ial instruments for the directors included the impa irment of loans and advances and valuation of financ ial instruments held at fair value. This risk assessment and management is explained further in the Audit Committee Key areas and Action taken on pages 164 and 165. The Risk review and Capital review on pages 236 and 325 sets out the princ ipal r isks, topical and emerging risks and integrated risks, our approach to risk management, includ ing our r isk management princ iples, an overv iew of our Enterprise Risk Management Framework and the risk management and governance practices for each princ ipal risk type. The Board-approved Risk Appetite Statement can be found on pages 301 to 309 In accordance with Article 435(1)(e) of the UK onshored Capital Requirements Regulation, and the Disclosure (CRR) Part of the PRA Rulebook, 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 place are adequate with regard to the Group’s profile and strategy. Internal control 1 The Board is responsible for mainta in ing and review ing the effectiveness of 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 2022, the Board Risk Committee has reviewed the effectiveness of the Group’s system of internal control. As part of this review, affirmat ion was received from the Interim GCRO (in situ at the time of the review as the new GCRO awaited regulatory approval) that the Group’s risk management and internal control framework is materially effective and improvement areas were highl ighted for management attent ion. Group Internal Audit represents the third line of defence and provides independent assurance of the effectiveness of management’s control of business activ it ies (the first line) and of the control processes mainta ined by the R isk Framework Owners and Policy Owners (the second line). The audit programme includes obtain ing an understanding of the processes and systems under audit review, evaluating the design of 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. 1 The Group’s Risk Management Framework and System of Internal Control applies only to wholly controlled subsid iar ies of the Group, and not to Associates, Joint Ventures or Structured Entit ies of the Group. ![]() 223 Standard Chartered – Annual Report 2022 Directors’ report 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 istrat ively to the Group Chief Executive. The find ings of all adverse aud its are reported to the Audit Committee, the Group Chairman and the Group Chief Executive where immed iate correct ive action is required. The Board Risk Committee is responsible for exercis ing oversight, on behalf of the Board, of the key risks of the Group. It reviews the Group’s Risk Appetite Statement and Enterprise Risk Management Framework and makes recommendations to the Board. The Audit Committee is responsible for oversight and advice to the Board on matters relating to financ ial reporting. The Committee’s role is to review, on behalf of the Board, the Group’s internal controls includ ing internal financ ial controls. The risk management approach starting on page 295 describes the Group’s risk management oversight committee structure. Our business is conducted with in a developed control framework, underpinned by policy statements and standards. There are written polic ies and standards des igned to ensure the ident ification and management of r isk, includ ing Cred it Risk, Traded Risk, Treasury Risk, Operational and Technology Risk, Information and Cyber Security Risk, Compliance Risk, Financ ial Cr ime Risk, Model Risk, Climate Risk and Reputational and Sustainab il ity Risk. The Board has established a management structure that clearly defines roles, responsib il it ies and report ing lines. Delegated authorit ies are documented and commun icated. Executive risk committees regularly review the Group’s risk 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 ial informat ion is prepared using appropriate accounting polic ies, wh ich are applied consistently. Operational procedures and controls have been established to facil itate complete, accurate and t imely processing of transactions and the safeguarding of assets. These controls include appropriate segregation of duties, the regular reconcil iat ion of accounts and the valuation of assets and posit ions. In respect of handl ing ins ide informat ion, we have applied relevant controls on employees who may handle ins ide informat ion, includ ing controls over the d issem inat ion of such informat ion and the ir dealings in the Company’s shares. Such systems are designed to manage rather than elim inate the r isk of failure to achieve business object ives and can only provide reasonable and not absolute assurance against material misstatement or loss. Employee polic ies and engagement We work hard to ensure that our employees are kept informed about matters affecting or of interest to them, and more importantly have the opportunit ies to prov ide feedback and engage in a dialogue. We continue to listen and act on feedback from colleagues to ensure internal communicat ions are t imely, informat ive, meaningful, and in support of the Group’s strategy and transformation. In addit ion to the Br idge (our primary internal communicat ions platform) wh ich allows colleagues to receive key updates, exchange ideas and provide feedback, we also leverage a range of channels includ ing ema il, dig ital newsletters with customised content for each employee segment, audio and video calls, virtual and face-to-face townhalls, and other staff engagement and recognit ion events. To continue to improve the way we communicate and ensure our employee communicat ions rema in relevant, we also period ically analyse and measure the impact of our communicat ions through a range of survey and feedback tools. We are currently assessing our suite of communicat ion channels as we prepare to launch improved solutions and discont inue those that are less effect ive. Our senior leaders and people leaders continue to play a crit ical role in engaging our teams across the network, ensuring that they are kept up to date on key business developments related to our performance and strategy. We provide addit ional support to our people leaders w ith specif ic calls and communicat ions packs to help them prov ide context and guidance to their team members to better understand their role in executing and deliver ing the Group’s strategy. Across the organisat ion, regular team meet ings with people leaders, one-to-ones and various management meetings provide an important platform for colleagues to discuss and clarify key issues. Regular performance conversations provide the opportunity to discuss how ind iv iduals, the team and the business area have contributed to our overall performance and how any compensation awards relate to this. The Group’s senior leadership also regularly share global, business, function, region and market updates on performance, strategy, structural changes, HR programmes, community involvement and other campaigns. The Board engages with and listens to the views of the workforce through several sources, includ ing through interact ive engagement sess ions. More informat ion can be found on pages 162 and 177 in the Directors’ report. Employees, past, present and future can follow our progress through the Group’s LinkedIn network and Facebook page, as well as other social network channels includ ing Instagram, which collectively have over 2.4 mill ion followers. The diverse range of internal and external communicat ion tools and channels we have put in place ensure that all our colleagues receive timely and relevant informat ion to support their effectiveness. The wellbeing of our employees is central to our think ing about benefits and support, so that they can thrive at work and in their personal lives. Our Group min imum standards provide employees with a range of flexible working options, in relation to both location and working patterns. In terms of leave, employees are provided with at least thirty days’ leave (through annual leave and public holidays), a min imum of twenty calendar weeks’ fully paid maternity leave, a min imum of two calendar weeks of leave for spouses or partners, and two calendar weeks for adoption leave. Combined, this is above the International Labour Organisat ion m in imum standards. ![]() 224 Standard Chartered – Annual Report 2022 Directors’ report Other disclosures We seek to build productive and enduring partnerships with various employee representative bodies (includ ing un ions and work councils). In our recognit ion and interact ions, we are heavily influenced by the 1948 United Nations Universal Declaration of Human Rights (UDHR), and several International Labour Organisat ion (ILO) convent ions includ ing the Right to Organise and Collective Bargain ing Convent ion, 1949 (No. 98) and the Freedom of Associat ion and Protect ion of the Right to Organise Convention, 1948 (No. 87). 14 per cent of employees across 19 markets have collective representation through unions or employee representative bodies. The working condit ions and terms of employment of other employees are based on our Group and country polic ies, and in accordance with ind iv idual employment contracts issued by the Group. The Group Grievance Standard provides a formal framework for dealing with concerns that employees have in relation to their employment or another colleague, which affects them directly, and cannot be resolved through informal mechanisms, such as counselling, coaching or mediat ion. This can include concerns related to bullying, harassment, discr im inat ion and v ict im isat ion, as well as concerns regard ing condit ions 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 for addressing grievances involves an HR representative and a member of the business review ing the gr ievance, conducting fact finding into the grievance and provid ing a wr itten outcome to the aggrieved employee. If a grievance is upheld, the next steps might include remedying a policy or process, or in it iat ing a d isc ipl inary review of the conduct of the colleague who is the subject of the grievance. The Group Grievance Standard and accompanying process is reviewed on a period ic bas is in consultation with stakeholders across HR, Legal, Compliance and Shared Investigat ive Serv ices. Grievance trends are reviewed on a quarterly basis and action is taken to address any concerning trends. There is a dist inct Group Speak ing Up Policy which covers instances where an employee wishes to ‘blow the whistle’ on actual, planned or potential wrongdoing by another employee or the Group. The Group is committed to creating a fair, consistent, and transparent approach to making decis ions in a disc ipl inary context. This commitment is codif ied in our Fair Accountabil ity Princ iples, wh ich underpin our Group Disc ipl inary Standard. Dism issals due to m isconduct issues and/or performance (where required by law to follow a disc ipl inary process) are governed by the Group Disc ipl inary Standard. Where local law or regulation requires a different process with regards to dism issals and other d isc ipl inary outcomes, we have country variances in place. Our Group Divers ity and Inclus ion Standard has been developed to ensure a respectful workplace, with fair and equal treatment, divers ity and inclus ion, and the prov is ion of opportunit ies for employees to part ic ipate fully and reach their full potential in an appropriate working environment. The Group aims to provide equality of opportunity for all, protect the dign ity of employees and promote respect at work. All ind iv iduals are entitled to be treated with dign ity and respect, and to be free from harassment, bullying, discr im inat ion and v ict im isat ion. Th is helps to support productive working condit ions, decreased staff attr it ion, posit ive employee morale and engagement, ma inta ins employee wellbeing, and reduces people-related risk. All employees and contractors are required to take personal responsib il ity to comply with the Standard, includ ing conducting themselves in a manner that demonstrates appropriate, non-discr im inatory behaviours. The Group is committed to provide equal opportunit ies and fair treatment in employment. We do not accept unlawful discr im inat ion in our recruitment or employment practices on any grounds includ ing but not l im ited to: sex, race, colour, national ity, ethn ic ity, nat ional or ind igenous or ig in, d isab il ity, age, marital or civ il partner status, pregnancy or matern ity, sexual orientat ion, gender ident ity, express ion or reassignment, HIV or AIDS status, parental status, mil itary and veterans status, flexib il ity of working arrangements, relig ion or belief. We strive for recruitment, appraisals, pay and condit ions, tra in ing, development, success ion planning, promotion, grievance/disc ipl inary procedures and employment terminat ion pract ices that are inclus ive and accessible; and that do not directly or ind irectly d iscr im inate. Recruitment, employment, train ing, development and promotion decis ions are based on the sk ills, knowledge and behaviour required to perform the role to the Group’s standards. Implied in all employment terms is the commitment to equal pay for equal work. We will also make reasonable workplace adjustments (includ ing dur ing the hir ing process) to ensure all ind iv iduals feel supported and are able to partic ipate fully and reach the ir potential. If employees become disabled, we will proactively seek to support them with appropriate train ing and workplace adjustments where possible and explore every opportunity to ensure their employment continues. Health and safety Our Health, Safety and Wellbeing (HSW) programme covers both mental and physical health and wellbeing. The Group complies with both external regulatory requirements and internal policy and standards for HSW in all markets. It is Group policy to ensure that the more stringent of the two requirements is always met, ensuring our HSW practices meet or exceed the regulatory min imum. Compl iance rates are reported at least biannually to each country’s Management Team. ![]() 225 Standard Chartered – Annual Report 2022 Directors’ report We follow the ILO code of practice on recording and notif icat ion of occupational accidents and diseases, as well as align ing to UK Health and Safety Execut ive, and ensuring we meet all local H&S regulatory reporting requirements. We record and report all work-related illness and injuries, includ ing sub-contractors, vis itors and cl ients. 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-mandated healthcare, which represent less than 0.5 per cent of the Group’s employees. All staff also have access to professional counselling via our Employee Assistance Program, as well as to more proactive mental health support through our holist ic wellbe ing app and wellbeing platform. Furthermore, we consider and treat mental health in the same way that we would treat physical health. Our global Mental Health First Aid (MHFA) programme offers help to someone developing a mental health problem, experienc ing a worsening of an exist ing mental illness or a mental health cris is. The mental health support is given until appropriate professional help is received, or the cris is resolved. To date we have trained over 500 mental health first aiders in 48 markets, covering more than 99 per cent of colleagues. In 2022, we recorded one work-related fatality where a contractor was fatally injured when crossing a road in Pakistan. Major in juries (per the UK Health & Safety Executive definit ion) decreased from 24 in 2021 to 21, with fractures the most common type of major in jury (21%). Overall, reported injuries increased by 5.1% per cent, with ‘slips/trips/falls’ and ‘transport/commuting’ remain ing the most common causes of injury. Our injury rates remain aligned to, or better than industry benchmarks. Hazards and near miss reports increased 23% per cent between 2021 and 2022, and all premises are inspected at least annually to ident ify any hazards, risks, and inc idences of non-compl iance. The overall increase in accidents and inc idents was due to the large increase in staff returning to office locations in 2022 after the lockdowns and restrict ions of 2021. One hundred and twenty of our largest premises were certif ied w ith the WELL Health & Safety Rating; an evidence- based, third-party certif icat ion that validates our efforts to address the hygiene and safety of our workspaces during COVID-19 and prepare our build ings for re-entry post- pandemic. Our regular Workplace Experience survey, conducted across 60 countries, returned our highest ever H&S and security satisfact ion scores. The Health and Wellbe ing index increased by 7%, and staff reported improved scores for work-life balance, wellbeing at home, and overall wellbeing. Staff also reported that our workplace design better supports their wellbeing and physical health compared with previous years. Throughout 2022, the COVID-19 pandemic reduced its impact, with lockdowns and restrict ions eas ing across most markets and staff returning to the office in greater numbers. That said, we still encourage flexible and hybrid work arrangements as part of our Future Work Now programme. A H&S online assessment tool is available for staff to assess their home working area for hazards, with a virtual assessments of the ind iv idual’s work environment. All staff opting to work flexibly received an allowance to purchase ergonomic office equipment. Our work injury insurance covers all staff working from home. Health, Safety & Security train ing is mandatory for all colleagues’ train ing, and 2022 saw both our in it ial and annual refresher train ing packages completely updated and refreshed, with emphasis on mental health and wellbeing, as well as work from home aspects. Major customers Our five largest customers together accounted for 1.9 per cent of our total operating income in the year ended 31 December 2022. Major suppliers In 2022, $4.3 bill ion was spent w ith approximately 11,700 suppliers. Of this, 74 per cent of the total spend was spent in the Asia region, with 18 per cent in Europe and the Americas, and 8 per cent in Africa and the Middle East. Furthermore, 80 per cent of total spend in 2022 was with 465 suppliers. In addit ion, 80 per cent of carbon em iss ions were with 652 suppliers. In 2022, our five largest suppliers together accounted for 14 per cent of total spend, with the largest ten amounting to 21 per cent of total spend. Supply chain management To support the operation of our businesses we source a variety of goods and services governed through a third-party risk management framework which ensures that we follow the highest standards in terms of vendor selection, due dil igence, and contract management. For informat ion about how the Group engages w ith suppliers on environmental and social matters, please see our Supplier Charter and Supplier Divers ity and Inclus ion Standard. As set out under the UK Modern Slavery Act 2015, the Group is required to publish a Modern Slavery Statement annually. The Group’s 2022 Modern Slavery Statement is issued at the same time as the Annual Report. This document gives further detail on the actions the Group has taken as it seeks to prevent modern slavery and human trafficking in its operations, financ ing and supply cha in during 2022. Our Supplier Charter and Supplier Divers ity and Inclus ion standard can be viewed at sc.com/suppliercharter and sc.com/supplierd ivers ity Details of how we create value for our suppliers and other stakeholder groups can be found on pages 54 to 63 ![]() 226 Standard Chartered – Annual Report 2022 Directors’ report Other disclosures Product responsib il ity 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 ing pol ic ies and standards, to support these objectives in alignment with our Conduct Risk Framework. This framework covers sales practices, client communicat ions, appropr iateness and suitab il ity, and post-sales practices. There are controls across all activ it ies above and the controls are tested on a regular basis to provide assurance on the framework. As part of this, we ensure products sold are suitable for clients and comply with relevant laws and regulations. We also review our products on a period ic bas is and refine them to keep them relevant to the changing needs of clients and regulators. We have processes and guidel ines spec if ic to each of our client industr ies, to promptly resolve cl ient complaints and understand and respond to client issues. Conduct considerat ions are g iven sign ificant we ight ing in frontline incent ive structures to dr ive the right behaviours. For more informat ion on our approach to product des ign, product pric ing, treat ing customers fairly and protecting customers, and incent iv is ing our frontl ine employees, see pages 55 and 56. For more informat ion on fraud ident ification see page 121. Safeguarding intellectual property rights The Group has processes in place to manage the Group’s trade mark rights and it respects third party intellectual property rights. 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 ity and fa ir dealing in relation to customers, employees and regulators in the communit ies in which the Group operates. Directors and employees are asked to recommit to the Code annually, and 99.5 per cent have completed the 2022 recommitment. All Board members have recommitted to the Code. Managing environmental and social risk The Board is responsible for ensuring that high standards of responsible business are mainta ined and that an effect ive control framework is in place. This encompasses risk associated with clients’ operations and their potential impact on the environment, includ ing cl imate change, and local communit ies. The Board recognises its responsib il ity to manage these risks and that failure to manage them adequately could have adverse impact on stakeholders as well as the Group. The Board, via the Culture and Sustainab il ity Committee, reviews sustainab il ity prior it ies, and oversees the development of, and delivery against, public commitments regarding the activ it ies and/or businesses that the Group will or will not accept in alignment with our here for good brand promise. At a management level, the Chief Sustainab il ity Officer is responsible for Sustainable Finance, which incorporates E&S risk management. A cross-business Sustainab il ity Forum is responsible for developing and deliver ing the Group’s sustainab il ity strategy, and in 2022 this Forum was chaired by the Group Head, Corporate Affairs, Brand & Marketing from January to July, and from August onwards 2022 by the Chief Sustainab il ity Officer. The Group Responsib il ity and Reputational Risk Committee (GRRRC), chaired by the Group Head, Conduct, Financ ial Crime and Compliance, oversees management of the Reputational and Sustainab il ity Risk profile for the Group, includ ing overs ight of our Posit ion Statements and assoc iated risk tolerance thresholds. Community engagement We collaborate with local partners to support social and economic development in communit ies across our markets. We are committed to sustainable social and economic development through our business, operations and communit ies. We a im to create more inclus ive econom ies by sharing our skills and expertise and developing community in it iat ives that transform l ives. We continue to support our communit ies through Futuremakers by Standard Chartered, our global in it iat ive to tackle youth econom ic inclus ion and enable the next generation to learn, earn and grow. For more informat ion on Futuremakers, as well as our employee volunteering and community investment expenditure, please see pages 122 to 123 in the ‘Sustainab il ity’ section and page 492. ESG reporting guide Compliance with List ing Rules We comply with the requirements for environmental, social and governance reporting under Appendix 27 of the Hong Kong List ing Rules w ith the exception of A1.3 on hazardous waste and A1.6 on production and handling of hazardous waste and A2.5 on packaging and B2.2 on lost days due to work injury. As an office-based financ ial serv ices provider, we generate min imal hazardous waste or packag ing material. As such, these issues are not material and we do not report them. 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 ing pol ic ies and standards, to support these objectives in alignment with our Conduct Risk Framework. This framework covers sales practices, client communicat ions, appropr iateness and suitab il ity, 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 not manufacture products and therefore does not have a defined quality assurance process or recall procedures; nor does it sell or ship products that would be liable for return on health and safety grounds. ![]() 227 Standard Chartered – Annual Report 2022 Directors’ report Compliance with Task Force on Climate-related Financ ial Disclosures (TCFD) In line with our ‘comply or explain’ obligat ion under the UK’s Financ ial Conduct Author ity’s List ing Rules, we can confirm that we have made disclosures consistent with the TCFD Recommendations and Recommended Disclosures in this Annual Report, except for one area: we do not fully disclose Scope 3 greenhouse gas emiss ions as we currently focus on the sectors which are most carbon intens ive. Further informat ion is available on pages 79 to 80. In line with the current UK List ing Rules requ irements, our TCFD disclosures also take into account the implementat ion guidance included in the TCFD 2021 Annex. EU Taxonomy The European Union Sustainable Finance Taxonomy (“EU Taxonomy”) is a classif icat ion system that establishes a list of environmentally sustainable economic activ it ies. It has come into force as of 1 January 2022 for entit ies fall ing with in the scope of disclosures. Standard Chartered Bank AG has assessed that implementat ion of the EU Taxonomy is not mandatory for Standard Chartered Bank AG at this stage given certain qualif icat ion thresholds; however, given the amendments introduced by the Corporate Sustainab il ity Reporting Direct ive (“CSRD”) Standard Chartered Bank AG and Standard Chartered PLC (the Group) have commenced preparation to embed EU Taxonomy classif icat ions and metrics and will continue to monitor expected policy developments from the European Commiss ion concern ing guidance on Taxonomy Alignment and Technical Screening Criter ia to incrementally enhance our assessment and support reporting as required. In this regard, the Group is developing dig ital capab il ity to help facil itate report ing against the different taxonomies that are being developed across the jur isd ict ions in which the Group operates. As the EU Taxonomy is the most advanced, the dig ital solut ion will adopt a rules-based approach to assess if a client and any client activ ity w ith the Group is in-scope and elig ible for EU Taxonomy report ing. The intent ion is to expand this dig ital capab il ity to include local taxonomy reporting and climate-related financ ial d isclosures requirements. The Group will consider taxonomy alignment in our business decis ions, includ ing at a cl ient and transaction level, as well as more broadly at a sector strategy level. Given our footprint across Europe/UK, Asia, Africa and the Middle East, we need to continually review our abil ity to assess taxonomy-al ignment based on informat ion ava ilable from clients and through our due dil igence process. Environmental impact of our operations We aim to min im ise the environmental impact of our operations as part of our commitment to be a responsible company. We report on energy, water and non-hazardous waste data which become the basis of our Greenhouse Gas (GHG) emiss ions management, as well as the targets we have set to reduce energy, water and waste consumption. Disclosures related to the Group’s environmental polic ies as well as GHG, energy efficiency, water and waste performance metrics are included in the Sustainab il ity section of the Strategic Report on pages 74 and 75, and in the Supplementary Environment Data table on pages 489 to 491. Our reporting methodology is based upon the World Resources Institute/ World Business Council for Sustainable Development Greenhouse Gas Protocol Corporate Accounting and Reporting Standard (Revised Edit ion). We report on all emiss ion sources requ ired under the Companies Act 2006 (Strategic Report and Directors’ Reports) Regulations. Using conversion factors from the International Energy Agency 2021 Emiss ions Factors and the UK Government’s Department for Business, Energy & Industrial Strategy, emiss ions are reported in metric tonnes of carbon diox ide equivalent (tCO 2 e), encompassing the six Kyoto gases. Scope 1 emiss ions are defined as ar is ing from the consumpt ion of energy from direct sources, during the use of property occupied by the Group. On-site combustion of fuels, includ ing diesel, liquef ied petroleum gas (LPG) and natural gas, is recorded using meters, or where metering is not available, collated from fuel vendors’ invo ices. Em iss ions from the combustion of fuel in Group-operated transportation devices, as well as fugit ive em iss ions, are excluded as be ing immater ial. Scope 2 emiss ions are defined as ar is ing from the consumption of ind irect sources of energy, dur ing the use of property occupied by the Group. Energy generated off-site in the form of purchased electric ity, heat, steam or cool ing, is collected as kilowatt hours consumed using meters or where metering is not available, collated from vendor’s invo ices. Applicable to both Scope 1 and 2 emiss ions, we include all ind irect and d irect sources of energy consumed by build ing services (amongst other activ it ies) with in the space occup ied by the Group, leased or owned. This can include base build ing services under landlord control, but over which we typically hold a reasonable degree of influence. All data centre facil it ies with condit ion ing systems and hardware remain ing under the operat ional control of the Group are included in the reporting. This does not include energy used at outsourced data centre facil it ies which are captured under Scope 3, Category 1. Scope 3 emiss ions occur as a consequence of the Group’s activ it ies but aris ing from sources not controlled by us. We have made great strides to enhance our Scope 3 GHG reporting for both upstream and downstream categories. Further informat ion on the pr inc iples and methodolog ies used to calculate the GHG emiss ions of the Group can be found on pages 74 to 83 with in the Strateg ic Report and in our reporting criter ia document at sc.com/environmentcriter ia. ![]() 228 Standard Chartered – Annual Report 2022 Directors’ report Other disclosures Reporting period The reporting period of our Scope 1 and 2, Scope 3 Category 6 (business flights), Scope 3 Category 1 (data centres) and environmental resource effic iency data is from 1 October 2021 to 30 September 2022. This allows suffic ient t ime for independent assurance to be gained on our Scope 1 and 2 emiss ions pr ior to the publicat ion of results. Our Scope 1 and 2 emiss ions are assured by an independent body, Global Documentation, against the requirements of ISO14064. Accordingly, the operating income used in this inventory corresponds to the same time period rather than the calendar year used in financ ial report ing. It is noted that there is a one year lag on data used for financed emiss ions. Th is is a result of time taken for our clients to report their financ ial and carbon em iss ion informat ion. Therefore, the Group’s baseline as released in 2021 util ised the 2020 year-end balance sheet date for client exposures, financial and carbon informat ion and the 2022 updated financed emiss ions ut il ises the 2021 year end balances. We st ill refer to these as the 2022 and 2021 updates. Assurance Our Scope 1 and 2 emiss ions are independently assured by Global Documentation, in accordance with ISO 14064. Units 2022 2021 2020 Reporting coverage of data Headcount No. of employees 83,266 81,957 83,657 Annual operating income from 1 October to 30 September $ mill ion 15,863 14,541 15,233 Net internal area of occupied property m 2 946,234 998,571 1,050,414 Greenhouse gas emiss ions (locat ion based) 1 Scope 1 & 2: 2 Scope 1 emiss ions (combust ion of fuels) tCO 2 e 2,071 2,902 3,988 Scope 2 emiss ions (purchased electr ic ity – locat ion based) tCO 2 e 47,363 82,761 113,870 Scope 1 & 2 emiss ions (locat ion based) tCO 2 e 49,434 85,662 117,858 Scope 1 & 2 emiss ions (UK and offshore area only) tCO 2 e – – – Scope 3: Purchased goods (Global data centres) tCO 2 e 706 43,132 29,562 Business travel (Air travel) tCO 2 e 39,107 3,654 33,930 Total scope 1,2 and 3 tCO 2 e 89,247 132,448 181,350 T GHG emiss ions – Intens ity: Total Scope 1, 2 & 3 emiss ions/headcount tCO 2 e/headcount/year 1.07 1.62 2.17 Total Scope 1, 2 & 3 emiss ions/operat ing income tCO 2 e/$m 5.63 9.11 11.91 Environmental resource effic iency Energy Indirect non-renewable energy consumption GWh/year 142 142 184 Indirect renewable energy consumption GWh/year 24 28 14 Direct non-renewable energy consumption GWh/year 10 12 17 Direct renewable energy consumption GWh/year 1 1 1 Energy consumption 3 GWh/year 177 183 216 Energy consumption (UK and offshore area only) GWh/year 6 5 – Energy consumption/Headcount kWH/headcount/year 2,129 2,233 2,544 1 Standard Chartered measures greenhouse gas emiss ions us ing the Greenhouse Gas emiss ions protocol 2 Despite only a 5 per cent reduction in our measured real estate, we reduced our Scope 1 and 2 emiss ions by more than 42 per cent to 49,434 tonnes dur ing 2022. This has been possible through a consumption reduction of 3 per cent to 177.3 GWh through energy-effic ient investment, plus a 12 per cent increase in renewable energy (being through direct power purchase agreements, green util it ies and renewable energy certif icates) across the portfol io. 3 Included in energy consumption is our scope 1 emiss ions from the combust ion of fuel. This energy usage has been measured in litres of fuel and converted to GWh/year using an energy intens ity factor Further detail on our environment performance, as well as associated assumptions and methodologies can be found on pages 74 to 83 with in the Strateg ic Report and in our reporting criter ia document at sc.com/environmentcriter ia. ![]() 229 Standard Chartered – Annual Report 2022 Directors’ report Electronic communicat ion The Board recognises the importance of good communicat ions w ith all shareholders. Directors are in regular contact with our inst itut ional shareholders and general presentations are made when we announce our financ ial results. The AGM presents an opportunity to communicate with all shareholders. Our shareholders are encouraged to receive our corporate documents electronically. The annual and inter im financial statements, Not ice of AGM and any div idend c irculars are all available electronically. If you do not already receive your corporate documents electronically and would like to do so in future, please contact our registrars at the address on page 509. 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 2023 AGM will be held at 11:00am (UK time) (6:00pm Hong Kong time) on 3 May 2023. Further details regarding the format, location and business to be transacted will be disclosed with in the 2023 Not ice of AGM. Our 2022 AGM was held on 4 May 2022 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 ies for cash without certain formalit ies. All Board recommended resolutions were passed at the meeting; a shareholder requis it ioned resolution concerning a proposed revis ion to the Group’s net-zero pathway was not passed, the details of which can be viewed on our website at sc.com/agm Non-audit services The Group’s non-audit services policy (“the policy”) was reviewed and approved by the Audit Committee on 22 September 2022. The policy is based on an overrid ing princ iple that, to avo id 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 ia for when the Aud it 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 ing pr inc iple, the Aud it Committee’s view is that EY can be of value in a range of non-audit service activ it ies and should be allowed to tender subject to the terms of the policy. The Group is required to take a conservative approach to interpret ing the potent ial threats to auditor independence and requires commensurately robust safeguards against them. UK legislat ion and gu idance from the FRC sets out threats to audit independence, includ ing self- interest, self-review, famil iar ity, taking of a management role or conducting advocacy. In particular, mainta in ing EY’s independence from the Group requires EY to avoid taking decis ions on the Group’s behalf. It is also recognised as essential that management retains the decis ion-mak ing capabil ity as to whether to act on advice given by EY as part of a non-audit service. This means not just the abil ity to act ion the advice given, but to have sufficient knowledge of the subject matter to be able to make a reasoned and independent judgement as to its valid ity. All of this is contained with in the pol icy. By way of (non-exhaustive) illustrat ion of the appl icat ion of the princ iples set out in the policy, the following types of non-audit services are likely to be permiss ible under the pol icy: • Reviews of inter im financial informat ion and ver if icat ion of inter im profits – the Group would also extend th is to work on investor circulars in most foreseeable circumstances • Extended audit or assurance work on financ ial informat ion and/or financial or operat ional controls, where this work is closely linked to the audit engagement • Agreed upon procedures on materials with in or referenced in the annual report of the Group or an entity with in the Group • Internal control review services Strictly prohib ited under the pol icy: • Bookkeeping, informat ion technology and internal audit services • Corporate finance services, valuation services or lit igat ion support • 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 ing or validat ing informat ion, wh ich management then util ises in the operation of the business ![]() 230 Standard Chartered – Annual Report 2022 Directors’ report Other disclosures 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 and challenge to be applied to each request for EY to provide non-audit services while (i i) preserv ing suffic ient flex ib il ity for the Group to engage EY to provide non-audit services where they are able to deliver particular value to the Group and where the proposed services can be provided without compromis ing EY’s objectiv ity and independence. To ensure that the Group will comply with a cap that lim its fees on non-audit services provided by EY to under 70 per cent of the average Group audit fee from the previous three consecutive financial years, (wh ich 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 2022, without deducting non-audit service fees which were required by law or regulation and performed by EY, the ratio was 0.3:1. Details relating to EY‘s remuneration as the Group statutory auditor and a descript ion of the broad categor ies of the types of non-audit services provided by EY are given in Note 38 to the financial statements. Auditor The Audit Committee reviews the appointment of the Group’s statutory auditor, its effectiveness and its relationsh ip w ith the Group, which includes monitor ing our use of the aud itors for non-audit services and the balance of audit 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 ive and independent in its role as Group statutory auditor. Each director believes that there is no relevant informat ion 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 ion and to establ ish that the Group statutory auditor is made aware of any pertinent informat ion. EY will be in attendance at the 2023 AGM. A resolution to re-appoint EY as auditor was proposed at the Company’s 2022 AGM and was successfully passed. EY is a Public Interest Entity Auditor recognised in accordance with the Hong Kong Financ ial Report ing Council Ordinance. By order of the Board Adrian de Souza Group Company Secretary 16 February 2023 Standard Chartered PLC Registered No. 966425 ![]() 231 Standard Chartered – Annual Report 2022 Directors’ report #### Statement of directors’ responsibilities The directors are responsible for preparing the Annual Report and the Group and Company financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare Group and Company financial statements for each financial year. Under that law: • The Group financial statements have been prepared in accordance with UK-adopted International Accounting Standards and International Financ ial Report ing Standards as adopted by the European Union; • The Company financial statements have been properly prepared in accordance with UK-adopted International Accounting Standards as applied in accordance with section 408 of the Companies Act 2006; and • The financial statements have been prepared in accordance with the requirements of the Companies Act 2006. Under company law the directors must not approve the financial statements unless they are sat isf ied 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 ial statements, the directors are required to: • Select suitable accounting polic ies 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-adopted International Accounting Standards and International Financ ial Report ing Standards as adopted by the European Union; • Assess the Group and the Company’s abil ity to cont inue as a going concern, disclos ing, as appl icable, matters related to going concern; and • Use the going concern basis of accounting unless they either intend to liqu idate the Group or the Company or to cease operations, or have no realist ic alternat ive but to do so The directors are responsible for keeping adequate accounting records that are suffic ient to show and expla in the Company’s transactions and disclose with reasonable accuracy at any time the financ ial pos it ion of the Company and enable them to ensure that its financ ial 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 ial statements that are free from material misstatement, whether due to fraud or error, and have general responsib il ity 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 it ies. Under applicable law and regulations, the directors are also responsible for preparing a 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 ity of the corporate and financial informat ion included on the Company’s website. Legislat ion in the UK governing the preparation and dissem inat ion of financ ial statements d iffer from legislat ion in other jur isd ict ions. Responsib il ity statement of the directors in respect of the annual financial report We confirm that to the best of our knowledge: • The financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liab il it ies, financial pos it ion and profit or loss of the Company and the undertakings included in the consolidat ion taken as a whole; and • The Strategic report includes a fair review of the development and performance of the business and the posit ion of the Company and the undertak ings included in the consolidat ion taken as a whole, together w ith a descript ion of the emerg ing risks and uncertaint ies that they face We consider the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the informat ion necessary for shareholders to assess the Group’s posit ion and performance, bus iness model and strategy. By order of the Board Andy Halford Group Chief Financ ial Officer 16 February 2023 1 The Group’s Risk Management Framework and System of Internal Control applies only to wholly controlled subsid iar ies of the Group, and not to Associates, Joint Ventures or Structured Entit ies of the Group ![]() #### Risk review and Capital review 236 Risk profile 295 Enterprise Risk Management Framework 301 Princ ipal r isks 320 Capital review #### Real-time trade transaction status with Trade Track-It #### In October, we launched Trade Track-It, a digital-transaction-tracking portal which gives our clients end-to-end vis #### ibility of their trade-transaction status globally. #### The tool is integrated with DHL’s tracking system and Lloyd’s List Intelligence’s vessel-tracking solution providing our clients, and their customers, with 24/7 access to #### near real time updates for trade transactions, document delivery and vessel status. #### Before the introduction of Trade #### Track-It, clients would have to wait hours – and sometimes days – for an update on the status of their trade #### transactions and related document and goods flows. Read more online at www.sc.com/tradetrackit 232 Standard Chartered – Annual Report 2022 Risk review ![]() 233 Standard Chartered – Annual Report 2022 Risk review and Capital review ![]() 234 Standard Chartered – Annual Report 2022 Risk review Index #### Risk review and Capital review Risk Index Annual Report and Accounts Risk profile Credit Risk 236 Basis of preparation 236 Credit risk overview 236 Impairment model 236 Staging of financ ial instruments 236 IFRS 9 expected credit loss princ iples and approaches 236 Maximum exposure to credit risk 238 Analysis of financ ial instrument by stage 239 Credit quality analysis 240 • Credit quality by client segment 240 • Credit quality by geographic region 246 Movement in gross exposures and credit impa irment for loans and advances, debt secur it ies, undrawn commitments and financ ial guarantees 247 Movement of debt securit ies, alternat ive tier one and other elig ible b ills 249 Analysis of Stage 2 balances 254 Credit impa irment charge 255 COVID-19 relief measures 255 Problem credit management and provis ion ing 256 • Forborne and other modif ied loans by cl ient segment 256 • Forborne and other modif ied loans by reg ion 256 • Credit-impa ired (stage 3) loans and advances by cl ient segment 257 • Credit-impa ired (stage 3) loans and advances by geograph ic region 257 Credit risk mit igat ion 257 • Collateral 258 • Collateral held on loans and advances 258 • Collateral – Corporate, Commercial & Institut ional Bank ing 258 • Collateral – Consumer, Private & Business Banking 259 • Mortgage loan-to-value ratios by geography 260 • Collateral and other credit enhancements possessed or called upon 260 • Other Credit Risk mit igat ion 261 Other portfolio analysis 261 • Contractual maturity analysis of loans and advances by client segment 261 • Credit quality by industry 262 • Industry analysis of loans and advances by geographic region 263 • Vulnerable and Cyclical Sector tables 264 • China commercial real estate 268 • Debt securit ies and other el ig ible b ills 269 IFRS 9 expected credit loss methodology 269 Traded risk 282 Market Risk movements 282 Counterparty Credit Risk 285 Derivat ive financial instruments Credit Risk mit igat ion 285 Liqu id ity and Funding Risk 285 Liqu id ity & Funding Risk metrics 286 Encumbrance 288 Liqu id ity analysis of the Group’s balance sheet 290 Interest Rate Risk in the Banking Book 293 Operational and Technology Risk 294 Operational and Technology Risk profile 294 Other princ ipal r isks 294 ![]() 235 Standard Chartered – Annual Report 2022 Risk review and Capital review Risk Index Annual Report and Accounts Risk management approach Enterprise Risk Management Framework 295 Princ ipal R isks 301 Capital Capital summary 320 • Capital ratio 320 • Capital base 321 • Movement in total capital 322 Risk-weighted asset 323 Leverage ratio 325 The following parts of the Risk review and Capital review form part of these financ ial statements and are aud ited by the external auditors: • a) Risk review: Disclosures marked as ‘audited’ from the start of Credit risk section (page 236) to the end of other princ ipal risks in the same section (page 301); and • b) Capital review: Tables marked as ‘audited’ from the start of ‘Capital base’ to the end of ‘Movement in total capital’, excluding ‘Total risk-weighted assets’ (pages 321 to 322). ![]() 236 Standard Chartered – Annual Report 2022 Risk review Risk profile Credit Risk (audited) Basis of preparation Unless otherwise stated the balance sheet and income statement informat ion presented w ith in th is section is based on the Group’s management view. This is princ ipally the location from which a client relationsh ip is managed, which may differ from where it is financ ially booked and may be shared between businesses and/or regions. This view reflects how the client segments and regions are managed internally. Loans and advances to customers and banks held at amortised cost in this Risk profile section include reverse repurchase agreement balances held at amortised cost, per Note 16 Reverse repurchase and repurchase agreements includ ing other s im ilar secured lend ing and borrowing. Credit Risk overview Credit Risk is the potential for loss due to the failure of a counterparty to meet its contractual obligat ions to pay the Group. Credit exposures arise from both the banking and trading books. Impairment model IFRS 9 mandates an impa irment model that requ ires the recognit ion of expected cred it losses (ECL) on all financ ial debt instruments held at amortised cost, Fair Value through Other Comprehensive Income (FVOCI), undrawn loan commitments and financ ial guarantees. Staging of financ ial instruments Financ ial instruments that are not already credit-impa ired are orig inated into stage 1 and a 12-month expected credit loss provis ion is recognised. Instruments will remain in stage 1 until they are repaid, unless they experience sign ificant cred it deteriorat ion (stage 2) or they become credit-impa ired (stage 3). Instruments will transfer to stage 2 and a lifet ime expected credit loss provis ion is recognised when there has been a sign ificant change in the Credit Risk compared to what was expected at orig inat ion. The framework used to determine a sign ificant increase in Credit Risk is set out below. IFRS 9 expected credit loss princ iples and approaches The main methodology princ iples and approach adopted by the Group are set out in the following table. Title Descript ion Supplementary informat ion Page Approach for determin ing expected credit losses For material loan portfolios, the Group has adopted a statist ical modelling approach for determin ing expected cred it losses that makes extensive use of credit modelling. These models leveraged exist ing advanced internal ratings based (IRB) models, where these were available. Where model performance breaches model monitor ing thresholds or validat ion standards, a post model adjustment may be required to correct for ident ified model issues, which will be removed once those issues have been remedied. IFRS 9 expected credit loss methodology Determin ing l ifet ime expected credit loss for revolving products Post-model adjustments 269 269 276 Incorporation of forward-looking informat ion The determinat ion of expected cred it loss includes various assumptions and judgements in respect of forward-looking macroeconomic informat ion. Refer to pages 271 to 274 for incorporation of forward- looking informat ion, forecast of key macroeconom ic variables underlying the expected credit loss calculation and the impact on non-linear ity and sens it iv ity of expected credit loss calculation to macroeconomic variables. Judgemental adjustments, includ ing management overlays may also be used to capture risks not ident ified in the models. Incorporation of forward-looking informat ion and impact of non-linear ity Forecast of key macroeconomic variables underlying the expected credit loss calculation Judgemental adjustments and sensit iv ity to macroeconomic variables 271 272 275 Stage 1 • 12-month ECL • Performing Stage 2 • Lifet ime expected cred it loss • Performing but has exhib ited sign ificant increase in Credit Risk (SICR) Stage 3 • Credit-impa ired • Non-performing #### Risk profile ![]() 237 Standard Chartered – Annual Report 2022 Risk review and Capital review Title Descript ion Supplementary informat ion Page Sign ificant increase in Credit Risk (SICR) Expected credit loss for financ ial assets w ill transfer from a 12-month basis (stage 1) to a lifet ime bas is (stage 2) when there is a sign ificant increase in Credit Risk (SICR) relative to that which was expected at the time of orig inat ion, or when the asset becomes credit-impa ired. On transfer to a lifet ime bas is, the expected credit loss for those assets will reflect the impact of a default event expected to occur over the remain ing l ifet ime of the instrument rather than just over the 12 months from the reporting date. SICR is assessed by comparing the risk of default of an exposure at the reporting date with the risk of default at orig inat ion (after consider ing the passage of time). ‘Sign ificant’ does not mean stat ist ically s ign ificant nor is it reflective of the extent of the impact on the Group’s financ ial statements. Whether a change in the risk of default is sign ificant or not is assessed using quantitat ive and qual itat ive cr iter ia, the we ight of which will depend on the type of product and counterparty. Quantitat ive cr iter ia Sign ificant increase in Credit Risk thresholds Specif ic qual itat ive and quantitat ive cr iter ia per segment: Corporate, Commercial & Institut ional Bank ing (CCIB) clients Consumer and Business Banking clients Private Banking clients Debt securit ies 278 279 279 279 279 279 280 Assessment of credit-impa ired financial assets Credit-impa ired (stage 3) financial assets compr ise 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 ipal and interest payments and/or where the assets are otherwise considered unlikely to pay. This defin it ion is consistent with internal Credit Risk management and the regulatory defin it ion of default. Unlikely to pay factors include object ive cond it ions such as bankruptcy, debt restructuring, fraud or death. It also includes credit-related modif icat ions of contractual cashflows due to sign ificant financial diff iculty (forbearance) where the Group has granted concess ions that it would not ordinar ily cons ider. Interest income for stage 3 assets is recognised by applying the orig inal effective interest rate to the net asset amount (that is, net of credit impa irment prov is ions). When financial 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 in the cred it impa irment l ine. Consumer and Business Banking clients CCIB and Private Banking clients 280 280 Transfers between stages Assets will transfer from stage 3 to stage 2 when they are no longer considered to be credit-impa ired. Assets w ill not be considered credit-impa ired only if the customer makes payments such that the obligat ions are current in line with the orig inal contractual terms. Assets may transfer to stage 1 if they are no longer considered to have experienced a sign ificant increase in Credit Risk. This will be immed iate when the orig inal probab il ity of default based transfer cr iter ia are no longer met (and as long as none of the other transfer criter ia apply). Where assets were transferred using other measures, the assets will only transfer back to stage 1 when the condit ion that caused the sign ificant increase in Credit Risk no longer applies (and as long as none of the other transfer criter ia apply). Movement in loan exposures and expected credit losses 247 Modif ied financial assets Where the contractual terms of a financial instrument have been modif ied, and th is does not result in the instrument being derecognised, a modif icat ion gain or loss is recognised in the income statement representing the difference between the orig inal cashflows and the modif ied cashflows, d iscounted at the effective interest rate. The modif icat ion gain/loss is directly applied to the gross carrying amount of the instrument. If the modif icat ion is credit related, such as forbearance or where the Group has granted concessions that it would not ordinar ily cons ider, then it will be considered credit-impa ired. Mod if icat ions that are not credit related will be subject to an assessment of whether the asset’s Credit Risk has increased sign ificantly s ince orig inat ion by comparing the remain ing l ifet ime PD based on the mod if ied terms w ith the remain ing l ifet ime PD based on the or ig inal contractual terms. COVID-19 relief measures Forbearance and other modif ied loans 255 256 Governance and applicat ion of expert credit judgement in respect of expected credit losses The models used in determin ing ECL are rev iewed and approved by the Group Credit Model Assessment Committee and have been validated by Group model validat ion, wh ich is independent of the business. A quarterly model monitor ing process is in place that uses recent data to compare the differences between model predict ions and actual outcomes against approved thresholds. Where a model’s performance breaches the monitor ing thresholds then an assessment of whether an ECL adjustment is required to correct for the ident ified model issue is completed. The determinat ion of expected cred it losses requires a sign ificant degree of management judgement which had an impact on governance processes, with the output of the expected credit models assessed by the IFRS 9 Impairment Committee. Group Credit Model Assessment Committee IFRS 9 Impairment Committee 280 281 ![]() 238 Standard Chartered – Annual Report 2022 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 ial instruments as at 31 December 2022, before and after taking into account any collateral held or other Credit Risk mit igat ion. The Group’s on-balance sheet maximum exposure to Credit Risk reduced by $6 bill ion to $790 b ill ion (31 December 2021: $796 bill ion). Loans and advances to customers increased by $12 bill ion to $311 b ill ion (31 December 2021: $298 b ill ion). Th is includes a $24 bill ion increase in Treasury and securit ies backed loans held to collect partly offset by a $13 b ill ion reduct ion from risk- weighted asset optim isat ion actions undertaken by CCIB and a $8 bill ion reduct ion from currency translation. Excluding the above, there was 3 per cent underlying loan growth, with growth in Trade partly offset by deleveraging in Wealth Management. Excluding reverse repurchase agreements, loans and advances to customers reduced by $5 bill ion. The reduct ion was primar ily in the CPBB business and was mainly driven by a decrease in Private Bank exposure (largely from UK, Hong Kong, and Singapore in all classes) and Resident ial Mortgage segment in Korea (due to tightened Debt Service Ratio following new government guidel ines). Th is was partly offset by $0.6 bill ion increase in Ventures from portfolio growth in Mox and the launch of Trust Bank in Singapore. Derivat ive exposures increased by $11.3 bill ion to $64 b ill ion and investment debt securit ies increased by $9 bill ion to $172 b ill ion. This was offset by a decrease of $14 bill ion of cash and balances at Central banks. Off-balance sheet instruments increased by $12 bill ion to $229 b ill ion, dr iven by higher undrawn commitments which increased from $159 bill ion to $169 b ill ion. 2022 2021 Maximum exposure $mill ion Credit risk management Net exposure $mill ion Maximum exposure $mill ion Credit risk management Net exposure $mill ion Collateral 8 $mill ion Master netting agreements $mill ion Collateral⁸ $mill ion Master netting agreements $mill ion On-balance sheet Cash and balances at central banks 58,263 58,263 72,663 72,663 Loans and advances to banks¹ 39,519 978 38,541 44,383 1,079 43,304 of which – reverse repurchase agreements and other sim ilar secured lending 7 978 978 – 1,079 1,079 – Loans and advances to customers 1 310,647 135,194 175,453 298,468 131,397 167,071 of which – reverse repurchase agreements and other sim ilar secured lending 7 24,498 24,498 – 7,331 7,331 – Investment securit ies – Debt secur it ies and other elig ible b ills 2 171,640 171,640 162,700 162,700 Fair value through profit or loss 3, 7 102,575 64,491 – 38,084 123,234 80,009 – 43,225 Loans and advances to banks 976 976 3,847 3,847 Loans and advances to customers 6,546 6,546 9,953 9,953 Reverse repurchase agreements and other sim ilar lend ing 7 64,491 64,491 – 80,009 80,009 – Investment securit ies – Debt secur it ies and other elig ible b ills 2 30,562 30,562 29,425 29,425 Derivat ive financial instruments 4, 7 63,717 9,206 50,133 4,378 52,445 8,092 39,502 4,851 Accrued income 2,706 2,706 1,674 1,674 Assets held for sale 1,388 1,388 52 52 Other assets 5 39,295 39,295 40,068 40,068 Total balance sheet 789,750 209,869 50,133 529,748 795,687 220,577 39,502 535,608 Off-balance sheet 6 Undrawn Commitments 168,668 2,951 165,717 158,523 3,848 154,675 Financ ial Guarantees and other equivalents 60,410 2,592 57,818 58,535 2,240 56,295 Total off-balance sheet 229,078 5,543 – 223,535 217,058 6,088 – 210,970 Total 1,018,828 215,412 50,133 753,283 1,012,745 226,665 39,502 746,578 1 An analysis of credit quality is set out in the credit quality analysis section (page 240). Further details of collateral held by client segment and stage are set out in the collateral analysis section (page 257) 2 Excludes equity and other investments of $808 mill ion (31 December 2021: $737 m ill ion). Further deta ils are set out in Note 13 Financ ial instruments 3 Excludes equity and other investments of $3,230 mill ion (31 December 2021: $5,861 m ill ion). Further deta ils are set out in Note 13 Financ ial instruments 4 The Group enters into master netting agreements, which in the event of default result in a single amount owed by or to the counterparty through netting the sum of the posit ive and negat ive mark-to-market values of applicable derivat ive transact ions 5 Other assets include Hong Kong certif icates of indebtedness, cash collateral, and acceptances, in addit ion to unsettled trades and other financial assets 6 Excludes ECL allowances which are reported under Provis ions for l iab il it ies and charges 7 Collateral capped at maximum exposure (over-collateralised) 8 Adjusted for over-collateralisat ion, wh ich has been determined with reference to the drawn and undrawn component as this best reflects the effect on the amount aris ing from expected cred it losses. ![]() 239 Standard Chartered – Annual Report 2022 Risk review and Capital review Analysis of financ ial instrument by stage (audited) The total balance of financial instruments held increased by $15.3 bill ion to $858 b ill ion (31 December 2021: $843 b ill ion). Total stage 1 balances increased by $22 bill ion, of wh ich around $16 bill ion was in loans and advances to customers, primar ily due to increased levels of reverse repurchase agreements in Central and other items segment. CPBB decreased by $5.2 bill ion due to mortgages and secured wealth. CCIB increased by $4 bill ion to $126 b ill ion (31 December 2021: $122 b ill ion). Off-balance sheet exposures increased by $15 bill ion pr imar ily in undrawn commitments from increased customer demand. Stage 2 financial instruments reduced to $28.1 bill ion (31 December 2021: $34.6 b ill ion) due to exposure changes and transfers to stage 1 in CCIB, particularly in the Transport, telecoms and util it ies and Energy sectors, partly offset by increase in commercial real estate, primar ily in Asia. As a result, the proportion of loans and advances to customers classif ied in stage 2 reduced by $3.8 bill ion. Stage 3 financial instruments were stable at $9.3 bill ion (31 December 2021: $9.1 b ill ion). 2022 Stage 1 Stage 2 Stage 3 Total Gross balance 1 $mill ion Total credit impa ir- ment $mill ion Net carrying value $mill ion Gross balance 1 $mill ion Total credit impa ir- ment $mill ion Net carrying value $mill ion Gross balance 1 $mill ion Total credit impa ir- ment $mill ion Net carrying value $mill ion Gross balance 1 $mill ion Total credit impa ir- ment $mill ion Net carrying value $mill ion Cash and balances at central banks 57,643 – 57,643 333 (8) 325 295 – 295 58,271 (8) 58,263 Loans and advances to banks (amortised cost) 39,149 (9) 39,140 337 (3) 334 59 (14) 45 39,545 (26) 39,519 Loans and advances to customers (amortised cost) 295,219 (559)294,660 13,043 (444) 12,599 7,845 (4,457) 3,388 316,107 (5,460) 310,647 Debt securit ies and other elig ible b ills 5 166,103 (25) 5,455 (90) 144 (106) 171,702 (221) Amortised cost 59,427 (9) 59,418 271 (2) 269 78 (51) 27 59,776 (62) 59,714 FVOCI 2 106,676 (16) 5,184 (88) 66 (55) 111,926 (159) – Accrued income (amortised cost) 4 2,706 2,706 – – 2,706 – 2,706 Assets held for sale 1,083 (6) 1,077 262 (4) 258 120 (67) 53 1,465 (77) 1,388 Other assets 39,294 – 39,294 – – – 4 (3) 1 39,298 (3) 39,295 Undrawn commitments 3 162,958 (41) 5,582 (53) 128 – 168,668 (94) Financ ial guarantees, trade credits and irrevocable letters of credit 3 56,683 (11) 3,062 (28) 665 (147) 60,410 (186) Total 820,838 (651) 28,074 (630) 9,260 (4,794) 858,172 (6,075) 1 Gross carrying amount for off-balance sheet refers to notional values 2 These instruments are held at fair value on the balance sheet. The ECL provis ion in respect of debt securit ies measured at FVOCI is held with in the OCI reserve 3 These are off-balance sheet instruments. Only the ECL is recorded on-balance sheet as a financ ial l iab il ity and therefore there is no “net carrying amount”. ECL allowances on off-balance sheet instruments are held as liab il ity provis ions to the extent that the drawn and undrawn components of loan exposures can be separately ident ified. Otherw ise they will be reported against the drawn component 4 Stage 1 ECL is not material 5 Stage 3 gross includes $28 mill ion (2021: $33 m ill ion) or ig inated cred it-impa ired debt secur it ies w ith impa irment of $13 m ill ion (2021: N il) ![]() 240 Standard Chartered – Annual Report 2022 Risk review Risk profile 2021 Stage 1 Stage 2 Stage 3 Total Gross balance¹ $mill ion Total credit impa ir- ment $mill ion Net carrying value $mill ion Gross balance¹ $mill ion Total credit impa ir- ment $mill ion Net carrying value $mill ion Gross balance¹ $mill ion Total credit impa ir- ment $mill ion Net carrying value $mill ion Gross balance 1 $mill ion Total credit impa ir- ment $mill ion Net carrying value $mill ion 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 ies and other elig ible b ills 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 ial 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) 1 Gross carrying amount for off-balance sheet refers to notional values 2 These instruments are held at fair value on the balance sheet. The ECL provis ion in respect of debt securit ies measured at FVOCI is held with in the OCI reserve 3 These are off-balance sheet instruments. Only the ECL is recorded on-balance sheet as a financ ial l iab il ity and therefore there is no “net carrying amount”. ECL allowances on off-balance sheet instruments are held as liab il ity provis ions to the extent that the drawn and undrawn components of loan exposures can be separately ident ified. Otherw ise they will be reported against the drawn component 4 Stage 1 ECL is not material 5 Stage 3 gross includes $33 mill ion or ig inated cred it-impa ired debt secur it ies and N il impa irment Credit quality analysis (audited) Credit quality by client segment For CCIB, exposures are analysed by credit grade (CG), which plays a central role in the quality assessment and monitor ing of risk. All loans are assigned a CG, which is reviewed period ically 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 (credit-impa ired) cl ients. Consumer and Business Banking portfolios are analysed by days past due and Private Banking by the type of collateral held. Mapping of credit quality The Group uses the following internal risk mapping to determine the credit quality for loans. Credit quality descript ion Corporate, Commercial & Institut ional Bank ing Private Banking 1 Consumer & Business Banking 4 Internal grade mapping S&P external ratings equivalent Regulatory PD range (%) Internal ratings Number of days past due Strong 1A to 5B AAA/AA+ to BBB-/BB+0 to 0.425 Class I and Class IV Current loans (no past dues nor impa ired) Satisfactory 6A to 11C BB+/BB to B-/CCC+ 2 0.426 to 15.75 Class II and Class III Loans past due till 29 days Higher risk Grade 12 CCC+ to C 3 15.751 to 99.999 Stressed Assets Group (SAG) managed Past due loans 30 days and over till 90 days 1 For Private Banking, classes of risk represent the type of collateral held. Class I represents facil it ies with liqu id collateral, such as cash and marketable secur it ies. Class II represents unsecured/partially secured facil it ies and those with ill iqu id collateral, such as equity in private enterprises. Class III represents facil it ies with resident ial or Commerc ial real estate collateral. Class IV covers margin trading facil it ies 2 Banks’ rating: BB to CCC/C 3 Banks’ rating: CCC to C 4 Medium enterprise clients with in Bus iness Banking are managed using the same internal credit grades as CCIB ![]() 241 Standard Chartered – Annual Report 2022 Risk review and Capital review The table overleaf sets out the gross loans and advances held at amortised cost, expected credit loss provis ions and expected credit loss coverage by business segment and stage. Expected credit loss coverage represents the expected credit loss reported for each segment and stage as a proportion of the gross loan balance for each segment and stage. Stage 1: Stage 1 gross loans and advances to customers increased by $16 bill ion to $295 b ill ion (31 December 2021: $279 b ill ion) and represent an increase of 1 percentage point to 93 per cent of loans and advances to customers (31 December 2021: 92 per cent). The stage 1 coverage ratio remained at 0.2 per cent compared with 31 December 2021. In CCIB, the proportion of stage 1 loans has increased to $126 bill ion, be ing 88 per cent (31 December 2021: 85 per cent), and the percentage of stage 1 loans rated as strong is higher at $90 bill ion, be ing 71 per cent (31 December 2021: 64 per cent) as the Group continues to focus on the orig inat ion of investment grade lending. This is primar ily due to a $10.5 bill ion increase in exposures in Financ ing, insurance and non-banking from a few notable clients, $1.5 bill ion from rat ing upgrades in Transport, telecom and util it ies clients, offset by $2.8 bill ion decrease in Manufacturing and $5.3 bill ion decrease in China Real Estate sector from repayments and downgrades into stage 2. CPBB stage 1 loans decreased by $5 bill ion to $129 b ill ion (31 December 2021: $134 bill ion), ma inly driven by a decrease in Private Bank exposure (largely from UK, Hong Kong, and Singapore in all classes), and a decrease in exposure of the Resident ial Mortgage segment in Korea (due to tightened Debt Service Ratio following new government guidel ines). The proportion of loans and advances rated as strong increased to 97 per cent (31 December 2021: 96 per cent). Ventures increased by $609 mill ion to $691 m ill ion (31 December 2021: $82 mill ion) from new lend ing in Mox Bank and the launch of Trust Bank in Singapore. Central and other items segment increased by $17 bill ion to $39.1 bill ion (31 December 2021: $22.4 b ill ion), due to h igher levels of reverse repurchase agreements with Non Bank Financ ial Inst itut ions and placements w ith governments. Stage 2: Stage 2 loans and advances to customers decreased by $4 bill ion to $13.0 b ill ion (31 December 2021: $16.8 b ill ion), primar ily in CCIB due to exposure reductions and rating upgrades in Transport, telecom and util it ies sectors, $1 bill ion decrease in the Energy sector, offset by increase in stage 2 in China commercial real estate. The proportion of stage 2 loans also reduced to 4.1 per cent (31 December 2021: 5.5 per cent). Stage 2 loans to customers classif ied as ‘H igher risk’ was at $1.8 bill ion due to the downgrade of Pak istan. This was largely offset by downgrades to stage 3 primar ily as a result of Sr i Lanka and Ghana sovereign rating downgrade. CPBB stage 2 loans reduced by $0.2 bill ion pr imar ily due to the transfers into stage 1 aris ing from the change in Credit Risk thresholds for certain credit card portfolios, largely in Asia. The overall stage 2 cover ratio increased by 0.3 per cent to 3.4 per cent (31 December 2021: 3.1 per cent). CCIB cover ratio increased to 2.8 per cent (31 December 2021: 2.3 per cent) primar ily w ith in h igher risk exposures from sovereign downgrades offset by full release of COVID-19 overlay. CPBB stage 2 cover ratio decreased to 7.2 per cent (31 December 2021: 9.5 per cent), primar ily dr iven by the release of $30 mill ion of COVID-19 management overlays aris ing from the reassessment of residual risk after manifestat ion of such r isk through ind iv idual impa irments, partly offset by worsen ing macroeconomic variables and portfolio maturity in the China loan book. Stage 3: Gross stage 3 loans decreased by $0.3 bill ion to $7.8 b ill ion (31 December 2021: $8.1 bill ion) as a result of upgrades and debt sales in CCIB which was offset by the downgrade of Sri Lanka and Ghana and China commercial real estate clients. CPBB stage 3 loans were materially unchanged at $1.5 bill ion, the $0.1 bill ion decrease was largely in Secured wealth and Mortgages portfolio. Ventures stage 3 was $1 mill ion pr imar ily dr iven by downgrades in Mox Bank Hong Kong. Central and other items stage 3 balances increased to $248 mill ion (31 December 2021: N il) due to downgrade of local currency loans to Sri Lanka Sovereign. ![]() 242 Standard Chartered – Annual Report 2022 Risk review Risk profile Loans and advances by client segment (audited) Amortised cost 2022 Banks $mill ion Customers Undrawn commitments $mill ion Financ ial Guarantees $mill ion Corporate, Commercial & Institut ional Banking $mill ion Consumer, Private & Business Banking $mill ion Ventures $mill ion Central & other items $mill ion Customer Total $mill ion Stage 1 39,149 126,261 129,134 691 39,133 295,219 162,958 56,683 - Strong 27,941 89,567 124,734 685 39,133 254,119 148,303 39,612 - Satisfactory 11,208 36,694 4,400 6 – 41,100 14,655 17,071 Stage 2 337 11,355 1,670 18 – 13,043 5,582 3,062 - Strong 148 2,068 1,215 10 – 3,293 1,449 522 - Satisfactory 119 7,783 146 4 – 7,933 3,454 2,134 - Higher risk 70 1,504 309 4 – 1,817 679 406 Of which (stage 2): - Less than 30 days past due 5 109 148 4 – 261 – – - More than 30 days past due 6 23 310 4 – 337 – – Stage 3, credit-impa ired financial assets 59 6,143 1,453 1 248 7,845 128 665 Gross balance¹ 39,545 143,759 132,257 710 39,381 316,107 168,668 60,410 Stage 1 (9) (143) (406) (10) – (559) (41) (11) - Strong (3) (43) (332) (10) – (385) (28) (3) - Satisfactory (6) (100) (74) – – (174) (13) (8) Stage 2 (3) (323) (120) (1) – (444) (53) (28) - Strong – (30) (62) (1) – (93) (6) – - Satisfactory (2) (159) (17) – – (176) (42) (15) - Higher risk (1) (134) (41) – – (175) (5) (13) Of which (stage 2): - Less than 30 days past due – (2) (17) – – (19) – – - More than 30 days past due – (1) (41) – – (42) – – Stage 3, credit-impa ired financial assets (14) (3,662) (776) (1) (18) (4,457) – (147) Total credit impa irment (26) (4,128) (1,302) (12) (18) (5,460) (94) (186) Net carrying value 39,519 139,631 130,955 698 39,363 310,647 Stage 1 0.0% 0.1% 0.3% 1.4% 0.0% 0.2% 0.0% 0.0% - Strong 0.0% 0.0% 0.3% 1.5% 0.0% 0.2% 0.0% 0.0% - Satisfactory 0.1% 0.3% 1.7% 0.0% 0.0% 0.4% 0.1% 0.0% Stage 2 0.9% 2.8% 7.2% 5.6% 0.0% 3.4% 0.9% 0.9% - Strong 0.0% 1.5% 5.1% 10.0% 0.0% 2.8% 0.4% 0.0% - Satisfactory 1.7% 2.0% 11.6% 0.0% 0.0% 2.2% 1.2% 0.7% - Higher risk 1.4% 8.9% 13.3% 0.0% 0.0% 9.6% 0.7% 3.2% Of which (stage 2): - Less than 30 days past due 0.0% 1.8% 11.5% 0.0% 0.0% 7.3% 0.0% 0.0% - More than 30 days past due 0.0% 4.3% 13.2% 0.0% 0.0% 12.5% 0.0% 0.0% Stage 3, credit-impa ired financial assets (S3) 23.7% 59.6% 53.4% 100.0% 7.3% 56.8% 0.0% 22.1% Cover ratio 0.1% 2.9% 1.0% 1.7% 0.0% 1.7% 0.1% 0.3% Fair value through profit or loss Performing 24,930 44,461 28 – 2,557 47,046 – – - Strong 21,451 36,454 27 – 2,409 38,890 – – - Satisfactory 3,479 8,007 1 – 148 8,156 – – - Higher risk – – – – – – – – Defaulted (CG13-14) – 37 – – – 37 – – Gross balance (FVTPL) 2 24,930 44,498 28 – 2,557 47,083 – – Net carrying value (incl FVTPL) 64,449 184,129 130,983 698 41,920 357,730 – – 1 Loans and advances includes reverse repurchase agreements and other sim ilar secured lend ing of $24,498 mill ion under Customers and of $978 m ill ion under Banks, held at amortised cost 2 Loans and advances includes reverse repurchase agreements and other sim ilar secured lend ing of $40,537 mill ion under Customers and of $23,954 m ill ion under Banks, held at fair value through profit or loss ![]() 243 Standard Chartered – Annual Report 2022 Risk review and Capital review Amortised cost 2021 (Restated) 1 Banks $mill ion Customers Undrawn commitments $mill ion Financ ial Guarantees $mill ion Corporate, Commercial & Institut ional Banking $mill ion Consumer, Private & Business Banking 1 $mill ion Ventures 1 $mill ion Central & other items $mill ion Customer Total $mill ion Stage 1 43,776 122,368 134,289 82 22,439 279,178 149,530 54,923 – Strong 30,813 77,826 129,486 82 22,333 229,727 132,274 37,418 – Satisfactory 12,963 44,542 4,803 – 106 49,451 17,256 17,505 Stage 2 580 14,818 1,912 9 110 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 1,272 351 9 110 1,742 972 553 Of which (stage 2): – Less than 30 days past due – 77 308 – – 385 – – – More than 30 days past due – 49 351 9 – 409 – – Stage 3, credit-impa ired financial assets 54 6,520 1,575 – – 8,095 – 799 Gross balance 2 44,410 143,706 137,776 91 22,549 304,122 158,523 58,535 Stage 1 (12) (103) (369) (1) – (473) (42) (15) – Strong (4) (58) (282) (1) – (341) (23) (5) – Satisfactory (8) (45) (87) – – (132) (19) (10) Stage 2 (4) (341) (181) (2) – (524) (60) (22) – Strong (2) (62) (104) – – (166) (6) (1) – Satisfactory (2) (179) (32) – – (211) (46) (9) – Higher risk – (100) (45) (2) – (147) (8) (12) Of which (stage 2): – Less than 30 days past due – (2) (32) – – (34) – – – More than 30 days past due – (3) (45) (2) – (50) – – Stage 3, credit-impa ired financial assets (11) (3,861) (796) – – (4,657) – (207) Total credit impa irment (27) (4,305) (1,346) (3) – (5,654) (102) (244) Net carrying value 44,383 139,401 136,430 88 22,549 298,468 Stage 1 0.0% 0.1% 0.3% 1.2% 0.0% 0.2% 0.0% 0.0% – Strong 0.0% 0.1% 0.2% 1.2% 0.0% 0.1% 0.0% 0.0% – Satisfactory 0.1% 0.1% 1.8% 0.0% 0.0% 0.3% 0.1% 0.1% Stage 2 0.7% 2.3% 9.5% 22.2% 0.0% 3.1% 0.7% 0.8% – Strong 1.6% 2.6% 8.3% 0.0% 0.0% 4.6% 0.2% 0.1% – Satisfactory 1.9% 1.6% 10.4% 0.0% 0.0% 1.8% 0.9% 0.6% – Higher risk 0.0% 7.9% 12.8% 22.2% 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% 0.0% 8.8% 0.0% 0.0% – More than 30 days past due 0.0% 6.1% 12.8% 22.2% 0.0% 12.2% 0.0% 0.0% Stage 3, credit-impa ired financial assets (S3) 20.4% 59.2% 50.5% 0.0% 0.0% 57.5% 0.0% 25.9% Cover ratio 0.1% 3.0% 1.0% 3.3% 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) 3 22,574 69,394 67 – 1,774 71,235 – – Net carrying value (incl FVTPL) 66,957 208,795 136,497 88 24,323 369,703 – – 1 Following the increased strategic importance and reporting of Ventures to management, this has been established as a separate operating segment from January 2022. Prior period has been restated 2 Loans and advances includes reverse repurchase agreements and other sim ilar secured lend ing of $7,331 mill ion under Customers and of $1,079 m ill ion under Banks, held at amortised cost 3 Loans and advances includes reverse repurchase agreements and other sim ilar secured lend ing of $61,282 mill ion under Customers and of $18,727 m ill ion under Banks, held at fair value through profit or loss ![]() 244 Standard Chartered – Annual Report 2022 Risk review Risk profile Loans and advances by client segment credit quality analysis Credit grade Regulatory 1 year PD range (%) S&P external ratings equivalent Corporate, Commercial & Institut ional Bank ing 2022 Gross Credit impa irment Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total Strong 89,567 2,068 – 91,635 (43) (30) – (73) 1A-2B 0 – 0.045 AA- and above 8,247 117 – 8,364 (4) – – (4) 3A-4A 0.046 – 0.110 A+ to A- 36,379 321 – 36,700 (5) – – (5) 4B-5B 0.111 – 0.425 BBB+ to BBB-/BB+ 44,941 1,630 – 46,571 (34) (30) – (64) Satisfactory 36,694 7,783 – 44,477 (100) (159) – (259) 6A-7B 0.426 – 1.350 BB+/BB to BB- 23,196 2,684 – 25,880 (67) (94) – (161) 8A-9B 1.351 – 4.000 BB-/B+ to B+/B 9,979 3,116 – 13,095 (20) (35) – (55) 10A-11C 4.001 – 15.75 B to B-/CCC+ 3,519 1,983 – 5,502 (13) (30) – (43) Higher risk – 1,504 – 1,504 – (134) – (134) 12 15.751 – 99.999 CCC+/C – 1,504 – 1,504 – (134) – (134) Credit- impa ired – – 6,143 6,143 – – (3,662) (3,662) 13-14 100 Defaulted – – 6,143 6,143 – – (3,662) (3,662) Total 126,261 11,355 6,143 143,759 (143) (323) (3,662) (4,128) Credit grade Regulatory 1 year PD range (%) S&P external ratings equivalent 2021 Gross Credit impa irment Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 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+ to BBB-/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) Credit- impa ired – – 6,520 6,520 – – (3,861) (3,861) 13-14 100 Defaulted – – 6,520 6,520 – – (3,861) (3,861) Total 122,368 14,818 6,520 143,706 (103) (341) (3,861) (4,305) ![]() 245 Standard Chartered – Annual Report 2022 Risk review and Capital review Credit grade Consumer, Private & Business Banking 2022 Gross Credit impa irment Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total Strong 124,734 1,215 – 125,949 (332) (62) – (394) Secured 107,262 995 – 108,257 (48) (12) – (60) Unsecured 17,472 220 – 17,692 (284) (50) – (334) Satisfactory 4,400 146 – 4,546 (74) (17) – (91) Secured 4,006 115 – 4,121 (11) (1) – (12) Unsecured 394 31 – 425 (63) (16) – (79) Higher risk – 309 – 309 – (41) – (41) Secured – 216 – 216 – (6) – (6) Unsecured – 93 – 93 – (35) – (35) Credit-impa ired – – 1,453 1,453 – – (776) (776) Secured 1,028 1,028 (552) (552) Unsecured – – 425 425 – – (224) (224) Total 129,134 1,670 1,453 132,257 (406) (120) (776) (1,302) Credit grade 2021 (Restated 1 ) Gross Credit impa irment Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total Strong 129,486 1,253 – 130,739 (282) (104) – (386) Secured 112,167 884 – 113,051 (48) (19) – (67) Unsecured 17,319 369 – 17,688 (234) (85) – (319) 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 – 351 – 351 – (45) – (45) Secured – 250 – 250 – (11) – (11) Unsecured – 101 – 101 – (34) – (34) Credit-impa ired – – 1,575 1,575 – – (796) (796) Secured 1,107 1,107 (516) (516) Unsecured – – 468 468 – – (280) (280) Total 134,289 1,912 1,575 137,776 (369) (181) (796) (1,346) 1 Following the increased strategic importance and reporting of Ventures to management, this has been established as a separate operating segment from 1 January 2022. Prior period has been restated. Detailed credit quality analysis not presented as amounts are not suffic iently mater ial ![]() 246 Standard Chartered – Annual Report 2022 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 2022 2021 Asia $mill ion Africa & Middle East $mill ion Europe & Americas $mill ion Total $mill ion Asia $mill ion Africa & Middle East $mill ion Europe & Americas $mill ion Total $mill ion Gross (stage 1) 248,625 17,553 29,041 295,219 235,123 19,990 24,065 279,178 Provis ion (stage 1) (454) (73) (32) (559) (371) (86) (16) (473) Gross (stage 2) 8,302 3,122 1,619 13,043 8,779 4,077 3,993 16,849 Provis ion (stage 2) (337) (104) (3) (444) (318) (137) (69) (524) Gross (stage 3) 4,562 2,725 558 7,845 4,448 2,918 729 8,095 Provis ion (stage 3) (2,483) (1,765) (209) (4,457) (2,400) (1,970) (287) (4,657) Net loans 1 258,215 21,458 30,974 310,647 245,261 24,792 28,415 298,468 1 Includes reverse repurchase agreements and other sim ilar secured lend ing Loans and advances to banks Amortised cost 2022 2021 Asia $mill ion Africa & Middle East $mill ion Europe & Americas $mill ion Total $mill ion Asia $mill ion Africa & Middle East $mill ion Europe & Americas $mill ion Total $mill ion Gross (stage 1) 21,806 3,818 13,525 39,149 29,916 5,828 8,032 43,776 Provis ion (stage 1) (3) (4) (2) (9) (3) (5) (4) (12) Gross (stage 2) 212 116 9 337 346 144 90 580 Provis ion (stage 2) (2) (1) – (3) (1) (1) (2) (4) Gross (stage 3) 59 – – 59 54 – – 54 Provis ion (stage 3) (14) – – (14) (11) – – (11) Net loans¹ 22,058 3,929 13,532 39,519 30,301 5,966 8,116 44,383 1 Includes reverse repurchase agreements and other sim ilar secured lend ing ![]() 247 Standard Chartered – Annual Report 2022 Risk review and Capital review Movement in gross exposures and credit impa irment for loans and advances, debt secur it ies, undrawn comm itments and financial guarantees (aud ited) The tables overleaf set out the movement in gross exposures and credit impa irment by stage in respect of amortised cost loans to banks and customers, undrawn commitments, financ ial guarantees and debt secur it ies class if ied at amort ised cost and FVOCI. The tables are presented for the Group, debt securit ies and other el ig ible b ills. Methodology The movement lines with in the tables are an aggregat ion of monthly movements over the year and will therefore reflect the accumulation of multiple trades during the year. The credit impa irment charge in the income statement comprises the amounts with in 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 ial instruments only. The approach for determin ing the key l ine items in the tables is set out below. • Transfers – transfers between stages are deemed to occur at the beginn ing of a month based on pr ior month closing balances • Net remeasurement from stage changes – the remeasurement of credit impa irment prov is ions ar is ing from a change in stage is reported with in the stage that the assets are transferred to. For example, assets transferred into stage 2 are remeasured from a 12-month to a lifet ime expected cred it loss, with the effect of remeasurement reported in stage 2. For stage 3, this represents the in it ial remeasurement from specif ic prov is ions recogn ised on ind iv idual assets transferred into stage 3 in the year • Net changes in exposures – new business written less repayments in the year. With in stage 1, new bus iness written will attract up to 12 months of expected credit loss charges. Repayments of non-amortis ing loans (pr imar ily w ith in CCIB) w ill have low amounts of expected credit loss provis ions attr ibuted to them, due to the release of provis ions over the term to matur ity. In stages 2 and 3, the amounts princ ipally reflect repayments although stage 2 may include new business written where clients are on non-purely precautionary early alert, are CG 12, or when non-investment grade debt securit ies are acqu ired. • Changes in risk parameters – for stages 1 and 2, this reflects changes in the probabil ity of default (PD), loss g iven default (LGD) and exposure at default (EAD) of assets during the year, which includes the impact of releasing provis ions over the term to maturity. It also includes the effect of changes in forecasts of macroeconomic variables during the year. In stage 3, this line represents addit ional spec if ic prov is ions recogn ised on exposures held with in stage 3 • Interest due but not paid – change in contractual amount of interest due in stage 3 financ ial instruments but not paid, being the net of accruals, repayments and write-offs, together with the corresponding change in credit impa irment Changes to ECL models, which incorporate changes to model approaches and methodologies, are not reported as a separate line item as these have an impact over a number of lines and stages. Movements during the year Stage 1 gross exposures increased by $35 bill ion to $720 b ill ion when compared w ith 31 December 2021. $2 bill ion net increase was in CCIB, from new orig inat ions largely reverse repurchase agreements from a change in booking model and undrawn commitments. There was a $2 bill ion net increase in CPBB due to an increase in undrawn commitments of $7 bill ion. Debt securit ies increased by $9 bill ion in stage 1. The rest of the increase is largely Central and other items segment due to lending to Governments in Asia. Total stage 1 provis ions increased by $36 mill ion to $645 m ill ion. CPBB increase is $36 mill ion pr imar ily in unsecured lending from net change in exposures, MEV changes and book growth in Asia offset by partial release of COVID-19 overlay. CCIB provis ions increased by $31 mill ion pr imar ily due to new or ig inat ions. Debt Security provis ion decreased by $42 m ill ion largely due to stage transfers following sovereign downgrades in Asia and Africa and the Middle East. Stage 2 gross exposures decreased by $7 bill ion to $27 b ill ion, pr imar ily dr iven by $6 bill ion of net outflows from exposure changes and transfers to stage 1 in CCIB, particularly in the Energy and Transport, Telecom and Util it ies sectors. CPBB exposures decreased by $1.9 bill ion, of wh ich $1.3 bill ion was from the secured portfol io. Debt securit ies were broadly stable as ex its were offset by the sovereign downgrade of Pakistan. Stage 2 provis ions decreased by $34 m ill ion to $618 m ill ion compared to 31 December 2021. $14 m ill ion decrease is from CCIB from full release of judgemental COVID-19 overlay of $102 mill ion offset by the impact of sovereign downgrades and an increase in provis ions for Ch ina commercial real estate. CPBB provis ions decreased by $67 m ill ion, ma inly in unsecured lending as a result of sign ificant increase in credit risk thresholds which resulted in a decrease of ECL of $15 mill ion and model changes resulted in ECL decrease of $7 mill ion, and part ial release of COVID-19 overlay. In CCIB, gross stage 3 loans decreased by $0.4 bill ion compared w ith 31 December 2021 due to upgrades and repayments offset by sovereign downgrades in Africa and the Middle East and increased exposure to China commercial real estate. CCIB provis ions decreased by $0.3 b ill ion to $3.8 b ill ion. CPBB total stage 3 loans decreased by $0.1 b ill ion to $1.5 b ill ion and prov is ion decreased by $21 mill ion dr iven by Personal loans and other unsecured lending portfolio as markets returned to normalised flows following the expiry of the major ity of COVID-19 rel ief schemes in 2021 offset by increase in provis ions secured portfol io. Debt Security Gross assets increased by $31 mill ion to $144 m ill ion (31 December 2021: $113 m ill ion) due to new downgrade of Ghana Sovereign, offset by one corporate write-off. ![]() 248 Standard Chartered – Annual Report 2022 Risk review Risk profile All segments (audited) Amortised cost and FVOCI Stage 1 Stage 2 Stage 3 5 Total Gross balance 3 $mill ion Total credit impa ir- ment $mill ion Net $mill ion Gross balance 3 $mill ion Total credit impa ir- ment $mill ion Net $mill ion Gross balance 3 $mill ion Total credit impa ir- ment $mill ion Net $mill ion Gross balance 3 $mill ion Total credit impa ir- ment $mill ion Net $mill ion 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 to stage 1 25,975 (620) 25,355 (25,924) 620 (25,304) (51) – (51) – – – Transfers to stage 2 (53,994) 211 (53,783) 54,335 (220) 54,115 (341) 9 (332) – – – Transfers to stage 3 (212) 3 (209) (2,822) 335 (2,487) 3,034 (338) 2,696 – – – Net change in exposures 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 – 54 54 – (157) (157) – (212) (212) – (315) (315) Changes in risk parameters – 79 79 – (89) (89) – (915) (915) – (925) (925) Write-offs – – – – – – (1,215) 1,215 – (1,215) 1,215 – Interest due but unpaid – – – – – – (189) 189 – (189) 189 – Discount unwind – – – – – – – 227 227 – 227 227 Exchange translation differences and other movements¹ (14,258) 459 (13,799) (275) (429) (704) 152 (184) (32) (14,381) (154) (14,535) As at 31 December 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 1 (77) (466) (542) Recoveries of amounts previously written off – – 288 288 Total credit impa irment (charge)/release 1 (77) (178) (254) As at 1 January 2022 684,759 (609) 684,150 34,550 (652) 33,898 9,061 (4,941) 4,120 728,370 (6,202) 722,168 Transfers to stage 1 24,666 (555) 24,111 (24,633) 555 (24,078) (33) – (33) – – – Transfers to stage 2 (46,960) 228 (46,732) 47,479 (246) 47,233 (519) 18 (501) – – – Transfers to stage 3 (176) 74 (102) (3,630) 253 (3,377) 3,806 (327) 3,479 – – – Net change in exposures 83,204 (137) 83,067 (24,324) 93 (24,231) (1,710) 338 (1,372) 57,170 294 57,464 Net remeasurement from stage changes – 45 45 – (126) (126) – (168) (168) – (249) (249) Changes in risk parameters – 106 106 – (387) (387) – (895) (895) – (1,176) (1,176) Write-offs – – – – – – (949) 949 – (949) 949 – Interest due but unpaid – – – – – – (157) 157 – (157) 157 – Discount unwind – – – – – – – 136 136 – 136 136 Exchange translation differences and other movements¹ (25,381) 203 (25,178) (1,963) (108) (2,071) (658) 9 (649) (28,002) 104 (27,898) As at 31 December 2022² 720,112 (645) 719,467 27,479 (618) 26,861 8,841 (4,724) 4,117 756,432 (5,987)750,445 Income statement ECL (charge)/release 6 14 (420) (725) (1,131) Recoveries of amounts previously written off – – 293 293 Total credit impa irment (charge)/release 4 14 (420) (432) (838) 1 Includes fair value adjustments and amortisat ion on debt secur it ies 2 Excludes Cash and balances at central banks, Accrued income, Assets held for sale and Other assets gross balances of $101,743 mill ion (2021: $114,464 m ill ion) and Total credit impa irment of $88 m ill ion (2021: $7 m ill ion) 3 The gross balance includes the notional amount of off balance sheet instruments 4 Statutory basis 5 Stage 3 gross includes $28 mill ion (2021: $33 m ill ion) or ig inated cred it-impa ired debt secur it ies w ith impa irment of $13 m ill ion (2021: N il) 6 Does not include $2 mill ion (2021: N il) release relating to Other assets ![]() 249 Standard Chartered – Annual Report 2022 Risk review and Capital review Of which – movement of debt securit ies, alternat ive tier one and other elig ible b ills (audited) Amortised cost and FVOCI Stage 1 Stage 2 Stage 3 2 Total Gross balance $mill ion Total credit impa ir- ment $mill ion Net $mill ion Gross balance $mill ion Total credit impa ir- ment $mill ion Net $mill ion Gross balance $mill ion Total credit impa ir- ment $mill ion Net $mill ion Gross balance $mill ion Total credit impa ir- ment $mill ion Net 3 $mill ion As at 1 January 2021 149,316 (56) 149,260 3,506 (26) 3,480 114 (58) 56 152,936 (140) 152,796 Transfers to stage 1 403 (11) 392 (403) 11 (392) – – – – – – Transfers to stage 2 (2,358) 16 (2,342) 2,358 (16) 2,342 – – – – – – Transfers to stage 3 – – – – – – – – – – – – Net change in exposures 14,670 (39) 14,631 (155) (11) (166) – 1 1 14,515 (49) 14,466 Net remeasurement from stage changes – 13 13 – (17) (17) – – – – (4) (4) Changes in risk parameters – 21 21 – 8 8 – (3) (3) – 26 26 Write-offs – – – – – – – – – – – – Interest due but unpaid – – – – – – – – – – – – Exchange translation differences and other movements 1 (4,679) (11) (4,690) 9 9 18 (1) (6) (7) (4,671) (8) (4,679) As at 31 December 2021 157,352 (67) 157,285 5,315 (42) 5,273 113 (66) 47 162,780 (175) 162,605 Income statement ECL (charge)/release (5) (20) (2) (27) Recoveries of amounts previously written off – – – – Total credit impa irment (charge)/release (5) (20) (2) (27) As at 1 January 2022 157,352 (67) 157,285 5,315 (42) 5,273 113 (66) 47 162,780 (175) 162,605 Transfers to stage 1 2,296 (22) 2,274 (2,296) 22 (2,274) – – – – – – Transfers to stage 2 (3,942) 38 (3,904) 3,942 (38) 3,904 – – – – – – Transfers to stage 3 – – – (66) 42 (24) 66 (42) 24 – – – Net change in exposures 21,613 (44) 21,569 (752) 9 (743) – 1 1 20,861 (34) 20,827 Net remeasurement from stage changes – 10 10 – (2) (2) – (23) (23) – (15) (15) Changes in risk parameters – 38 38 – (98) (98) – (13) (13) – (73) (73) Write-offs – – – – – – (30) 30 – (30) 30 – Interest due but unpaid – – – – – – – – – – – – Exchange translation differences and other movements 1 (11,216) 22 (11,194) (688) 17 (671) (5) 7 2 (11,909) 46 (11,863) As at 31 December 2022 166,103 (25) 166,078 5,455 (90) 5,365 144 (106) 38 171,702 (221) 171,481 Income statement ECL (charge)/release 4 (91) (35) (122) Recoveries of amounts previously written off – – – – Total credit impa irment (charge)/release 4 (91) (35) (122) 1 Includes fair value adjustments and amortisat ion on debt secur it ies 2 Stage 3 gross includes $28 mill ion (2021: $33 m ill ion) or ig inated cred it-impa ired debt secur it ies w ith impa irment of $13 m ill ion (2021: N il) 3 FVOCI 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 to $171,640 mill ion (31 December 2021: $162,700 mill ion. Refer to the Analys is of financ ial instrument by stage table on page 239 ![]() 250 Standard Chartered – Annual Report 2022 Risk review Risk profile Corporate, Commercial & Institut ional Bank ing (audited) Amortised cost and FVOCI Stage 1 Stage 2 Stage 3 Total Gross balance 1 $mill ion Total credit impa ir- ment $mill ion Net $mill ion Gross balance 1 $mill ion Total credit impa ir- ment $mill ion Net $mill ion Gross balance 1 $mill ion Total credit impa ir- ment $mill ion Net $mill ion Gross balance 1 $mill ion Total credit impa ir- ment $mill ion Net $mill ion As at 1 January 2021 292,453 (154) 292,299 31,742 (599) 31,143 8,422 (4,803) 3,619 332,617 (5,556) 327,061 Transfers to stage 1 21,123 (243) 20,880 (21,123) 243 (20,880) – – – – – – Transfers to stage 2 (45,354) 103 (45,251) 45,556 (112) 45,444 (202) 9 (193) – – – Transfers to stage 3 (69) – (69) (1,989) 164 (1,825) 2,058 (164) 1,894 – – – Net change in 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 – 1 1 – (27) (27) – (145) (145) – (171) (171) Changes in risk parameters – 41 41 – (105) (105) – (434) (434) – (498) (498) Write-offs – – – – – – (510) 510 – (510) 510 – Interest due but unpaid – – – – – – (224) 224 – (224) 224 – Discount unwind – – – – – – – 191 191 – 191 191 Exchange translation differences and other movements (5,783) 151 (5,632) (302) (122) (424) (90) (103) (193) (6,175) (74) (6,249) As at 31 December 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 2 (20) 1 57 38 Recoveries of amounts previously written off – – 19 19 Total credit impa irment (charge)/release (20) 1 76 57 As at 1 January 2022 313,132 (163) 312,969 25,437 (425) 25,012 7,372 (4,079) 3,293 345,941 (4,667) 341,274 Transfers to stage 1 17,565 (227) 17,338 (17,565) 227 (17,338) – – – – – – Transfers to stage 2 (37,505) 48 (37,457) 37,944 (66) 37,878 (439) 18 (421) – – – Transfers to stage 3 (42) – (42) (2,478) 134 (2,344) 2,520 (134) 2,386 – – – Net change in exposures 30,508 (44) 30,464 (21,915) 65 (21,850) (1,314) 340 (974) 7,279 361 7,640 Net remeasurement from stage changes – 2 2 – (42) (42) – (104) (104) – (144) (144) Changes in risk parameters – 21 21 – (154) (154) – (551) (551) – (684) (684) Write-offs – – – – – – (384) 384 – (384) 384 – Interest due but unpaid – – – – – – (130) 130 – (130) 130 – Discount unwind – – – – – – – 110 110 – 110 110 Exchange translation differences and other movements (8,221) 169 (8,052) (1,275) (150) (1,425) (631) 64 (567) (10,127) 83 (10,044) As at 31 December 2022 315,437 (194) 315,243 20,148 (411) 19,737 6,994 (3,822) 3,172 342,579 (4,427) 338,152 Income statement ECL (charge)/release 2 (21) (131) (315) (467) Recoveries of amounts previously written off – – 49 49 Total credit impa irment (charge)/release (21) (131) (266) (418) 1 The gross balance includes the notional amount of off balance sheet instruments 2 Does not include $2 mill ion (2021: N il) release relating to Other assets ![]() 251 Standard Chartered – Annual Report 2022 Risk review and Capital review Consumer, Private and Business Banking (restated)¹ (audited) Amortised cost and FVOCI Stage 1 Stage 2 Stage 3 Total Gross balance 2 $mill ion Total credit impa ir ment $mill ion Net $mill ion Gross balance 2 $mill ion Total credit impa ir ment $mill ion Net $mill ion Gross balance 2 $mill ion Total credit impa ir ment $mill ion Net $mill ion Gross balance 2 $mill ion Total credit impa ir ment $mill ion Net $mill ion 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 to stage 1 4,450 (365) 4,085 (4,399) 365 (4,034) (51) – (51) – – – Transfers to stage 2 (6,270) 89 (6,181) 6,409 (89) 6,320 (139) – (139) – – – Transfers to stage 3 (144) 2 (142) (833) 172 (661) 977 (174) 803 – – – Net change in exposures 14,055 (28) 14,027 (2,060) 47 (2,013) (347) 24 (323) 11,648 43 11,691 Net remeasurement from stage changes – 40 40 – (113) (113) – (66) (66) – (139) (139) Changes in risk parameters – 17 17 – 8 8 – (480) (480) – (455) (455) Write-offs – – – – – – (705) 705 – (705) 705 – Interest due but unpaid – – – – – – 35 (35) – 35 (35) – Discount unwind – – – – – – – 36 36 – 36 36 Exchange translation differences and other movements (3,275) 313 (2,962) 24 (316) (292) 247 (77) 170 (3,004) (80) (3,084) As at 31 December 2021 190,860 (377) 190,483 3,675 (185) 3,490 1,578 (797) 781 196,113 (1,359) 194,754 Income statement ECL (charge)/release 29 (58) (522) (551) Recoveries of amounts previously written off – – 269 269 Total credit impa irment (charge)/release 29 (58) (253) (282) As at 1 January 2022 190,860 (377) 190,483 3,675 (185) 3,490 1,578 (797) 781 196,113 (1,359) 194,754 Transfers to stage 1 4,798 (314) 4,484 (4,765) 314 (4,451) (33) – (33) – – – Transfers to stage 2 (5,498) 92 (5,406) 5,578 (92) 5,486 (80) – (80) – – – Transfers to stage 3 (81) – (81) (890) 151 (739) 971 (151) 820 – – – Net change in exposures 9,072 (49) 9,023 (1,611) 19 (1,592) (396) – (396) 7,065 (30) 7,035 Net remeasurement from stage changes – 32 32 – (82) (82) – (25) (25) – (75) (75) Changes in risk parameters – 63 63 – (132) (132) – (331) (331) – (400) (400) Write-offs – – – – – – (535) 535 – (535) 535 – Interest due but unpaid – – – – – – (27) 27 – (27) 27 – Discount unwind – – – – – – – 26 26 – 26 26 Exchange translation differences and other movements (5,912) 140 (5,772) (166) (111) (277) (24) (60) (84) (6,102) (31) (6,133) As at 31 December 2022 193,239 (413) 192,826 1,821 (118) 1,703 1,454 (776) 678 196,514 (1,307) 195,207 Income statement ECL (charge)/release 46 (195) (356) (505) Recoveries of amounts previously written off – – 245 245 Total credit impa irment (charge)/release 46 (195) (111) (260) 1 Following the increased strategic importance and reporting of Ventures to management, this has been established as a separate operating segment from 2022. Prior period has been restated 2 The gross balance includes the notional amount of off balance sheet instruments ![]() 252 Standard Chartered – Annual Report 2022 Risk review Risk profile Consumer, Private and Business Banking – Secured (restated)¹ (audited) Amortised cost and FVOCI Stage 1 Stage 2 Stage 3 Total Gross balance 2 $mill ion Total credit impa ir- ment $mill ion Net $mill ion Gross balance 2 $mill ion Total credit impa ir- ment $mill ion Net $mill ion Gross balance 2 $mill ion Total credit impa ir- ment $mill ion Net $mill ion Gross balance 2 $mill ion Total credit impa ir- ment $mill ion Net $mill ion 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 to stage 1 2,884 (37) 2,847 (2,843) 37 (2,806) (41) – (41) – – – Transfers to stage 2 (3,888) 9 (3,879) 4,007 (9) 3,998 (119) – (119) – – – Transfers to stage 3 (107) 1 (106) (400) 8 (392) 507 (9) 498 – – – Net change in exposures 13,009 (9) 13,000 (1,452) 3 (1,449) (224) 24 (200) 11,333 18 11,351 Net remeasurement from stage changes – (1) (1) – (2) (2) – (1) (1) – (4) (4) Changes in risk parameters – 4 4 – 14 14 – (144) (144) – (126) (126) Write-offs – – – – – – (125) 125 – (125) 125 – Interest due but unpaid – – – – – – (3) 3 – (3) 3 – Discount unwind – – – – – – – 34 34 – 34 34 Exchange translation differences and other movements (2,746) 9 (2,737) 10 (31) (21) 50 (131) (81) (2,686) (153) (2,839) As at 31 December 2021 136,600 (96) 136,504 2,685 (32) 2,653 1,103 (517) 586 140,388 (645) 139,743 Income statement ECL (charge)/release (6) 15 (121) (112) Recoveries of amounts previously written off – – 68 68 Total credit impa irment (charge)/release (6) 15 (53) (44) As at 1 January 2022 136,600 (96) 136,504 2,685 (32) 2,653 1,103 (517) 586 140,388 (645) 139,743 Transfers to stage 1 3,080 (28) 3,052 (3,054) 28 (3,026) (26) – (26) – – – Transfers to stage 2 (3,254) 11 (3,243) 3,319 (11) 3,308 (65) – (65) – – – Transfers to stage 3 (38) 1 (37) (473) 1 (472) 511 (2) 509 – – – Net change in exposures 3,093 (8) 3,085 (945) 1 (944) (259) – (259) 1,889 (7) 1,882 Net remeasurement from stage changes – 1 1 – (1) (1) – (4) (4) – (4) (4) Changes in risk parameters – (4) (4) – 48 48 – (80) (80) – (36) (36) Write-offs – – – – – – (78) 78 – (78) 78 – Interest due but unpaid – – – – – – – – – – – – Discount unwind – – – – – – – – – – – – Exchange translation differences and other movements (4,119) 63 (4,056) (119) (51) (170) (158) (27) (185) (4,396) (15) (4,411) As at 31 December 2022 135,362 (60) 135,302 1,413 (17) 1,396 1,028 (552) 476 137,803 (629) 137,174 Income statement ECL (charge)/release (11) 48 (84) (47) Recoveries of amounts previously written off – – 55 55 Total credit impa irment (charge)/release (11) 48 (29) 8 1 Following the increased strategic importance and reporting of Ventures to management, this has been established as a separate operating segment from 2022. Prior period has been restated 2 The gross balance includes the notional amount of off balance sheet instruments ![]() 253 Standard Chartered – Annual Report 2022 Risk review and Capital review Consumer, Private and Business Banking – Unsecured (restated)¹ (audited) Amortised cost and FVOCI Stage 1 Stage 2 Stage 3 Total Gross balance 2 $mill ion Total credit impa ir- ment $mill ion Net $mill ion Gross balance 2 $mill ion Total credit impa ir- ment $mill ion Net $mill ion Gross balance² $mill ion Total credit impa ir- ment $mill ion Net $mill ion Gross balance² $mill ion Total credit impa ir- ment $mill ion Net $mill ion As at 1 January 2021 54,596 (373) 54,223 1,171 (207) 964 503 (312) 191 56,270 (892) 55,378 Transfers to stage 1 1,566 (328) 1,238 (1,556) 328 (1,228) (10) – (10) – – – Transfers to stage 2 (2,382) 80 (2,302) 2,402 (80) 2,322 (20) – (20) – – – Transfers to stage 3 (37) 1 (36) (433) 164 (269) 470 (165) 305 – – – Net change in exposures 1,046 (19) 1,027 (608) 44 (564) (123) – (123) 315 25 340 Net remeasurement from stage changes – 41 41 – (111) (111) – (65) (65) – (135) (135) Changes in risk parameters – 13 13 – (6) (6) – (336) (336) – (329) (329) Write-offs – – – – – – (580) 580 – (580) 580 – Interest due but unpaid – – – – – – 38 (38) – 38 (38) – Discount unwind – – – – – – – 2 2 – 2 2 Exchange translation differences and other movements (529) 304 (225) 14 (285) (271) 197 54 251 (318) 73 (245) As at 31 December 2021 54,260 (281) 53,979 990 (153) 837 475 (280) 195 55,725 (714) 55,011 Income statement ECL (charge)/release 35 (73) (401) (439) Recoveries of amounts previously written off – – 201 201 Total credit impa irment (charge)/release 35 (73) (200) (238) As at 1 January 2022 54,260 (281) 53,979 990 (153) 837 475 (280) 195 55,725 (714) 55,011 Transfers to stage 1 1,718 (286) 1,432 (1,711) 286 (1,425) (7) – (7) – – – Transfers to stage 2 (2,244) 81 (2,163) 2,259 (81) 2,178 (15) – (15) – – – Transfers to stage 3 (43) (1) (44) (417) 150 (267) 460 (149) 311 – – – Net change in exposures 5,979 (41) 5,938 (666) 18 (648) (137) – (137) 5,176 (23) 5,153 Net remeasurement from stage changes – 31 31 – (81) (81) – (21) (21) – (71) (71) Changes in risk parameters – 67 67 – (180) (180) – (251) (251) – (364) (364) Write-offs – – – – – – (457) 457 – (457) 457 – Interest due but unpaid – – – – – – (27) 27 – (27) 27 – Discount unwind – – – – – – – 26 26 – 26 26 Exchange translation differences and other movements (1,793) 77 (1,716) (47) (60) (107) 134 (33) 101 (1,706) (16) (1,722) As at 31 December 2022 57,877 (353) 57,524 408 (101) 307 426 (224) 202 58,711 (678) 58,033 Income statement ECL (charge)/release 57 (243) (272) (458) Recoveries of amounts previously written off – – 190 190 Total credit impa irment (charge)/release 57 (243) (82) (268) 1 Following the increased strategic importance and reporting of Ventures to management, this has been established as a separate operating segment from 2022. Prior period has been restated 2 The gross balance includes the notional amount of off balance sheet instruments ![]() 254 Standard Chartered – Annual Report 2022 Risk review Risk profile Analysis of stage 2 balances The table below analyses total stage 2 gross on-and off-balance sheet exposures and associated expected credit provis ions by the key sign ificant increase in Credit Risk (SICR) driver that caused the exposures to be classif ied as stage 2 as at 31 December 2022 and 31 December 2021 for each segment. 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’. 2022 Corporate, Commercial & Institut ional Bank ing Consumer, Private & Business Banking Ventures Central & other items Total Gross $mill ion ECL $mill ion Coverage % Gross $mill ion ECL $mill ion Coverage % Gross $mill ion ECL $mill ion Coverage % Gross $mill ion ECL $mill ion Coverage % Gross $mill ion ECL $mill ion Coverage % Increase in PD 13,620 192 1.4% 1,389 89 6.4% – – 0.0% 2,973 11 0.4% 17,982 292 1.6% Non-purely precautionary early alert 3,272 12 0.4% 35 – 0.0% – – 0.0% 5 – 0.0% 3,312 12 0.4% Higher risk (CG12) 653 30 4.6% 18 1 5.6% – – 0.0% 2,534 69 2.7% 3,205 100 3.1% Sub-investment grade – – 0.0% – – 0.0% – – 0.0% 95 11 11.6% 95 11 11.6% Top up/Sell down (Private Banking) – – 0.0% 111 – 0.0% – – 0.0% – – 0.0% 111 – 0.0% Others 2,603 41 1.6% 122 4 3.3% – – 0.0% 451 7 1.6% 3,176 52 1.6% 30 days past due – – 0.0% 146 12 8.2% 47 3 6.4% – – 0.0% 193 15 7.8% Management overlay – 136 0.0% – 12 0.0% – – 0.0% – – 0.0% – 148 0.0% Total stage 2 20,148 411 2.0% 1,821 118 6.5% 47 3 6.4% 6,058 98 1.6% 28,074 630 2.2% 2021 (Restated) 1 Corporate, Commercial & Institut ional Bank ing Consumer, Private & Business Banking Ventures Central & other items Total Gross $mill ion ECL $mill ion Coverage % Gross $mill ion ECL $mill ion Coverage % Gross $mill ion ECL $mill ion Coverage % Gross $mill ion ECL $mill ion Coverage % Gross $mill ion ECL $mill ion Coverage % Increase in PD 14,737 187 1.3% 2,704 123 4.5% – – 0.0% 4,691 22 0.5% 22,132 332 1.5% Non-purely precautionary early alert 5,000 26 0.5% 83 – 0.0% – – 0.0% – – 0.0% 5,083 26 0.5% Higher risk (CG12) 1,075 37 3.4% 27 1 3.2% – – 0.0% 631 20 3.1% 1,733 58 3.3% Sub-investment grade 235 1 0.3% – – 0.0% – – 0.0% – – 0.0% 235 1 0.3% Top up/Sell down (Private Banking) – – 0.0% 493 1 0.2% – – 0.0% – – 0.0% 493 1 0.2% Others 4,390 8 0.2% 178 2 1.2% – – 0.0% 173 2 1.3% 4,741 12 0.3% 30 days past due – – 0.0% 190 16 8.7% 9 2 22.2% – – 0.0% 199 18 9.3% Management overlay – 166 0.0% – 42 0.0% – – 0.0% – – 0.0% – 208 0.0% Total stage 2 25,437 425 1.7% 3,675 185 5.0% 9 2 22.2% 5,495 44 0.8% 34,616 656 1.9% 1 Following the increased strategic importance and reporting of Ventures to management, this has been established as a separate operating segment from 1 January 2022. Prior period has been restated The majority of exposures and the assoc iated expected credit loss provis ions cont inue to be in stage 2 due to increases in the probabil ity of default. The amount of exposures in CCIB placed on non-purely precautionary early alert and PD have decreased from repayments and upgrades offset by sovereign downgrade of Pakistan. In CPBB, 10 per cent of the provis ions held aga inst stage 2 arise from the applicat ion of the 30 days past due backstop, although this represents only 8 per cent of exposures. Central and other items segment has seen a sign ificant increase in the ’Higher risk’ category as at 31 December 2022 due to Pakistan Sovereign downgrade. ‘Others’ primar ily incorporates exposures where orig inat ion data is incomplete and the exposures are allocated into stage 2. ![]() 255 Standard Chartered – Annual Report 2022 Risk review and Capital review Credit impa irment charge (restated)¹ (aud ited) The ongoing credit impa irment was a net charge of $838 m ill ion (31 December 2021: $263 m ill ion), wh ich consists of $432 mill ion in stage 3 (31 December 2021: $185 mill ion) and $406 m ill ion in stage 1 and 2 (31 December 2021: $78 mill ion). Stage 1 and 2 impa irment charge increased by $328 mill ion to $406 m ill ion (31 December 2021: $78 m ill ion), includ ing a $83 mill ion charge relat ing to the sovereign ratings downgrade of Pakistan into credit grade 12. The management overlay relating to stage 1 and 2 assets was $210 mill ion (31 December 2021: $344 m ill ion). There was a $212 m ill ion reduct ion in the COVID-19 element of the overlay, which now total $37 mill ion, whereas the element relat ing to China commercial real estate sector increased by $78 mill ion to $173 m ill ion. CCIB Stage 1 and 2 impa irments of $148 m ill ion are dr iven by China commercial real estate downgrades includ ing a $78 m ill ion increase for China commercial real estate overlay and sovereign downgrades in Africa and the Middle East which is offset by $102 mill ion full release of COVID-19 overlay. Stage 3 impa irment of $279 m ill ion is largely from China commercial real estate downgrades, clients’ rating changes due to the Sri Lanka and Ghana Sovereign rating downgrades, offset by releases and repayments of a few notable clients. CPBB charge decreased by $20 mill ion to $262 m ill ion (31 December 2021: $282 m ill ion). Stage 1 and 2 charge increased by $121 mill ion to $150 m ill ion (31 December 2021: $29 m ill ion). Stage 3 charge decreased by $141 m ill ion to $112 m ill ion (31 December 2021: $253 mill ion) as markets returned to normal ised flows following the expiry of major ity of COVID-19 rel ief schemes in 2021. In 2022, there were increased charges for Korea and Taiwan due to worsening macroeconomic forecasts, as well as China due to portfolio maturity and book growth. This was offset by a net release of $110 mill ion (31 December 2021: $15 m ill ion) in management overlays and a $25 mill ion release from s ign ificant increase in Credit Risk (SICR) methodology changes and model updates largely in the Asia region. Ventures impa irment charge increased by $13 mill ion to $16 m ill ion (31 December 2021: $3 m ill ion) due to book growth in Mox Bank and Trust Bank Singapore. Central and other items stage 1 and 2 impa irments of $95 m ill ion was dr iven by the sovereign downgrade in Ghana and Pakistan. Stage 3 charge of $38 mill ion was dr iven by the sovereign downgrade of Ghana and Sri Lanka. 2022 2021 (Restated) 1 Stage 1 & 2 $mill ion Stage 3 $mill ion Total $mill ion Stage 1 & 2 $mill ion Stage 3 $mill ion Total $mill ion Ongoing business portfolio Corporate, Commercial & Institut ional Bank ing 148 279 427 23 (67) (44) Consumer, Private & Business Banking 1 150 112 262 29 253 282 Ventures 1 13 3 16 3 – 3 Central & other items 95 38 133 23 (1) 22 Credit impa irment charge 406 432 838 78 185 263 Restructuring business portfolio Others (2) – (2) (2) (7) (9) Credit impa irment charge (2) – (2) (2) (7) (9) Total credit impa irment charge 404 432 836 76 178 254 1 Following the increased strategic importance and reporting of Ventures to management, this has been established as a separate operating segment from 1 January 2022. Prior period has been restated COVID-19 relief measures The table below sets out the extent to which payment reliefs are in place across the Group’s CPBB loan portfolio based on the amount outstanding at 31 December 2022. The accounting for temporary changes to loan contractual term is unchanged from that presented on page 220 of the 2021 Annual Report. COVID-19 payment-related relief measures in most markets have now expired. The CPBB loans under payment relief schemes reduced to $237 mill ion ($184 m ill ion is from secured products) compared to $1.2 bill ion at the end of 2021 and a peak of $8.9 bill ion in the first half of 2020, with the remain ing balance concentrated in Asia. This represents 0.2 per cent of CPBB’s gross loans and advances to customers, mainly in Hong Kong, China and India. Segment 1 /Product Total Asia Africa & Middle East Outstanding $mill ion % of portfolio 2 Outstanding $mill ion % of portfolio 2 Outstanding $mill ion % of portfolio 2 Credit card & Personal loans 14 0.1% 14 0.1% – – Mortgages & Auto 90 0.1% 90 0.1% – – Business Banking 133 1.3% 133 1.4% – – Total Consumer, Private & Business Banking at 31 December 2022 237 0.2% 237 0.2% – – Total Consumer, Private & Business Banking at 31 December 2021 1,182 0.9% 1,029 0.9% 153 3.1% 1 Outstanding relief balance for Corporate, Commercial and Institut ional Bank ing are less than $100 mill ion (31 December 2021: $1,195 m ill ion) and n il (31 December 2021: nil) for Ventures³ 2 Percentage of portfolio represents the outstanding amount as a percentage of the gross loans and advances to customers by product and segment 3 Following the increased strategic importance and reporting of Ventures to management, this has been established as a separate segment from 1 January 2022 ![]() 256 Standard Chartered – Annual Report 2022 Risk review Risk profile Problem credit management and provis ion ing (audited) Forborne and other modif ied loans by cl ient segment A forborne loan arises when a concession has been made to the contractual terms of a loan in response to a customer’s financial d iff icult ies. Net forborne loans decreased by $404 mill ion to $1,125 m ill ion (31 December 2021: $1,529 m ill ion), of wh ich $176 mill ion decrease was in performing forborne loans and $228 mill ion decrease was in non-performing forborne loans. Performing forborne loans reduction in CCIB was driven by COVID-19 relief measures in 2021 which have expired across most of our markets while non- performing forborne loans reduction was due to a major repayment. The table below presents loans with forbearance measures by segment. Amortised cost 2022 2021 Corporate, Commercial & Institut ional Banking $mill ion Consumer, Private & Business Banking $mill ion Ventures $mill ion Total $mill ion Corporate, Commercial & Institut ional Banking $mill ion Consumer, Private & Business Banking $mill ion Ventures 1 $mill ion Total $mill ion All loans with forbearance measures 2,129 377 – 2,506 2,526 406 – 2,932 Credit impa irment (stage 1 and 2) (1) – – (1) (4) – – (4) Credit impa irment (stage 3) (1,253) (127) – (1,380) (1,237) (162) – (1,399) Net carrying value 875 250 – 1,125 1,285 244 – 1,529 Included with in the above table Gross performing forborne loans 89 63 – 152 272 59 – 331 Modif icat ion of terms and condit ions 2 89 63 – 152 257 59 – 316 Refinancing 3 – – – – 15 – – 15 Impairment provis ions (1) – – (1) (4) – – (4) Modif icat ion of terms and condit ions 2 (1) – – (1) (4) – – (4) Refinancing 3 – – – – – – – – Net performing forborne loans 88 63 – 151 268 59 – 327 Collateral 7 60 – 67 65 56 – 121 Gross non-performing forborne loans 2,040 314 – 2,354 2,253 348 – 2,601 Modif icat ion of terms and condit ions 2 1,997 314 – 2,311 2,095 348 – 2,443 Refinancing 3 43 – – 43 158 – – 158 Impairment provis ions (1,253) (127) – (1,380) (1,237) (162) – (1,399) Modif icat ion of terms and condit ions 2 (1,210) (127) – (1,337) (1,106) (162) – (1,268) Refinancing 3 (43) – – (43) (131) – – (131) Net non-performing forborne loans 787 187 – 974 1,016 186 – 1,202 Collateral 243 68 – 311 236 62 – 298 1 Following the increased strategic importance and reporting of Ventures to management, this has been established as a separate operating segment from 1 January 2022 2 Modif icat ion of terms is any contractual change apart from refinanc ing, as a result of cred it stress of the counterparty, i.e. interest reductions, loan covenant waivers 3 Refinancing 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 Forborne and other modif ied loans by reg ion Net forborne loans decreased by $404 mill ion to $1,125 m ill ion (31 December 2021: $1,529 m ill ion), dr iven by CCIB mainly due to a repayment with in Europe and the Amer icas. Amortised cost 2022 2021 Asia $mill ion Africa & Middle East $mill ion Europe & Americas $mill ion Total $mill ion Asia $mill ion Africa & Middle East $mill ion Europe & Americas $mill ion Total $mill ion Performing forborne loans 129 9 13 151 205 76 46 327 Stage 3 forborne loans 568 144 262 974 572 137 493 1,202 Net forborne loans 697 153 275 1,125 777 213 539 1,529 ![]() 257 Standard Chartered – Annual Report 2022 Risk review and Capital review Credit-impa ired (stage 3) loans and advances by cl ient segment (audited) Gross stage 3 loans for the Group is $7.8 bill ion (31 December 2021: $8.1 bill ion). The reduct ion in loans was primar ily dr iven by the following: In CCIB, stage 3 loans decreased by $0.4 bill ion to $6.1 b ill ion (31 December 2021: $6.5 bill ion) due to $2.4 b ill ion outflows in debt sales, write-offs and material upgrades. This was offset by $2 bill ion inflows due to downgrades of Ghana and Sri Lanka Sovereign related clients as well as China commercial real estate clients. CPBB stage 3 loans were materially unchanged at $1.5 bill ion with $0.1 bill ion decrease from mortgages and secured wealth products. Ventures loans increased to $1 mill ion (31 December 2021: N il) due to downgrades in Mox Bank Hong Kong. Central and other items includes new inflows relating to local currency default of Sri Lanka. Stage 3 cover ratio (audited) The stage 3 cover ratio measures the proportion of stage 3 impa irment prov is ions to gross stage 3 loans, and is a metric commonly used in consider ing impa irment trends. Th is metric does not allow for variat ions in the composit ion of stage 3 loans and should be used in conjunct ion w ith other Credit Risk informat ion prov ided, includ ing the level of collateral cover. The balance of stage 3 loans not covered by stage 3 impa irment prov is ions represents the adjusted value of collateral held and the net outcome of any workout or recovery strategies. Collateral provides risk mit igat ion to some degree in all client segments and supports the credit quality and cover ratio assessments post impa irment prov is ions. Further informat ion on collateral is provided in the Credit Risk mit igat ion section. The CCIB cover ratio increased by 1 per cent to 60 per cent (31 December 2021: 59 per cent) due to repayments and write-offs, which was offset by provis ions taken on Ghana Sovereign downgrade and China commercial real estate clients. The CPBB cover ratio increased by 2 per cent to 53 per cent (31 December 2021: 51 per cent) due to stage 3 loan balances reducing across secured wealth and mortgage portfolios. 2022 2021 (Restated)¹ Corporate, Commercial & Institut ional Banking $mill ion Consumer, Private & Business Banking $mill ion Ventures $mill ion Central & Others $mill ion Total $mill ion Corporate, Commercial & Institut ional Banking $mill ion Consumer, Private & Business Banking 1 $mill ion Ventures $mill ion Central & Others $mill ion Total $mill ion Gross credit-impa ired 6,143 1,453 1 248 7,845 6,520 1,575 – – 8,095 Credit impa irment prov is ions (3,662) (776) (1) (18) (4,457) (3,861) (796) – – (4,657) Net credit-impa ired 2,481 677 – 230 3,388 2,659 779 – – 3,438 Cover ratio 60% 53% 100% 7% 57% 59% 51% – – 58% Collateral ($ mill ion) 956 543 – – 1,499 805 641 – – 1,446 Cover ratio (after collateral) 75% 91% 100% 7% 76% 72% 91% – – 75% 1 Following the increased strategic importance and reporting of Ventures to management, this has been established as a separate operating segment from 1 January 2022. Prior period has been restated. Credit-impa ired (stage 3) loans and advances by geograph ic region Stage 3 gross loans decreased by $0.3 bill ion to $7.8 b ill ion (31 December 2021: $8.1 b ill ion). The decrease was pr imar ily dr iven by CCIB debt sales and repayments in Africa and the Middle East and in Europe and the Americas regions offset by the sovereign downgrade of Ghana and Sri Lanka. Amortised cost 2022 2021 Asia $mill ion Africa & Middle East $mill ion Europe & Americas $mill ion Total $mill ion Asia $mill ion Africa & Middle East $mill ion Europe & Americas $mill ion Total $mill ion Gross credit-impa ired 4,562 2,725 558 7,845 4,448 2,918 729 8,095 Credit impa irment prov is ions (2,483) (1,765) (209) (4,457) (2,401) (1,970) (286) (4,657) Net credit-impa ired 2,079 960 349 3,388 2,047 948 443 3,438 Cover ratio 54% 65% 37% 57% 54% 68% 39% 58% Credit Risk mit igat ion Potential credit losses from any given account, customer or portfolio are mit igated us ing a range of tools such as collateral, netting arrangements, credit insurance and credit derivat ives, tak ing into account expected volatil ity and guarantees. The reliance that can be placed on these mit igants is carefully assessed in light of issues such as legal certainty and enforceabil ity, market valuat ion correlation and counterparty risk of the guarantor. 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. The unadjusted market value of collateral across all asset types, in respect of CCIB, without adjust ing for over- collateralisat ion, was $345 b ill ion (31 December 2021: $346 bill ion). ![]() 258 Standard Chartered – Annual Report 2022 Risk review Risk profile The collateral values in the table below (which covers loans and advances to banks and customers, excluding those held at fair value through profit or loss) are adjusted where appropriate in accordance with our risk mit igat ion policy and for the effect of over-collateralisat ion. The extent of overcollateralizat ion has been determ ined 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 ing from expected cred it 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. CCIB collateral increased by $9 bill ion to $38.2 b ill ion (31 December 2021: $29.4 bill ion) due to an increase in reverse repurchase agreements. CPBB collateral decreased by $10 bill ion to $92.4 b ill ion (31 December 2021: $102.8 bill ion) due to a decrease in mortgages and secured wealth product balances. Stage 2 collateral reduced by $1.1 bill ion to $5.0 b ill ion (31 December 2021: $6.1 bill ion) due to a decrease in CCIB loan balances. Total collateral for Central and other items increased by $4.8 bill ion to $11.2 b ill ion (31 December 2021: $6.4 b ill ion) 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 ing stage 2 and stage 3 exposure and corresponding collateral. Amortised cost 2022 Net amount outstanding Collateral Net exposure Total $mill ion Stage 2 financial assets $mill ion Credit- impa ired financial assets (S3) $mill ion Total 2 $mill ion Stage 2 financial assets $mill ion Credit- impa ired financial assets (S3) $mill ion Total $mill ion Stage 2 financial assets $mill ion Credit- impa ired financial assets (S3) $mill ion Corporate, Commercial & Institut ional Bank ing 1 179,150 11,366 2,526 38,151 3,973 956 140,999 7,393 1,570 Consumer, Private & Business Banking 130,955 1,550 677 92,350 1,019 543 38,605 531 134 Ventures 698 17 – – – – 698 17 – Central & other items 39,363 – 230 11,214 – – 28,149 – 230 Total 350,166 12,933 3,433 141,715 4,992 1,499 208,451 7,941 1,934 Amortised cost 2021 (Restated) 3 Net amount outstanding Collateral Net exposure Total $mill ion Stage 2 financial assets $mill ion Credit- impa ired financial assets (S3) $mill ion Total 2 $mill ion Stage 2 financial assets $mill ion Credit- impa ired financial assets (S3) $mill ion Total $mill ion Stage 2 financial assets $mill ion Credit- impa ired financial assets (S3) $mill ion Corporate, Commercial & Institut ional Bank ing 1 183,784 15,053 2,702 29,414 5,077 805 154,370 9976 1,897 Consumer, Private & Business Banking 3 136,430 1,731 779 102,769 1,045 641 33,661 686 138 Ventures 3 88 7 – – – – 88 7 – Central & other items 22,549 110 – 6,381 – – 16,168 110 – Total 342,851 16,901 3,481 138,564 6,122 1,446 204,287 10,779 2,035 1 Includes loans and advances to banks 2 Adjusted for over-collateralisat ion based on the drawn and undrawn components of exposures 3 Following the increased strategic importance and reporting of Ventures to management, this has been established as a separate operating segment in 2022. Prior period has been restated Collateral – CCIB (audited) Collateral held against CCIB exposures amounted to $38 bill ion. Collateral taken for longer-term and sub-investment grade corporate loans improved to 53 per cent (31 December 2021: 49 per cent). Our underwrit ing standards encourage tak ing specif ic charges on assets and we consistently seek high-quality, investment-grade collateral. 79 per cent of tangible collateral excluding reverse repurchase agreements (31 December 2021: 76 per cent) held comprises physical assets or is property based, and investment securit ies. Overall collateral increased by $8.7 bill ion to $38 b ill ion (31 December 2021: $29 bill ion) due to an increase in reverse repurchase agreements. Non-tangible collateral, such as guarantees and standby letters of credit, is also held against corporate exposures, although the financial effect of th is type of collateral is less sign ificant in terms of recoveries. However, this is considered when determin ing the probab il ity of default and other credit-related factors. Collateral is also held against off- balance sheet exposures, includ ing undrawn comm itments and trade-related instruments. ![]() 259 Standard Chartered – Annual Report 2022 Risk review and Capital review Corporate, Commercial & Institut ional Bank ing Amortised cost 2022 $mill ion 2021 $mill ion Maximum exposure 179,150 183,784 Property 10,152 10,589 Plant, machinery and other stock 1,168 1,411 Cash 2,797 3,549 Reverse repos 14,305 2,042 A- to AA+ 10,551 122 BBB- to BBB+ 1,485 483 Unrated 2,269 1,437 Financ ial guarantees and insurance 5,096 6,616 Commodit ies 37 198 Ships and aircraft 4,596 5,009 Total value of collateral 1 38,151 29,414 Net exposure 140,999 154,370 1 Adjusted for over-collateralisat ion based on the drawn and undrawn components of exposures Collateral – CPBB (audited) In CPBB, $113 bill ion wh ich equates to 86 per cent of the portfolio is fully secured (31 December 2021: 86 per cent). The following table presents an analysis of loans to ind iv iduals by product; split between fully secured, partially secured and unsecured. Amortised cost 2022 2021 (Restated) 3 Fully secured $mill ion Partially secured $mill ion Unsecured $mill ion Total $mill ion Fully secured $mill ion Partially secured $mill ion Unsecured $mill ion Total $mill ion Maximum exposure 112,556 449 17,950 130,955 117,129 1,329 17,972 136,430 Loans to ind iv iduals Mortgages 87,212 – – 87,212 89,222 – – 89,222 CCPL 221 – 16,711 16,932 150 – 16,943 17,093 Auto 502 – – 502 542 – – 542 Secured wealth products 19,551 – – 19,551 21,495 – – 21,495 Other 5,070 449 1,239 6,758 5,720 1,329 1,029 8,078 Total collateral 1 92,350 102,769 Net exposure 2 38,605 33,661 Percentage of total loans 86% 0% 14% 86% 1% 13% 1 Collateral values are adjusted where appropriate in accordance with our risk mit igat ion policy and for the effect of over-collateralisat ion 2 Amounts net of ECL 3 Following the increased strategic importance and reporting of Ventures to management, this has been established as a separate operating segment in 2022. Prior period has been restated ![]() 260 Standard Chartered – Annual Report 2022 Risk review Risk profile 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 ificantly exceeds pr inc ipal outstand ing of the mortgage loans. The average LTV of the overall mortgage portfolio increased to 44.7 per cent (31 December 2021: 41.1 per cent) mainly from Hong Kong due to a drop in the Property Price Index. Hong Kong, which represents 40 per cent of the mortgage portfolio, has an average LTV of 52.6 per cent (31 December 2021: 43.8 per cent). All of our other key markets continue to have low portfolio LTVs (Korea, Singapore and Taiwan at 37.3 per cent, 42.9 per cent and 45.1 per cent respectively). An analysis of LTV ratios by geography for the mortgage portfolio is presented in the table below. Amortised cost 2022 Asia % Gross Africa & Middle East % Gross Europe & Americas % Gross Total % Gross Less than 50 per cent 60.9 43.0 32.2 60.1 50 per cent to 59 per cent 15.5 18.2 19.2 15.6 60 per cent to 69 per cent 9.8 16.8 31.3 10.2 70 per cent to 79 per cent 6.5 12.8 14.8 6.7 80 per cent to 89 per cent 3.6 5.1 1.1 3.6 90 per cent to 99 per cent 2.5 2.0 – 2.4 100 per cent and greater 1.4 2.2 1.3 1.4 Average portfolio loan-to-value 44.4 54.3 56.6 44.7 Loans to ind iv iduals – mortgages ($mill ion) 83,954 1,388 1,870 87,212 Amortised cost 2021 Asia 1 % 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 iv iduals – mortgages ($mill ion) 85,765 1,651 1,806 89,222 Collateral and other credit enhancements 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 ies acqu ired may be held by the Group for investment purposes and are classif ied as fa ir value through profit or loss, and the related loan written off. The carrying value of collateral possessed and held by the Group is $14.9 mill ion (31 December 2021: $11.8 mill ion). 2022 $mill ion 2021 $mill ion Property, plant and equipment 9.6 5.8 Guarantees 5.3 6.0 Total 14.9 11.8 ![]() 261 Standard Chartered – Annual Report 2022 Risk review and Capital review Other Credit Risk mit igat ion (audited) Other forms of credit risk mit igat ion are set out below. Credit default swaps The Group has entered into credit default swaps for portfolio management purposes, referencing loan assets with a notional value of $5.1 bill ion (31 December 2021: $12.1 b ill ion). These credit default swaps are accounted for as financ ial 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. Credit linked notes The Group has issued credit linked notes for portfolio management purposes, referencing loan assets with a notional value of $13.5 bill ion (31 December 2021: $10.0 b ill ion). The Group continues to hold the underlying assets for which the credit linked notes provide mit igat ion. Derivat ive financial instruments The Group enters into master netting agreements, which in the event of default result in a single amount owed by or to the counterparty through netting the sum of the posit ive and negative mark-to-market values of applicable derivat ive transactions. Credit Risk mit igat ion for derivat ive financial instruments is set out in page 285. 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 a default take place. Other portfolio analysis This section provides maturity analysis by credit quality by industry and industry and retail products analysis by region. Contractual maturity analysis of loans and advances by client segment Loans and advances to the CCIB segment remain predominantly short-term, with $98.3 bill ion or 68 per cent (31 December 2021: $95.5 bill ion or 66 per cent) matur ing in less than one year. Loans and advances to banks decreased by $4.9 bill ion to $39.5 bill ion (31 December 2021: $44.4 b ill ion) of wh ich 96 per cent mature in less than one year (31 December 2021: 98 per cent). The CPBB short-term book of one year or less is stable at 25 per cent (31 December 2021: 26 per cent) and long term book over five years increased to 64 per cent (31 December 2021: 62 per cent) of the total portfolio. Amortised cost 2022 One year or less $mill ion One to five years $mill ion Over five years $mill ion Total $mill ion Corporate, Commercial & Institut ional Bank ing 98,335 34,635 10,789 143,759 Consumer, Private & Business Banking 33,365 14,161 84,731 132,257 Ventures 548 162 – 710 Central & other items 39,373 – 8 39,381 Gross loans and advances to customers 171,621 48,958 95,528 316,107 Impairment provis ions (4,767) (574) (119) (5,460) Net loans and advances to customers 166,854 48,384 95,409 310,647 Net loans and advances to banks 38,105 1,211 203 39,519 Amortised cost 2021 (Restated)¹ One year or less $mill ion One to five years $mill ion Over five years $mill ion Total $mill ion Corporate, Commercial & Institut ional Bank ing 95,454 36,953 11,299 143,706 Consumer, Private & Business Banking 35,900 16,783 85,093 137,776 Ventures 91 – – 91 Central & other items 22,318 224 7 22,549 Gross loans and advances to customers 153,763 53,960 96,399 304,122 Impairment provis ions (5,057) (462) (135) (5,654) Net loans and advances to customers 148,706 53,498 96,264 298,468 Net loans and advances to banks 43,274 955 154 44,383 1 Following the increased strategic importance and reporting of Ventures to management, this has been established as a separate operating segment from 1 January 2022. Prior period has been restated ![]() 262 Standard Chartered – Annual Report 2022 Risk review Risk profile 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 irment and net basis. From an industry perspective, gross loans and advances increased by $12.0 bill ion to $316 b ill ion (31 December 2021: $304 b ill ion), of which $16.8 bill ion was from Central and other items segments, offset by $5.5 bill ion in CPBB. CCIB was stable at $144 bill ion with increase in stage 1 loans offset by a decrease in stage 2 loans. Stage 1 loans increased by $16.0 bill ion to $295.2 b ill ion (31 December 2021: $279.2 b ill ion), due to an increase in Lending to Governments notably Hong Kong, Singapore and Korea. In CPBB, loans decreased by $4.5 bill ion to $129.8 b ill ion (31 December 2021: $134.4 bill ion), ma inly driven by a decrease in Private Bank exposure (largely from UK, Hong Kong and Singapore in all classes), and a decrease in exposure of the Resident ial Mortgage segment in Korea (due to tightened Debt Service Ratio following new government guidel ines). This is offset by an increase in credit card portfolio of $1 bill ion. In CCIB, loans were broadly stable due to $10.5 bill ion increase in exposures in Financ ing, insurance and non-banking from a few notable clients, $1.5 bill ion increase in Transport, telecom and util it ies from upgrades offset by $2.8 bill ion decrease in Manufacturing and $5.3 bill ion decrease in Commercial real estate sector from repayments. Stage 2 loans decreased by $3.8 bill ion to $13 b ill ion (31 December 2021: $16.8 b ill ion) largely due to CCIB, $2.6 b ill ion reduct ions in Transport, telecom and util it ies from upgrades to Stage 1 and repayments, $1.2 bill ion decrease in Energy. This was offset by an increase in Commercial real estate sector from accounts being placed on Early Alert Non Purely Precautionary and higher risk categories. Stage 3 loans reduced by $0.3 bill ion to $7.8 b ill ion (31 December 2021: $8.1 b ill ion) of wh ich CCIB and Central and other items are broadly flat as the effects of the sovereign downgrades of Ghana and Sri Lanka are largely offset by repayments and upgrades. CPBB stage 3 loans reduced in Secured wealth and Mortgages portfolios. Amortised cost 2022 Stage 1 Stage 2 Stage 3 Total Gross balance $mill ion Total credit impa ir- ment $mill ion Net carrying amount $mill ion Gross balance $mill ion Total credit impa ir- ment $mill ion Net carrying amount $mill ion Gross balance $mill ion Total credit impa ir- ment $mill ion Net carrying amount $mill ion Gross balance $mill ion Total credit impa ir- ment $mill ion Net carrying amount $mill ion Industry: Energy 10,959 (8) 10,951 818 (7) 811 1,324 (620) 704 13,101 (635) 12,466 Manufacturing 20,990 (23) 20,967 1,089 (27) 1,062 777 (518) 259 22,856 (568) 22,288 Financ ing, insurance and non-banking 34,915 (9) 34,906 774 (3) 771 195 (175) 20 35,884 (187) 35,697 Transport, telecom and util it ies 14,273 (22) 14,251 2,347 (36) 2,311 669 (224) 445 17,289 (282) 17,007 Food and household products 7,841 (21) 7,820 695 (20) 675 418 (259) 159 8,954 (300) 8,654 Commercial real estate 12,393 (43) 12,350 3,217 (195) 3,022 1,305 (761) 544 16,915 (999) 15,916 Min ing and quarry ing 5,482 (4) 5,478 537 (5) 532 248 (174) 74 6,267 (183) 6,084 Consumer durables 6,403 (4) 6,399 420 (17) 403 358 (307) 51 7,181 (328) 6,853 Construction 2,424 (2) 2,422 407 (5) 402 495 (410) 85 3,326 (417) 2,909 Trading companies & distr ibutors 2,205 (1) 2,204 170 (2) 168 122 (80) 42 2,497 (83) 2,414 Government 42,825 (2) 42,823 603 (1) 602 168 (15) 153 43,596 (18) 43,578 Other 4,684 (4) 4,680 278 (5) 273 312 (137) 175 5,274 (146) 5,128 Retail Products: Mortgage 85,859 (12) 85,847 996 (7) 989 556 (180) 376 87,411 (199) 87,212 Credit Cards 6,912 (103) 6,809 155 (46) 109 59 (44) 15 7,126 (193) 6,933 Personal loans and other unsecured lending 10,652 (253) 10,399 215 (57) 158 296 (156) 140 11,163 (466) 10,697 Auto 501 – 501 1 – 1 – – – 502 – 502 Secured wealth products 19,269 (45) 19,224 235 (10) 225 407 (305) 102 19,911 (360) 19,551 Other 6,632 (3) 6,629 86 (1) 85 136 (92) 44 6,854 (96) 6,758 Net carrying value (customers)¹ 295,219 (559)294,660 13,043 (444) 12,599 7,845 (4,457) 3,388 316,107 (5,460) 310,647 1 Includes reverse repurchase agreements and other sim ilar secured lend ing held at amortised cost of $24,498 mill ion ![]() 263 Standard Chartered – Annual Report 2022 Risk review and Capital review Amortised cost 2021 Stage 1 Stage 2 Stage 3 Total Gross balance $mill ion Total credit impa ir- ment $mill ion Net carrying amount $mill ion Gross balance $mill ion Total credit impa ir- ment $mill ion Net carrying amount $mill ion Gross balance $mill ion Total credit impa ir- ment $mill ion Net carrying amount $mill ion Gross balance $mill ion Total credit impa ir- ment $mill ion Net carrying amount $mill ion 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 ing, insurance and non-banking 24,380 (9) 24,371 1,257 (12) 1,245 268 (207) 61 25,905 (228) 25,677 Transport, telecom and util it ies 12,778 (5) 12,773 4,926 (51) 4,875 966 (289) 677 18,670 (345) 18,325 Food and household 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 ing and quarry ing 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 & distr ibutors 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 Retail Products: Mortgage 87,987 (22) 87,965 862 (20) 842 599 (184) 415 89,448 (226) 89,222 Credit Cards 2 5,899 (90) 5,809 388 (74) 314 61 (44) 17 6,348 (208) 6,140 Personal loans and other unsecured lending 2 10,981 (188) 10,793 182 (58) 124 334 (210) 124 11,497 (456) 11,041 Auto 541 (1) 540 2 – 2 – – – 543 (1) 542 Secured wealth products 21,067 (61) 21,006 307 (10) 297 483 (291) 192 21,857 (362) 21,495 Other 7,896 (8) 7,888 180 (21) 159 97 (66) 31 8,173 (95) 8,078 Net carrying 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 1 Includes reverse repurchase agreements and other sim ilar secured lend ing held at amortised cost of $7,331 mill ion. 2 Prior year has been re-presented to provide product granularity Industry analysis of loans and advances by geographic region This section provides an analysis of the Group’s amortised cost loan portfolio, net of provis ions, by industry and region. In the CCIB and Central and other items segment, our largest industry exposures are to Government, Financ ing, insurance and non-banking and Manufacturing with each constitut ing at least 10 per cent of CCIB and Central and other items loans and advances to customers. Financ ing, insurance and non-banking industry clients are mostly investment-grade inst itut ions and this lending forms part of the liqu id ity management of the Group. The Manufacturing sector group is spread across a diverse range of industr ies, includ ing automob iles and components, capital goods, pharmaceuticals, biotech and life sciences, technology hardware and equipment, chemicals, paper products and packaging, with lending spread over 3,330 clients. The Group provides loans to Commercial real estate counterparties of $16.9 bill ion, wh ich represents 9 per cent of total customer loans and advances. In total, $9.1 bill ion of th is 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 ing Commerc ial real estate loans comprise working capital loans to real estate corporates, loans with non-property collateral, unsecured loans and loans to real estate entit ies of d ivers ified conglomerates. The average LTV rat io of the performing book Commercial real estate portfolio has decreased to 49 per cent, compared with 50 per cent in 2021. The proportion of loans with an LTV greater than 80 per cent has decreased to 1 per cent, compared with 2 per cent in 2021. The China commercial real estate portfolio is being closely monitored and is being separately disclosed on page 268. ![]() 264 Standard Chartered – Annual Report 2022 Risk review Risk profile The Mortgage portfolio continues to be the largest portion of the CPBB portfolio at $87.4 bill ion, w ith Credit Cards at $7.1 bill ion and Personal loans portolio at $11.2 bill ion. In Asia, the Financ ing, insurance and non-banking industry increased by $10.5 bill ion to $24.7 b ill ion (31 December 2021: $14.2 bill ion), the Government sector increased by $16.7 bill ion to $39.7 b ill ion (31 December 2021: $23.0 b ill ion) due to increased lending to the Hong Kong, Singapore and Korea Sovereign, the Credit Cards portfolio increased by $0.8 bill ion to $6.6 b ill ion (31 December 2021: $5.8 bill ion). Th is was offset by a $3.4 bill ion decrease in the Manufacturing Sector, $4.0 bill ion decrease in Commercial real estate due to repayments in Stage 1 and $3.9 bill ion decrease in mortgages and secured wealth products. Amortised cost 2022 2021 Asia $mill ion Africa & Middle East $mill ion Europe & Americas $mill ion Total $mill ion Asia $mill ion Africa & Middle East $mill ion Europe & Americas $mill ion Total $mill ion Industry: Energy 6,250 2,278 3,938 12,466 6,265 2,721 3,719 12,705 Manufacturing 17,388 1,267 3,633 22,288 20,771 1,751 2,702 25,224 Financ ing, insurance and non-banking 24,674 761 10,262 35,697 14,184 905 10,588 25,677 Transport, telecom and util it ies 10,841 3,567 2,599 17,007 11,661 4,218 2,446 18,325 Food and household products 4,160 2,566 1,928 8,654 5,497 2,360 1,033 8,890 Commercial real estate 13,179 598 2,139 15,916 17,150 1,048 1,649 19,847 Min ing and quarry ing 3,785 390 1,909 6,084 3,833 572 950 5,355 Consumer durables 5,860 461 532 6,853 6,742 398 403 7,543 Construction 1,775 625 509 2,909 1,839 814 400 3,053 Trading companies and distr ibutors 2,281 101 32 2,414 1,047 176 37 1,260 Government 39,713 3,759 106 43,578 22,987 4,117 305 27,409 Other 3,636 702 790 5,128 4,681 670 1,311 6,662 Retail Products: Mortgages 83,954 1,388 1,870 87,212 85,765 1,651 1,806 89,222 Credit Cards 1 6,642 291 – 6,933 5,849 291 – 6,140 Personal loans and other unsecured lending 1 9,056 1,541 100 10,697 9,241 1,700 100 11,041 Auto 469 33 – 502 500 42 – 542 Secured wealth products 17,876 1,048 627 19,551 19,984 545 966 21,495 Other 6,676 82 – 6,758 7,265 813 – 8,078 Net loans and advances to customers 258,215 21,458 30,974 310,647 245,261 24,792 28,415 298,468 Net loans and advances to banks 22,058 3,929 13,532 39,519 30,301 5,966 8,116 44,383 1 Prior year has been re-presented to provide product granularity Vulnerable and Cyclical Sector tables Vulnerable and cyclical sectors are those that the Group considers to be most at risk from current economic stresses, includ ing volat ile energy and commodity prices, and we continue to monitor exposures to these sectors particularly carefully. Total net on-balance sheet exposure to vulnerable and cyclical sectors decreased by $4.7 bill ion to $30.9 b ill ion (31 December 2021: $35.5 bill ion) largely due to lower levels of drawn balances particularly in the Commercial real estate sector. The total net on and off-balance sheet exposure for CCIB decreased by $7.8bn to $251.3 bill ion (31 December 2021: $259.2 bill ion). Stage 2 vulnerable and cyclical sector loans decreased by $1.8 bill ion to $5.6 b ill ion (31 December 2021: $7.4 b ill ion). Th is was primar ily dr iven by a decrease in the Aviat ion sector from stage upgrades and in Oil and Gas sectors from repayments, which was partly offset by an increase in Commercial Real Estate. Stage 3 vulnerable and cyclical sector loans increased by $0.4 bill ion to $4 b ill ion (31 December 2021: $3.6 b ill ion), ma inly from China commercial real estate clients and the Oil and Gas sector. Construction sector is included in this section and prior year tables are re-presented. ![]() 265 Standard Chartered – Annual Report 2022 Risk review and Capital review Maximum exposure Amortised Cost 2022 Maximum on Balance Sheet Exposure (net of credit impa irment) $mill ion Collateral $mill ion Net On Balance Sheet Exposure $mill ion Undrawn Commitments (net of credit impa irment) $mill ion Financ ial Guarantees (net of credit impa irment) $mill ion Net Off Balance Sheet Exposure $mill ion Total On & Off Balance Sheet Net Exposure $mill ion Industry: Aviat ion¹ 3,072 1,597 1,475 1,762 632 2,394 3,869 Commodity Traders 7,571 341 7,230 2,578 6,095 8,673 15,903 Metals & Min ing 4,754 321 4,433 3,425 852 4,277 8,710 Construction 2,909 552 2,357 2,762 5,969 8,731 11,088 Commercial real estate 15,916 7,205 8,711 6,258 224 6,482 15,193 Hotels & Tourism 1,741 919 822 1,346 138 1,484 2,306 Oil & Gas 6,643 806 5,837 7,630 7,158 14,788 20,625 Total 42,606 11,741 30,865 25,761 21,068 46,829 77,694 Total Corporate, Commercial & Institut ional Bank ing 139,631 35,229 104,402 95,272 51,662 146,934 251,336 Total Group 350,166 141,715 208,451 168,574 60,224 228,798 437,249 Amortised Cost 2021 Maximum On Balance Sheet Exposure(net of credit impa irment) $mill ion Collateral $mill ion Net On Balance Sheet Exposure $mill ion Undrawn Commitments (net of credit impa irment) $mill ion Financ ial Guarantees (net of credit impa irment) $mill ion Net Off Balance Sheet Exposure $mill ion Total On & Off Balance Sheet Net Exposure $mill ion Industry: Aviat ion¹ 3,458 2,033 1,425 1,914 431 2,345 3,770 Commodity Traders 8,732 262 8,470 2,434 6,832 9,266 17,736 Metals & Min ing 3,616 450 3,166 3,387 637 4,024 7,190 Construction 3,053 544 2,509 2,374 5,860 8,234 10,743 Commercial real 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 8,842 6,013 14,855 20,652 Total 47,922 12,397 35,525 27,506 20,185 47,691 83,216 Total Corporate, Commercial & Institut ional Bank ing 139,401 26,294 113,107 96,406 49,666 146,072 259,179 Total Group 342,851 138,564 204,287 158,421 58,291 216,712 420,999 1 In addit ion to the av iat ion sector loan exposures, the Group owns $3.2 b ill ion (31 December 2021: $3.1 b ill ion) of a ircraft under operating leases. Refer to Operating lease assets ![]() 266 Standard Chartered – Annual Report 2022 Risk review Risk profile Loans and advances by stage Amortised Cost 2022 Stage 1 Stage 2 Stage 3 Total Gross Balance $mill ion Total Credit Impair- ment $mill ion Net Carrying Amount $mill ion Gross Balance $mill ion Total Credit Impair- ment $mill ion Net Carrying Amount $mill ion Gross Balance $mill ion Total Credit Impair- ment $mill ion Net Carrying Amount $mill ion Gross Balance $mill ion Total Credit Impair- ment $mill ion Net Carrying Amount $mill ion Industry: Aviat ion 2,377 (1) 2,376 573 – 573 155 (32) 123 3,105 (33) 3,072 Commodity Traders 7,187 (6) 7,181 138 (2) 136 689 (435) 254 8,014 (443) 7,571 Metals & Min ing 4,184 (1) 4,183 475 (4) 471 257 (157) 100 4,916 (162) 4,754 Construction 2,424 (2) 2,422 407 (5) 402 497 (412) 85 3,328 (419) 2,909 Commercial real estate 12,393 (43) 12,350 3,217 (195) 3,022 1,305 (761) 544 16,915 (999) 15,916 Hotels & Tourism 1,448 (2) 1,446 108 (1) 107 206 (18) 188 1,762 (21) 1,741 Oil & Gas 5,468 (4) 5,464 708 (6) 702 919 (442) 477 7,095 (452) 6,643 Total 35,481 (59) 35,422 5,626 (213) 5,413 4,028 (2,257) 1,771 45,135 (2,529) 42,606 Total Corporate, Commercial & Institut ional Bank ing 126,261 (143) 126,118 11,355 (323) 11,032 6,143 (3,662) 2,481 143,759 (4,128) 139,631 Total Group 334,368 (568)333,800 13,380 (447) 12,933 7,904 (4,471) 3,433 355,652 (5,486) 350,166 Amortised Cost 2021 Stage 1 Stage 2 Stage 3 Total Gross Balance $mill ion Total Credit Impair- ment $mill ion Net Carrying Amount $mill ion Gross Balance $mill ion Total Credit Impair- ment $mill ion Net Carrying Amount $mill ion Gross Balance $mill ion Total Credit Impair- ment $mill ion Net Carrying Amount $mill ion Gross Balance $mill ion Total Credit Impair- ment $mill ion Net Carrying Amount $mill ion Industry: Aviat ion 1,120 – 1,120 2,174 (11) 2,163 239 (64) 175 3,533 (75) 3,458 Commodity Traders 8,482 (4) 8,478 195 (5) 190 713 (649) 64 9,390 (658) 8,732 Metals & Min ing 3,083 (1) 3,082 450 (17) 433 219 (118) 101 3,752 (136) 3,616 Construction 2,279 (3) 2,276 505 (19) 487 916 (626) 290 3,701 (647) 3,053 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 39,205 (57) 39,148 7,428 (170) 7,259 3,588 (2,073) 1,515 50,222 (2,299) 47,922 Total Corporate, Commercial & Institut ional Bank ing 122,368 (103) 122,265 14,818 (341) 14,477 6,520 (3,861) 2,659 143,706 (4,305) 139,401 Total Group 322,954 (485) 322,469 17,429 (528) 16,901 8,149 (4,668) 3,481 348,532 (5,681) 342,851 Loans and advances by region (net of credit impa irment) 2022 2021 Asia $mill ion Africa & Middle East $mill ion Europe & Americas $mill ion Total $mill ion Asia $mill ion Africa & Middle East $mill ion Europe & Americas $mill ion Total $mill ion Industry: Aviat ion¹ 1,105 1,259 708 3,072 1,356 1,214 888 3,458 Commodity Traders 3,497 978 3,096 7,571 4,352 660 3,720 8,732 Metals & Min ing 2,966 347 1,441 4,754 2,736 492 388 3,616 Construction 1,776 624 509 2,909 1,781 644 628 3,053 Commercial real estate 13,180 598 2,138 15,916 17,150 1,048 1,649 19,847 Hotel & Tourism 880 465 396 1,741 1,464 397 529 2,390 Oil & Gas 3,574 1,445 1,624 6,643 2,770 2,248 1,808 6,826 Total 26,978 5,716 9,912 42,606 31,609 6,703 9,610 47,922 1 In addit ion to the av iat ion sector loan exposures, the Group owns $3.2 b ill ion (31 December 2021: $3.1 b ill ion) of a ircraft under operating leases. Refer to Operating lease assets ![]() 267 Standard Chartered – Annual Report 2022 Risk review and Capital review Credit quality – loans and advances Amortised Cost Credit Grade 2022 Aviat ion Gross $mill ion Commodity Traders Gross $mill ion Construction Gross $mill ion Metals & Min ing Gross $mill ion Commercial real estate Gross $mill ion Hotel & Tourism Gross $mill ion Oil & Gas Gross $mill ion Total Gross $mill ion Strong 1,437 4,419 1,164 3,425 8,000 1,047 3,923 23,415 Satisfactory 1,413 2,894 1,634 1,208 7,334 494 2,215 17,192 Higher risk 100 12 33 26 276 15 38 500 Credit impa ired (stage 3) 155 689 497 257 1,305 206 919 4,028 Total Gross Balance 3,105 8,014 3,328 4,916 16,915 1,762 7,095 45,135 Strong – (3) – – (25) (1) (1) (30) Satisfactory (1) (4) (3) (5) (129) (1) (7) (150) Higher risk – (1) (4) – (84) (1) (2) (92) Credit impa ired (stage 3) (32) (435) (412) (157) (761) (18) (442) (2,257) Total Credit Impairment (33) (443) (419) (162) (999) (21) (452) (2,529) Strong 0.0% 0.1% 0.0% 0.0% 0.3% 0.1% 0.0% 0.1% Satisfactory 0.1% 0.1% 0.2% 0.4% 1.8% 0.2% 0.3% 0.9% Higher risk 0.0% 8.3% 12.1% 0.0% 30.4% 6.7% 5.3% 18.4% Credit impa ired (stage 3) 20.6% 63.1% 82.9% 61.1% 58.3% 8.7% 48.1% 56.0% Cover Ratio 1.1% 5.5% 12.6% 3.3% 5.9% 1.2% 6.4% 5.6% Credit Grade 2021 Aviat ion Gross $mill ion Commodity Traders Gross $mill ion Construction Gross $mill ion Metals & Min ing Gross $mill ion Commercial real estate Gross $mill ion Hotel & Tourism Gross $mill ion Oil & Gas Gross $mill ion Total Gross $mill ion Strong 896 5,878 1,181 1,730 9,581 731 3,594 23,591 Satisfactory 2,257 2,788 1,506 1,781 9,735 1,353 2,892 22,312 Higher risk 141 11 123 22 151 200 108 756 Credit impa ired (stage 3) 239 713 892 219 833 182 486 3,564 Total Gross Balance 3,533 9,390 3,701 3,752 20,300 2,466 7,080 50,222 Strong – (1) (24) – (92) – – (117) Satisfactory (8) (5) (3) (14) (21) (4) (24) (79) Higher risk (3) (3) (17) (4) (5) (6) (15) (53) Credit impa ired (stage 3) (64) (649) (603) (118) (335) (66) (215) (2,050) Total Credit Impairment (75) (658) (647) (136) (453) (76) (254) (2,299) Strong 0.0% 0.0% 2.0% 0.0% 1.0% 0.0% 0.0% 0.5% Satisfactory 0.4% 0.2% 0.2% 0.8% 0.2% 0.3% 0.8% 0.4% Higher risk 2.1% 27.3% 14.2% 18.2% 3.3% 3.0% 13.9% 7.1% Credit impa ired (stage 3) 26.8% 91.0% 67.6% 53.9% 40.2% 36.3% 44.2% 57.5% Cover Ratio 2.1% 7.0% 17.5% 3.6% 2.2% 3.1% 3.6% 4.6% ![]() 268 Standard Chartered – Annual Report 2022 Risk review Risk profile China commercial real estate With in CCIB, the Group’s gross loans and advances to customers that are exposed to Ch ina commercial real estate are $3.2 bill ion (31 December 2021: $3.7 b ill ion). The proportion of credit impa ired exposures increased to 33 per cent from 12 per cent in 2021 as market condit ions cont inued to deteriorate during the year and provis ion coverage increased to 57 per cent from 18 per cent in 2021 reflecting increased provis ion charges dur ing the year. The proportion of the loan book rated as Higher Risk also increased compared to 2021 and the proportion rated as strong reduced from 38 per cent to 15 per cent as the major ity of non-cred it impa ired developer cl ients were placed on non-purely precautionary early alert. The Group continues to hold a judgemental management overlay (see page 276), which increased by $78 mill ion to $173 m ill ion compared to 2021, reflecting the increased uncertainty and deteriorat ion in the portfolio. $5 mill ion (2021: $3 m ill ion) of th is overlay is held against off-balance sheet exposures. Total coverage of the non-credit impa ired portfol io is 10 per cent or 2 per cent excluding the judgemental overlay. The Group is further ind irectly exposed to Ch ina commercial real estate through its associate investment in China Bohai Bank. Refer to Note 19 Investments in subsid iary undertak ings, jo int ventures and assoc iates. 2022 China $mill ion Hong Kong $mill ion Rest of Group $mill ion Total $mill ion Loans to customers 953 2,248 39 3,240 Off balance sheet 74 85 8 167 Total as at 31 December 2022 1,027 2,333 47 3,407 Loans to customers – By Credit quality Gross Strong 256 221 – 477 Satisfactory 459 921 39 1,419 Higher risk – 271 – 271 Credit impa ired (stage 3) 238 835 – 1,073 Total as at 31 December 2022 953 2,248 39 3,240 Loans to customers – ECL Strong – (19) – (19) Satisfactory (9) (110) – (119) Higher risk – (83) – (83) Credit impa ired (stage 3) (37) (559) – (596) Total as at 31 December 2022 (46) (771) – (817) 2021 China $mill ion Hong Kong $mill ion Rest of Group $mill ion Total $mill ion Loans to customers 881 2,728 130 3,739 Off balance sheet 286 86 20 392 Total as at 31 December 2021 1,167 2,814 150 4,131 Loans to customers – By Credit quality Gross Strong 278 1,104 46 1,428 Satisfactory 592 1,187 84 1,863 Higher risk – – – – Credit impa ired (stage 3) 11 437 – 448 Total as at 31 December 2021 881 2,728 130 3,739 Loans to customers – ECL Strong – (60) (2) (62) Satisfactory (2) (31) (1) (34) Higher risk – – – – Credit impa ired (stage 3) (4) (120) – (124) Total as at 31 December 2021 (6) (211) (3) (220) ![]() 269 Standard Chartered – Annual Report 2022 Risk review and Capital review Debt securit ies and other el ig ible b ills (audited) This section provides further detail on gross debt securit ies and treasury b ills. The standard credit ratings used by the Group are those used by Standard & Poor’s or its equivalent. Debt securit ies held that have a short-term rating are reported against the long-term rating of the issuer. For securit ies that are unrated, the Group applies an internal credit rating, as described under the credit rating and measurement section on page 302. Total gross debt securit ies and other el ig ible b ills increased by $8.9 bill ion to $171.7 b ill ion (31 December 2021: $162.8 b ill ion). Stage 1 gross balance increased by $8.8 bill ion to $166.1 b ill ion (31 December 2021: $157.4 b ill ion) of wh ich $7.3 bill ion increase was unrated. Of the unrated securit ies, 97 per cent (31 December 2021: 88 per cent) are internally rated as Strong and 3 per cent (31 December 2021: 12 per cent) were internally rated as Satisfactory. Stage 2 gross balance was broadly flat at $5.5 bill ion (31 December 2021: $5.3 b ill ion) wh ich includes the sovereign downgrade of Pakistan. Stage 3 gross balance was at $0.1 bill ion (31 December 2021: $0.1 b ill ion) wh ich includes the sovereign downgrade of Ghana. Amortised cost and FVOCI 2022 2021 Gross $mill ion ECL $mill ion Net 2 $mill ion Gross $mill ion ECL $mill ion Net 2 $mill ion Stage 1 166,103 (25) 166,078 157,352 (67) 157,285 AAA 73,933 (10) 73,923 75,920 (23) 75,897 AA- to AA+ 42,327 (4) 42,323 40,577 (8) 40,569 A- to A+ 29,488 (2) 29,486 23,993 (3) 23,990 BBB- to BBB+ 7,387 (1) 7,386 11,071 (27) 11,044 Lower than BBB- 1,047 (2) 1,045 1,123 (1) 1,122 Unrated 11,921 (6) 11,915 4,668 (5) 4,663 Stage 2 5,455 (90) 5,365 5,315 (42) 5,273 AAA 21 – 21 641 (7) 634 AA- to AA+ 40 – 40 592 (3) 589 A- to A+ 17 (1) 16 22 (1) 21 BBB- to BBB+ 2,605 (16) 2,589 2,869 (10) 2,859 Lower than BBB- 2,485 (71) 2,414 809 (21) 788 Unrated 287 (2) 285 382 – 382 Stage 3 144 (106) 38 113 (66) 47 Lower than BBB- 67 (55) 12 – – – Unrated 77 (51) 26 113 (66) 47 Gross balance¹ 171,702 (221) 171,481 162,780 (175) 162,605 1 Stage 3 gross includes $28 mill ion (2021: $33 m ill ion) or ig inated cred it-impa ired debt secur it ies w ith impa irment of $13 m ill ion (2021: N il) 2 FVOCI instrument are not presented net of ECL. While the presentation is on a net basis for the table, the total net on-balance sheet amount is $171,640 mill ion (31 December 2021: $162,700 mill ion). Refer to the Analys is of financ ial instrument by stage table on page 239 IFRS 9 expected credit loss methodology (audited) Approach for determin ing expected cred it losses Credit loss terminology Component Definit ion Probabil ity of default (PD) The probabil ity that a counterparty w ill default, over the next 12 months from the reporting date (stage 1) or over the lifet ime 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 ime (or term structure) PDs are based on statist ical models, cal ibrated using histor ical data and adjusted to incorporate forward-looking economic assumptions. Loss given default (LGD) The loss that is expected to arise on default, incorporating the impact of forward-looking economic assumptions where relevant, which represents the difference between the contractual cashflows due and those that the bank expects to receive. The Group estimates LGD based on the history of recovery rates and considers the recovery of any collateral that is integral to the financ ial asset, tak ing 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 ime of the exposure. Th is incorporates the impact of drawdowns of facil it ies with lim its, repayments of pr inc ipal and interest, and amortisat ion. ![]() 270 Standard Chartered – Annual Report 2022 Risk review Risk profile To determine the expected credit loss, these components are multipl ied together: PD for the reference per iod (up to 12 months or lifet ime) x LGD x EAD and d iscounted 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 ional Bank ing CCIB businesses on a global basis, in line with their respective portfolios. However, for some of the key countries, country- specif ic models have also been developed. The calibrat ion of forward-look ing informat ion is assessed at a country or region level to take into account local macroeconomic condit ions. Retail expected credit loss models are country and product specif ic g iven the local nature of the CPBB business. For less material retail portfolios, the Group has adopted less sophist icated approaches based on h istor ical 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 ion rate between del inquency states from period to period. A matrix multipl icat ion is then performed to generate the final PDs by delinquency bucket over different time horizons. • For smaller retail portfolios, loss rate models are applied. These use an adjusted gross charge-off rate, developed using monthly write-off and recoveries over the preceding 12 months and total outstanding balances. • While the loss rate models do not incorporate forward- looking informat ion, to the extent that there are s ign ificant changes in the macroeconomic forecasts an assessment will be completed on whether an adjustment to the modelled output is required. For a lim ited number of exposures, proxy parameters or approaches are used where the data is not available to calculate the orig inat ion PDs for the purpose of applying the SICR criter ia; or for some reta il portfolios where a full history of LGD data is not available, estimates based on the loss experience from sim ilar portfol ios 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 ing that uses recent data to compare the differences between model predict ions and actual outcomes against approved thresholds. • Annual independent validat ions of the performance of material models by Group Model Valuation (GMV); an abridged validat ion is completed for non-material models. Applicat ion of l ifet ime Expected credit loss is estimated based on the period over which the Group is exposed to Credit Risk. For the major ity of exposures this equates to the maximum contractual period. For retail credit cards and corporate overdraft facil it ies 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 2022, the behavioural life for corporate overdraft facil it ies was re-estimated using recent data, and it was confirmed that the exist ing l ifet ime of 24 months rema ins appropriate. Composit ion of cred it impa irment prov is ions (aud ited) The table below summarises the key components of the Group’s credit impa irment prov is ion balances at 31 December 2022 and 31 December 2021. Total ECL provis ions before management judgements includes model performance post model adjustments and the impact of multiple economic scenarios. Total modelled ECL provis ions, wh ich also includes judgemental post model adjustments and management overlays, were 26 per cent (31 December 2021: 23 per cent) of total credit impa irment provis ions at 31 December 2022. 17 per cent of the modelled ECL provis ions at 31 December 2022 related to judgemental adjustments compared with 25 per cent at 31 December 2021. 31 December 2022 Corporate, Commercial & Institut ional Banking $mill ion Consumer, Private & Business Banking $mill ion Ventures $mill ion Central & other items $mill ion Total $mill ion Modelled ECL provis ions (base forecast) 505 556 12 194 1,267 Modelled Impact of multiple economic scenarios 1 38 6 – 6 50 Total ECL provis ions before management judgements 543 562 12 200 1,317 Judgemental post model adjustments – Model Calibrat ion – 10 – – 10 – Multiple Economic Scenarios – 34 – – 34 Management overlays 2 – COVID-19 and other – 37 – – 37 – China commercial real estate 173 – – – 173 – Sri Lanka 9 – – – 9 Total modelled provis ions 725 643 12 200 1,580 Of which: Stage 1 194 413 10 34 651 Stage 2 411 118 1 100 630 Stage 3 120 112 1 66 299 Stage 3 non-modelled provis ions 3,702 664 – 129 4,495 Total credit impa irment prov is ions 4,427 1,307 12 329 6,075 ![]() 271 Standard Chartered – Annual Report 2022 Risk review and Capital review 31 December 2021 Corporate, Commercial & Institut ional Banking $mill ion Consumer, Private & Business Banking 3 $mill ion Ventures 3 $mill ion Central & other items 3,4 $mill ion Total $mill ion Modelled ECL provis ions (base forecast) 365 529 3 103 1,000 Impact of multiple economic scenarios 1 32 14 – 9 55 Total ECL provis ions before management judgements 397 543 3 112 1,055 Judgemental post model adjustments – – – – – – Model calibrat ion – 7 – – 7 – Multiple economic scenarios – – – – – Management Overlays 2 – COVID-19 102 147 – – 249 – China commercial real estate 95 – – – 95 Total modelled provis ions 594 697 3 112 1,406 Of which: Stage 1 163 377 1 68 609 Stage 2 425 185 2 44 656 Stage 3 6 135 – – 141 Stage 3 non-modelled provis ions 4,073 662 – 68 4,803 Total credit impa irment prov is ions 4,667 1,359 3 180 6,209 1 Includes a post model adjustment (PMA) of $17 mill ion (2021: $51 m ill ion) 2 $55 mill ion (2021: $115 m ill ion) is in stage 1, $148 mill ion (2021: $208 m ill ion) in stage 2 and $16 mill ion (2021: $21 m ill ion) in stage 3 3 Following the increased strategic importance and reporting of Ventures to management, this has been established as a separate operating segment from 1 January 2022. Prior period has been restated 4 Includes ECL on cash and balances at central banks, accrued income, assets held for sale and other assets Post model adjustments As part of normal model monitor ing and val idat ion operational processes, where a model’s performance breaches the monitor ing thresholds or val idat ion standards, an assessment is completed to determine whether an ECL PMA is required to correct for the ident ified model issue. PMAs will be removed when the models are updated to correct for the ident ified model issue or the estimates return to being with in the mon itor ing thresholds. As at 31 December 2022, PMAs have been applied for 9 models out of the total of 172 models. In aggregate, the PMAs reduce the Group’s impa irment prov is ions by $60 m ill ion (0.5 per cent of modelled provis ions) compared w ith a $17 mill ion increase at 31 December 2021, and primar ily relate to a $17 mill ion decrease for mult iple economic scenarios in CCIB and a $24 mill ion decrease in ECL for Malaysian CPBB Business Clients. On top of these PMAs, a separate judgemental management adjustment that covers risk not captured by the models has also been applied. These adjustments are summarised below. 2022 $mill ion 2021 $mill ion Model performance PMAs Corporate, Commercial & Institut ional Bank ing (22) 24 Consumer, Private & Business Banking (38) (15) Central & other items – 8 Total model performance PMAs (60) 17 Key assumptions and judgements in determin ing expected credit loss Incorporation of forward-looking informat ion The evolving economic environment is a key determinant of the abil ity of a bank’s cl ients to meet their obligat ions as they fall due. It is a fundamental princ iple of IFRS 9 that the provis ions banks hold aga inst potential future Credit Risk losses should depend, not just on the health of the economy today, but should also take into account potential changes to the economic environment. For example, if a bank were to antic ipate a sharp slowdown in the world economy over the coming year, it should hold more provis ions 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 ion 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 ity 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 projections from the Group’s in-house research team and outputs from a third-party model that project specif ic econom ic variables and asset prices. The research team takes consensus views into considerat ion, and sen ior management review project ions for some core country variables against consensus when forming their view of the outlook. For the period beyond five years, management util ises the in-house research view and third-party model outputs, which allow for a reversion to long-term growth rates or norms. All projections are updated on a quarterly bas is. ![]() 272 Standard Chartered – Annual Report 2022 Risk review Risk profile Forecast of key macroeconomic variables underlying the expected credit loss calculation and the impact on non- linear ity In the Base Forecast – management’s view of the most likely outcome –the pace of growth of the world economy is expected to slow in the near term as central banks keep monetary policy restrict ive. Global GDP is forecast to grow by less than 3 per cent in 2023. World GDP growth averaged 3.7 per cent for the 10 years prior to COVID-19 (between 2010 and 2019). The multitude of headwinds that have faced most economies in 2022 are likely to persist in the months ahead. However, a recovery in growth is expected to take hold in H2 2023. The balance of risks to the 2023 outlook is to the downside. They include the impact from higher inflat ion and interest rates, ongoing geopolit ical tens ions, renewed lockdowns/ restrict ions to movement from the spread of COVID-19 and severe corrections in property sectors in key countries. While the quarterly Base Forecasts inform the Group’s strategic plan, one key requirement of IFRS 9 is that the assessment of provis ions should cons ider multiple future economic environments. For example, the global economy may grow more quickly or more slowly than the Base Forecast, and these variat ions would have d ifferent impl icat ions for the provis ions that the Group should hold today. As the negat ive impact of an economic downturn on credit losses tends to be greater than the posit ive impact of an economic upturn, if the Group sets provis ions only on the ECL under the Base Forecast it might mainta in a level of prov is ions that does not appropriately capture the range of potential outcomes. To address this property of skewness (or non-linear ity), IFRS 9 requires reported ECL to be a probabil ity-we ighted 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 ion, wh ich addresses the challenges of crafting many realist ic alternat ive scenarios in the many countries in which the Group operates by means of a model, which produces these alternative scenarios while consider ing the degree of h istor ical uncerta inty (or volatil ity) observed from Q1 1990 to Q3 2022 around economic outcomes and how these outcomes have tended to move in relation to one another (or correlation). This naturally means that each of the 50 scenarios do not have a specif ic narrat ive, although collectively they explore a range of hypothetical alternative outcomes for the global economy, includ ing scenarios that turn out better than expected and scenarios that amplify antic ipated stresses. The GDP graphs below illustrate the shape of the Base Forecast for key footprint markets in relation to prior periods’ actuals. The long-term growth rates are based on the pace of economic expansion expected for 2030. The tables below provide a summary of the Group’s Base Forecast for these markets. The peak/trough amounts show the highest and lowest points with in the Base Forecast. China’s growth is expected to accelerate to 5.8 per cent in 2023 from less than 3.5 per cent in 2022. Consumption should start to recover as the country gradually eases its zero-COVID stance and starts to reopen. Recently announced policy support measures for the real estate sector are also expected to lift the outlook for the broader economy in H2 2023. Like China, Hong Kong‘s GDP growth, is expected to improve to around 2.5 per cent in 2023 from a contraction of 3 per cent in 2022 on the gradual relaxation of travel curbs and social- distanc ing measures and the much- improved labour market. However, the upside will be lim ited on the expected weakness in the external sector. Major economies such as the US and Europe are forecast to slow sharply on account of monetary policy tighten ing and h igh inflat ion. Slow ing external demand will also be a key factor in Singapore’s GDP growth easing to 2.8 per cent in 2023 from around 3.5 per cent in 2022 and Korea’s growth easing to around 2 per cent from 2.7 per cent. Growth in India is also forecast to slow with GDP expected to grow by 5.5 per cent in FY24 (ending March 2024) from 7 per cent in FY23. Fading pent-up demand (especially in the services sector), ris ing interest rates, lim ited real wage h ikes and like other countries in the region easing global demand will weigh on activ ity. The slowdown in world GDP growth in the near term will translate to a softening in the growth of demand for commodit ies in 2023. Brent Crude oil prices are expected to average around $91 in 2023 compared to around $100 in 2022. 15Q1 16Q1 18Q1 17Q1 19Q1 20Q1 21Q1 22 Q1 23Q1 25Q1 27Q1 26Q1 24Q1 -8 -4 0 4 8 12 16 20 China GDP YoY% Actual Long-term growth Forecast -10 -8 -6 -4 -2 0 2 4 6 8 10 Hong Kong GDP YoY% Actual Long-term growth Forecast 15Q1 16Q1 18Q1 17Q1 19Q1 20Q1 21Q1 22 Q1 23Q1 25Q1 27Q1 26Q1 24Q1 15Q1 16Q1 18Q1 17Q1 19Q1 20Q1 21Q1 22 Q1 23Q1 25Q1 27Q1 26Q1 24Q1 -4 -3 -2 -1 0 1 2 3 4 5 6 7 Korea GDP YoY% Actual Forecast Long-term growth 15Q1 16Q1 18Q1 17Q1 19Q1 20Q1 21Q1 22 Q1 23Q1 25Q1 27Q1 26Q1 24Q1 -15 -10 -5 0 5 10 15 20 Singapore GDP YoY% Actual Forecast Long-term growth 15Q1 16Q1 18Q1 17Q1 19Q1 20Q1 21Q1 22 Q1 23Q1 25Q1 27Q1 26Q1 24Q1 -30 -20 -10 0 10 20 30 India GDP YoY% Actual Forecast Long-term growth Long-term growth = GDP growth expected for 2030 ![]() 273 Standard Chartered – Annual Report 2022 Risk review and Capital review 2022 China Hong Kong GDP growth (YoY%) Unemployment % 3-month interest rates % House prices (YoY %) GDP growth (YoY %) Unemployment % 3-month interest rates % House prices (YoY %) Base forecast 1 2023 5.8 4.0 1.4 0.6 2.4 3.0 3.6 (4.4) 2024 5.4 3.9 1.9 3.3 2.5 2.9 3.1 3.9 2025 5.2 3.8 2.4 4.9 2.2 2.9 2.5 3.7 2026 4.8 3.8 2.7 4.5 2.3 2.9 2.4 2.8 2027 4.5 3.8 3.0 4.4 2.1 2.9 2.4 2.7 5-year average 2 5.1 3.9 2.3 3.6 2.3 3.0 2.8 1.7 Peak 7.9 4.1 3.0 5.0 4.3 3.1 3.6 4.9 Trough 4.5 3.8 1.4 0.0 0.5 2.9 2.4 (8.4) Monte Carlo Low 3 1.1 3.4 0.6 (3.4) (3.8) 1.7 0.5 (22.0) High 4 9.6 4.3 4.4 10.0 8.0 4.2 6.1 26.8 2022 Singapore Korea GDP growth (YoY%) Unemployment % 3-month interest rates % House prices (YoY%) GDP growth (YoY%) Unemployment % 3-month interest rates % House prices (YoY %) Base forecast 1 2.8 3.2 4.5 1.0 2.1 3.2 3.9 0.0 2023 2.5 3.0 3.3 1.6 2.5 3.2 3.3 2.2 2024 2.6 3.0 2.5 3.9 2.3 3.1 2.9 2.8 2025 2.9 3.0 2.4 3.5 2.0 3.1 2.7 2.8 2026 2.8 3.0 2.4 3.9 1.8 3.0 2.7 2.8 2027 2.7 3.0 3.1 2.8 2.2 3.1 3.1 2.1 5-year average 2 3.7 3.2 4.7 4.7 2.5 3.3 3.9 2.8 Peak 1.7 3.0 2.4 (2.4) 1.8 3.0 2.7 (0.4) Trough 2.8 3.2 4.5 1.0 2.1 3.2 3.9 0.0 Monte Carlo Low 3 (3.4) 2.1 0.8 (15.9) (2.8) 1.1 1.1 (5.4) High 4 8.6 4.5 5.6 20.4 7.0 4.9 5.9 10.0 2022 India Brent Crude $ pb GDP growth (YoY%) Unemployment % 3-month interest rates % House prices (YoY%) Base forecast 1 2023 5.5 NA 6.0 2.9 91.0 2024 6.0 NA 5.4 5.6 97.5 2025 6.5 NA 5.5 7.1 109.3 2026 7.4 NA 5.5 7.1 116.9 2027 7.5 NA 5.3 7.0 118.3 5-year average 2 6.4 NA 5.6 5.7 106.6 Peak 7.7 NA 6.3 7.2 118.8 Trough 3.2 NA 5.3 1.6 88.0 Monte Carlo Low 3 1.5 NA 1.9 (1.1) 42.4 High 4 12.1 NA 9.5 13.0 204.2 ![]() 274 Standard Chartered – Annual Report 2022 Risk review Risk profile 2021 China Hong Kong GDP growth (YoY%) Unemployment % 3-month interest rates % House prices (YoY%) GDP growth (YoY%) Unemployment % 3-month interest rates % House prices (YoY%) 5-year average 2 5.4 3.4 2.8 4.0 2.6 3.8 1.5 3.1 Peak 6.1 3.4 3.1 4.5 3.5 4.4 2.3 5.3 Trough 4.7 3.4 2.1 1.8 1.8 3.7 0.3 2.7 Monte Carlo Low 3 2.6 3.3 1.3 (2.8) (1.7) 2.4 (0.3) (12.4) High 4 8.3 3.5 4.6 11.1 6.9 5.8 5.0 22.8 2021 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-year average 2 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 3.3 2.4 3.1 1.2 (0.3) Monte Carlo Low 3 (4.0) 2.1 0.1 (4.1) (3.1) 2.7 0.5 (5.2) High 4 9.4 4.5 4.2 15.4 7.1 4.5 4.3 9.5 2021 India Brent crude $ pb GDP growth (YoY%) Unemployment % 3-month interest rates % House prices (YoY%) 5-year average 2 6.4 N/A 5.4 7.1 63.7 Peak 16.6 N/A 6.2 7.2 73.5 Trough 4.2 N/A 4.0 5.8 60.0 Monte Carlo Low 3 2.0 N/A 3.2 (1.9) 8.9 High 4 10.5 N/A 8.8 24.9 211.4 1 Annual numbers are for calendar year except for India where it covers fiscal year ending Q1 of each year. For example, 2022 is Q2 2022 to Q1 2023 2 5-year averages reported for 31.12.22 cover Q1 2023 to Q4 2027 3 Represents the 10th percentile in the range of economic scenarios used to determine non-linear ity 4 Represents the 90th percentile in the range of economic scenarios used to determine non-linear ity ![]() 275 Standard Chartered – Annual Report 2022 Risk review and Capital review Impact of multiple economic scenarios The final probabil ity-we ighted 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. The Monte Carlo model was redeveloped over 2022 to increase the range of scenarios that the model forecasts. The redeveloped Monte Carlo model was implemented in Q4 2022 and forecasted a wider range of scenarios. The total amount of non-linear ity calculated as the d ifference between the probabil ity-we ighted ECL calculated by the Monte Carlo model and the unweighted base forecast ECL is $50 mill ion (31 December 2021: $4 m ill ion). The CCIB and Central and other items portfolios accounted for $44 mill ion of the calculated non-l inear ity w ith the remain ing $6 m ill ion attr ibutable to CPBB portfolios. As the non-linear ity calculated for the CPBB portfol ios remained relatively low a judgemental PMA of $34 mill ion has been applied. The impact of multiple economic scenarios (which includes the post model adjustment for multiple economic scenarios) 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 ion Multiple economic scenarios 1 $mill ion Management overlays and other judgemental adjustments $mill ion Total modelled ECL 2 $mill ion Total expected credit loss at 31 December 2022 1,267 84 229 1,580 Total expected credit loss at 31 December 2021 1,000 55 351 1,406 1 Includes judgemental post model adjustment of $34 mill ion (31 December 2021: $n il) relating to Consumer, Private and Business Banking. 2021 includes model performance post model adjustments of $51 mill ion 2 Total modelled ECL comprises stage 1 and stage 2 balances of $1,281 mill ion (31 December 2021: $1,265 m ill ion) and $299 m ill ion (31 December 2021: $141 m ill ion) of modelled ECL on stage 3 loans The average expected credit loss under multiple scenarios is 7 per cent higher than the expected credit loss calculated using only the most likely scenario (the Base Forecast). Portfolios that are more sensit ive to non-l inear ity include those with greater leverage and/or a longer tenor, such as Project and Shipp ing F inance portfolios. Other portfolios display min imal non-l inear ity owing to lim ited respons iveness to macroeconomic impacts for structural reasons such as sign ificant collateral isat ion as w ith the CPBB mortgage portfolios. Judgemental adjustments As at 31 December 2022, the Group held judgemental adjustments for ECL as set out in the table below. All of the judgemental adjustments have been determined after taking account of the model performance PMAs reported and they are reassessed quarterly. They are reviewed and approved by the IFRS 9 Impairment Committee. 31 December 2022 Corporate, Commercial & Institut ional Banking $mill ion Consumer, Private & Business Banking Mortgages $mill ion Credit Cards $mill ion Other $mill ion Total $mill ion Judgemental post model adjustments – 3 11 30 44 Judgemental management overlays: – COVID-19 and other overlays – 2 5 30 37 – China CRE 173 – – – – – Sri Lanka 9 – – – – Total judgemental adjustments 182 5 16 60 81 Judgemental adjustments by stage: – Stage 1 37 1 5 39 45 – Stage 2 138 3 9 17 29 – Stage 3 9 1 2 4 7 31 December 2021 Corporate, Commercial & Institut ional Banking $mill ion Consumer, Private & Business Banking Mortgages $mill ion Credit Cards $mill ion Other $mill ion Total $mill ion Judgemental post model adjustments – – – 7 7 Judgemental management overlays: – COVID-19 102 36 15 96 147 – China CRE 95 – – – – – Sri Lanka – – – – – Total judgemental adjustments 197 36 15 103 154 Judgemental adjustments by stage: – Stage 1 31 – 13 75 87 – Stage 2 166 25 2 19 46 – Stage 3 – 11 1 9 21 ![]() 276 Standard Chartered – Annual Report 2022 Risk review Risk profile Post model adjustments As at 31 December 2022, judgemental post model adjustments to increase ECL by $44 mill ion (31 December 2021: $7 mill ion) have been appl ied to certain CPBB models. $34 mill ion (31 December 2021: $n il) of this relates to multiple economic scenarios. The remainder is primar ily to hold back releases of ECL ident ified from model mon itor ing breaches because moratoria and other support schemes have suppressed observed defaults. These will be released when the observed defaults normalise. Management overlays CCIB COVID-19 The COVID-19 overlay of $102 mill ion at 31 December 2021 has been fully released in 2022 and no overlay is held at 31 December 2022. China commercial real estate Chinese property developers continue to experience liqu id ity issues, triggered by government policy changes aimed at deleveraging the property sector and ensuring property developers have the financial ab il ity to complete res ident ial properties under construction. The government’s ‘three red lines’ matrix was introduced in August 2020 to tighten the funding condit ions for property developers by l im it ing the growth rate in external debt. With addit ional controls on sales of properties to end buyers (e.g. mortgage lending control, pric ing control, el ig ib il ity control) and on restr ict ing developers’ abil ity to access cash from ‘escrow accounts’ w ith cash paid by retail resident ial buyers, the cashflow of developers has been sign ificantly squeezed. Also, w ith capital markets reacting negatively to the tighten ing pol ic ies, we have seen greater volatil ity in bond pric ing and reduced access to capital markets liqu id ity for developers. As such, some developers have faced/are facing diff icult ies in servic ing and repaying financ ing obl igat ions. The Group’s loans and advances to China commercial real estate clients was $3.2 bill ion at 31 December 2022 (31 December 2021: $3.7 bill ion). Cl ient level analysis continues to be done, with the high-risk clients being placed on purely precautionary or non-purely precautionary early alert. Given the evolving nature of the risks in the China commercial real estate sector, a management overlay of $173 mill ion (31 December 2021: $95 mill ion) has been taken by est imat ing the impact of further deteriorat ion to those cl ients placed on early alert. Sri Lanka Due to the ongoing economic uncertainty following the Sri Lanka Sovereign default in the first half of 2022, a judgemental overlay of $9 mill ion (31 December 2021: $n il) is held against modelled stage 3 exposures in Sri Lanka that have not yet been ind iv idually assessed for impa irment. CPBB While industry wide government COVID-19 relief measures have ended for most markets, there are a few markets where either the schemes have recently ended or lim ited rel iefs are still available. At 31 December $21 mill ion (31 December 2021: $147 mill ion) was held for res idual COVID-19 related risks in these portfolios. Overlays of $16 mill ion (31 December 2021: $n il) have also been applied to capture operating environment challenges, in part caused by ris ing interest rates in certain markets, and the impact of sovereign defaults in the last quarter of 2022, both of which are not fully captured in the modelled outcomes. Stage 3 assets Credit-impa ired assets managed by Stressed Asset R isk incorporate forward-looking economic assumptions in respect of the recovery outcomes ident ified, and are ass igned ind iv idual probabil ity we ight ings. These assumpt ions are not based on a Monte Carlo simulat ion but are informed by the Base Forecast. Sensit iv ity of expected credit loss calculation to macroeconomic variables The ECL calculation relies on multiple variables and is inherently non-linear and portfolio-dependent, which impl ies that no single analysis can fully demonstrate the sensit iv ity of the ECL to changes in the macroeconomic variables. The Group has conducted a series of analyses with the aim of ident ify ing the macroeconomic variables which might have the greatest impact on the overall ECL. These encompassed single variable and multi-variable exercises, using simple up/ down variat ion and extracts from actual calculat ion data, as well as bespoke scenario design assessments. The primary conclusion of these exercises is that no ind iv idual macroeconomic variable is materially influent ial. The Group believes this is plausible as the number of variables used in the ECL calculation is large. This does not mean that macroeconomic variables are uninfluent ial; rather, that the Group believes that considerat ion of macroeconom ics should involve whole scenarios, as this aligns with the multi-variable nature of the calculation. The Group faces downside risks in the operating environment related to the uncertaint ies surround ing the macroeconomic outlook. To explore this, a sensit iv ity analysis of ECL was undertaken to explore the effect of slower economic recoveries across the Group’s footprint markets. Two downside scenarios were considered. The first scenario is based on the Bank of England’s 2022 regulatory Annual Cyclical Scenario (ACS 2022) and is a deep synchronised global downturn characterised by sign ificantly h igher commodity prices relative to base, inflat ion and interest rates. In the second more modest downside scenario, inflat ion in advanced economies surprises to the upside in the very near term as the supply-chain cris is intens ifies and th is prompts addit ional monetary tighten ing. F inanc ial markets weaken w ith bond yields spik ing and equ it ies fall ing sharply. The deteriorat ion in sentiment also leads to adjustments in property markets. Advanced economies are shocked more than emerging markets in the second scenario. ![]() 277 Standard Chartered – Annual Report 2022 Risk review and Capital review Baseline ACS 2022 Advanced Economic Downturn Five year average Peak/Trough Five year average Peak/Trough Five year average Peak/Trough China GDP 5.1 7.9/4.5 3.1 4.7/(2.6) 4.9 7.2/3.7 China unemployment 3.9 4.1/3.8 5.2 5.6/4.6 4.1 4.3/3.8 China property prices 3.6 5.0/0.0 (6.5) 9.2/(22.1) 3.3 6.9/(1.8) Hong Kong GDP 2.3 4.3/0.5 (0.7) 2.9/(9.7) 2.1 3.4/(0.1) Hong Kong unemployment 3.0 3.1/2.9 5.8 7.0/2.7 3.1 3.2/3.0 Hong Kong property prices 1.7 4.9/(8.4) (10.6) 6.2/(24.8) 1.4 5.1/(9.5) US GDP 1.7 3.1/(0.4) 0.1 2.4/(5.9) 1.6 3.9/(2.6) Singapore GDP 2.7 3.7/1.7 1.1 4.6/(7.0) 2.6 3.1/1.4 India GDP 6.4 7.7/3.2 4.3 6.6/(0.2) 6.3 7.7/3.2 Crude oil 106.6 118.8/88.0 140.3 148.4/118.8 90.2 104.9/77.3 Period covered from Q1 2023 to Q4 2027 Base (GDP, YoY%) ACS 2022 (GDP, YoY%) Difference from Base 2023 2024 2025 2026 2027 2023 2024 2025 2026 2027 2023 2024 2025 2026 2027 China 5.8 5.4 5.2 4.8 4.5 0.1 2.2 4.6 4.2 4.2 (5.7) (3.2) (0.6) (0.6) (0.4) Hong Kong 2.4 2.5 2.2 2.3 2.1 (5.7) (3.5) 2.5 1.7 1.4 (8.1) (6.0) 0.3 (0.6) (0.7) US (0.2) 1.8 2.6 2.1 2.1 (3.3) (1.2) 1.7 1.5 1.5 (3.1) (3.0) (0.8) (0.6) (0.6) Singapore 2.8 2.5 2.6 2.9 2.8 (3.7) (0.6) 3.6 3.0 2.9 (6.5) (3.1) 0.9 0.1 0.1 India 4.9 5.9 6.3 7.2 7.6 1.7 2.7 4.7 6.0 6.4 (3.1) (3.3) (1.6) (1.1) (1.2) Each year is from Q1 to Q4. For example 2023 is from Q1 2023 to Q4 2023. Base (GDP, YoY%) Advanced Economic Downturn (GDP, YoY%) Difference from Base 2023 2024 2025 2026 2027 2023 2024 2025 2026 2027 2023 2024 2025 2026 2027 China 5.8 5.4 5.2 4.8 4.5 5.0 5.0 5.2 4.8 4.5 (0.8) (0.4) 0.1 0.0 0.0 Hong Kong 2.4 2.5 2.2 2.3 2.1 1.6 2.0 2.4 2.3 2.1 (0.8) (0.5) 0.1 0.0 0.0 US (0.2) 1.8 2.6 2.1 2.1 (1.6) 1.5 3.1 2.4 2.7 (1.5) (0.3) 0.6 0.3 0.6 Singapore 2.8 2.5 2.6 2.9 2.8 1.9 2.3 2.8 3.0 3.0 (0.9) (0.2) 0.2 0.1 0.2 India 4.9 5.9 6.3 7.2 7.6 4.8 5.5 6.2 7.2 7.6 (0.1) (0.4) (0.1) 0.0 0.0 Each year is from Q1 to Q4. For example 2023 is from Q1 2023 to Q4 2023 The total modelled stage 1 and 2 ECL provis ions ( includ ing both on and off-balance sheet instruments) would be approximately $32 mill ion h igher under the Advanced Economy Downturn scenario, and $459 mill ion h igher under the ACS 2022 scenario than the baseline ECL provis ions (wh ich excluded the impact of multiple economic scenarios and management overlays which may already capture some of the risks in these scenarios). The proportion of stage 2 assets would increase from 3.1 per cent in the base case to 3.3 per cent and 8.1 per cent respectively under the Advanded Economy Downturn and ACS 2022 scenarios. This includes the impact of exposures transferring to stage 2 from stage 1 but does not consider an increase in stage 3 defaults. Under both scenarios the major ity of the increase in CCIB came from the main corporate and project finance portfolios in the UAE and Hong Kong being impacted. For the CPBB portfolios most of the increases came from the unsecured retail portfolios with the Taiwan Personal Loans and Singapore Credit Cards portfolios impacted. There was no material change in modelled stage 3 provis ions as these primar ily relate to unsecured CPBB exposures for which the LGD is not sensit ive to changes in the macroeconomic forecasts. There is also no material change for non-modelled stage 3 exposures as these are more sensit ive to cl ient specif ic factors than to alternat ive macroeconomic scenarios. The actual outcome of any scenario may be materially different due to, among other factors, the effect of management actions to mit igate potent ial increases in risk and changes in the underlying portfolio. ![]() 278 Standard Chartered – Annual Report 2022 Risk review Risk profile Gross as reported 1 $ mill ion ECL as reported 1 $ mill ion ECL Base case $ mill ion Advanced economy downturn $ mill ion ACS 2022 $ mill ion Stage 1 modelled Corporate, Commercial & Institut ional Bank ing 315,437 157 138 148 191 Consumer, Private & Business Banking 193,239 395 372 379 447 Ventures 691 10 10 10 10 Central & Other items 210,745 28 25 26 38 Total excluding management overlays 720,112 590 545 563 686 Stage 2 modelled Corporate, Commercial & Institut ional Bank ing 19,432 275 256 269 435 Consumer, Private & Business Banking 1,821 106 89 90 227 Ventures 18 1 1 1 1 Central & Other items 6,208 88 85 85 86 Total excluding management overlays 27,479 470 431 445 749 Total Stage 1 & 2 modelled Corporate, Commercial & Institut ional Bank ing 334,869 432 394 417 626 Consumer, Private & Business Banking 195,060 501 461 469 674 Ventures 709 11 11 11 11 Central & Other items 216,953 116 110 111 124 Total excluding management overlays 747,859 1,060 976 1,008 1,435 Stage 3 exposures excluding management overlays 8,975 4,778 Other financial assets 2 101,606 18 ECL from management overlays 219 Total reported at 31 December 2022 858,172 6,075 1 Includes both on- and off- balance sheet instruments 2 Includes cash and balances at central banks; Accrued income; Other assets; and Assets held for sale Sign ificant increase in Credit Risk (SICR) Quantitat ive cr iter ia SICR is assessed by comparing the risk of default at the reporting date to the risk of default at orig inat ion. Whether a change in the risk of default is sign ificant or not is assessed using quantitat ive and qual itat ive cr iter ia. These quant itat ive sign ificant deter iorat ion thresholds have been separately defined for each business and where meaningful are consistently applied across business lines. Assets are considered to have experienced SICR if they have breached both relative and absolute thresholds for the change in the average annualised lifet ime probab il ity of default over the residual term of the exposure. The absolute measure of increase in Credit Risk is used to capture instances where the IFRS 9 PDs on exposures are relatively low at in it ial recognit ion as these may increase by several multiples without representing a sign ificant increase in credit risk. Where IFRS 9 PDs are relatively high at in it ial recognit ion, a relat ive measure is more appropriate in assessing whether there is a sign ificant increase in credit risk, as the IFRS 9 PDs increase more quickly. The SICR thresholds have been calibrated based on the following princ iples: • Stabil ity – the thresholds are set to ach ieve a stable stage 2 population at a portfolio level, trying to min im ise the number of accounts moving back and forth between stage 1 and stage 2 in a short period of time • Accuracy – the thresholds are set such that there is a materially higher propensity for stage 2 exposures to eventually default than is the case for stage 1 exposures • Dependency from backstops – the thresholds are stringent enough such that a high proportion of accounts transfer to stage 2 due to movements in forward-looking IFRS9 PDs rather than relying on backward-looking backstops such as arrears • Relationsh ip w ith business and product risk profiles – the thresholds reflect the relative risk differences between different products, and are aligned to business processes For CCIB clients, the relative threshold is a 100 per cent increase in IFRS 9 PD and the absolute change in IFRS 9 PD is between 50 and 100 bps. For Consumer and Business Banking clients, portfolio specif ic quantitat ive thresholds in Hong Kong, Singapore, Malaysia, UAE and Taiwan have been introduced in 2022 for credit cards and one personal loan portfolio. The thresholds include relative and absolute increases in IFRS 9 PD with average lifet ime IFRS 9 PD cut-offs for those exposures that are w ith in a range of customer util isat ion lim its (for cred it cards) and remain ing tenor (for personal loans) and d ifferent iate between exposures that are current and those that are 1 to 29 days past due. ![]() 279 Standard Chartered – Annual Report 2022 Risk review and Capital review The range of thresholds applied are: Portfolio Relative IFRS 9 PD increase (%) Absolute IFRS 9 PD increase (%) Customer util isat ion (%) Remain ing tenor (%) Average IFRS 9 PD (lifet ime) Credit cards – Current 50% – 150% 3.4% – 9.3% 15% – 90% – 4.15% – 11.6% Credit cards – 1-29 days past due 100% – 210% 3.5% – 6.1% 25% – 67% – 1.5% – 18.5% Personal loans – Current – 3.5% – 70% 2.8% Personal loan – 1-29 days past due 25% 3% – 75% – The impact of this change has been to transfer $212 mill ion of credit cards balances and $14 mill ion of personal loans balances from stage 2 to stage 1, which reduced ECL by a net $15 mill ion. For all other Consumer and Business Banking portfolios, the thresholds remained the same as 2021, with a relative threshold of 100 per cent increase in IFRS 9 PD and an absolute change in IFRS 9 PD is between 100 and 350 bps depending on the product. Certain countries have a higher absolute threshold reflecting the lower default rate with in their personal loan portfolios compared with the Group’s other personal loan portfolios. Private Banking clients are assessed qualitat ively, based on a delinquency measure relating to collateral top-ups or sell-downs. Debt securit ies or ig inated before 1 January 2018 w ith an internal credit rating mapped to an investment grade equivalent are allocated to stage 1 and all other debt securit ies to stage 2. Debt secur it ies or ig inated after 1 January 2018 apply the same approach and thresholds as for CCIB clients. Qualitat ive cr iter ia Qualitat ive factors that ind icate that there has been a sign ificant increase in credit risk include processes linked to current risk management, such as placing loans on non-purely precautionary early alert. Backstop Across all portfolios, accounts that are 30 or more days past due (30 DPD) on contractual payments of princ ipal and/or interest that have not been captured by the criter ia above are considered to have experienced a sign ificant increase in credit risk. Expert credit judgement may be applied in assessing sign ificant increase in credit risk to the extent that certain risks may not have been captured by the models or through the above criter ia. Such instances are expected to be rare, for example due to events and material uncertaint ies ar is ing close to the reporting date. CCIB clients Quantitat ive cr iter ia Exposures are assessed based on both the absolute and the relative movement in the IFRS 9 PD from orig inat ion to the reporting date as described above. To account for the fact that the mapping between internal credit grades (used in the orig inat ion process) and IFRS 9 PDs is non-linear (e.g. a one-notch downgrade in the investment grade universe results in a much smaller IFRS 9 PD increase than in the sub-investment grade universe), the absolute thresholds have been different iated by cred it quality at orig inat ion, as measured by internal credit grades being investment grade or sub-investment grade. Qualitat ive cr iter ia All assets of clients that have been placed on early alert (for non-purely precautionary reasons) are deemed to have experienced a sign ificant increase in credit risk. An account is placed on non-purely precautionary early alert if it exhib its r isk or potential weaknesses of a material nature requir ing closer mon itor ing, superv is ion or attent ion by management. Weaknesses in such a borrower’s account, if left uncorrected, could result in deteriorat ion of repayment prospects and the likel ihood of be ing downgraded. Indicators could include a rapid erosion of posit ion w ith in the industry, concerns over management’s abil ity to manage operat ions, weak/deteriorat ing operat ing results, liqu id ity strain and overdue balances, among other factors. All client assets that have been assigned a CG12 rating, equivalent to ‘Higher risk’, are deemed to have experienced a sign ificant increase in credit risk. Accounts rated CG12 are primar ily managed by relat ionsh ip managers in the CCIB unit with support from SAG for certain accounts.. All CCIB 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 ive cr iter ia Material portfolios (defined as a combinat ion of country and product, for example Hong Kong mortgages, Taiwan credit cards) for which a statist ical model has been bu ilt, are assessed based on both the absolute and relative movement in the IFRS 9 PD from orig inat ion to the reporting date as described previously in page 270. For these portfolios, the orig inal l ifet ime IFRS 9 PD term structure is determined based on the orig inal Appl icat ion Score or R isk Segment of the client. Qualitat ive cr iter ia Accounts that are 30 days past due (DPD) that have not been captured by the quantitat ive cr iter ia are cons idered to have experienced a sign ificant increase in credit risk. For less material portfolios, which are modelled based on a roll-rate or loss-rate approach, SICR is primar ily assessed through the 30 DPD trigger. Private Banking clients For Private Banking clients, SICR is assessed by referencing the nature and the level of collateral against which credit is extended (known as ‘Classes of Risk’). Qualitat ive cr iter ia For all Private Banking classes, in line with risk management practice, an increase in credit risk is deemed to have occurred where margin ing or loan-to-value covenants have been breached. For Class I assets (lending against divers ified l iqu id collateral), if these margin ing requ irements have not been met with in 30 days of a trigger, a sign ificant increase in credit risk is assumed to have occurred. ![]() 280 Standard Chartered – Annual Report 2022 Risk review Risk profile For Class I and Class III assets (real-estate lending), a sign ificant 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 in five days of a trigger. Class II assets are typically unsecured or partially secured, or secured against ill iqu id collateral such as shares in private companies. Sign ificant cred it deteriorat ion of these assets is deemed to have occurred when any early alert trigger has been breached. Debt Securit ies Quantitat ive cr iter ia For debt securit ies or ig inated before 1 January 2018, the bank is util is ing the low Credit Risk simpl ified approach, where debt securit ies w ith an internal credit rating mapped to an investment grade equivalent are allocated to stage 1 and all other debt securit ies are allocated to stage 2. Debt secur it ies orig inated after 1 January 2018 are assessed based on the absolute and relative movements in IFRS 9 PD from orig inat ion to the reporting date. Qualitat ive cr iter ia Debt securit ies ut il ise the same qual itat ive cr iter ia as the CCIB client segments, includ ing be ing placed on early alert or being classif ied as CG12. Assessment of credit-impa ired financial assets Consumer and Business Banking clients The core components in determin ing cred it-impa ired expected credit loss provis ions are the value of gross chargeoff and recoveries. Gross charge-off and/or loss provis ions are recogn ised when it is established that the account is unlikely to pay through the normal process. Recovery of unsecured debt post credit impa irment is recognised based on actual cash collected, either directly from clients or through the sale of defaulted loans to third- party inst itut ions. Release of credit impa irment prov is ions for secured loans is recognised if the loan outstanding is paid in full (release of full provis ion), or the prov is ion is higher than the loan outstanding (release of the excess provis ion). CCIB, and Private Banking clients Credit-impa ired accounts are managed by the Group’s special ist recovery un it, Stressed Assets Risk (SAR). Where any amount is considered irrecoverable, a stage 3 credit impa irment prov is ion is raised. This stage 3 provis ion is the difference between the loan-carrying amount and the probabil ity-we ighted 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 realisable collateral, the values used will incorporate the impact of forward-looking economic informat ion. The ind iv idual circumstances of each client are considered when SAR estimates future cashflows and the tim ing of future recoveries which involves sign ificant judgement. All ava ilable sources, such as cashflow aris ing from operat ions, selling assets or subsid iar ies, realis ing collateral or payments under guarantees are considered. In any decis ion relat ing to the rais ing of prov is ions, the Group attempts to balance econom ic condit ions, local knowledge and exper ience, and the results of independent asset reviews. Write-offs Where it is considered that there is no realist ic prospect of recovering a portion of an exposure against which an impa irment prov is ion has been ra ised, that amount will be written off. Governance and applicat ion of expert cred it judgement in respect of expected credit losses The Group’s Credit Policy and Standards framework details the requirements for continuous monitor ing to ident ify any changes in credit quality and resultant ratings, as well as ensuring a consistent approach to monitor ing, manag ing and mit igat ing credit risks. The framework aligns with the governance of ECL estimat ion through the early recogn it ion of sign ificant deter iorat ions in ratings which drive stage 2 and 3 ECL. The models used in determin ing expected cred it 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 il ity to assess and approve the use of models and to review all IFRS 9 interpretat ions related to models. CMAC also prov ides oversight on operational matters related to model development, performance monitor ing and model val idat ion activ it ies includ ing standards and regulatory matters. Prior to submiss ion to CMAC for approval, the models are validated by GMV, a function which is independent of the business and the model developers. GMV’s analysis comprises review of model documentation, model design and methodology, data validat ion, rev iew of the model development and calibrat ion process, out-of-sample performance testing, and assessment of compliance review against IFRS 9 rules and internal standards. A quarterly model monitor ing process is in place that uses recent data to compare the differences between model predict ions and actual outcomes aga inst approved thresholds. Where a model’s performance breaches the monitor ing thresholds, an assessment of whether a PMA is required to correct for the ident ified model issue is completed. Key inputs into the calculation and resulting expected credit loss provis ions are subject to rev iew 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 ions and any judgemental overrides that may be necessary. ![]() 281 Standard Chartered – Annual Report 2022 Risk review and Capital review The IFRS 9 Impairment Committee: • Oversees the appropriateness of all Business Model Assessment and Solely Payments of Princ ipal and Interest (SPPI) tests; • Reviews and approves expected credit loss for financ ial assets classif ied as stages 1, 2 and 3 for each financial reporting period; • Reviews and approves stage allocation rules and thresholds; • Approves material adjustments in relation to expected credit loss for Fair Value through Other Comprehensive Income (FVOCI) and amortised cost financ ial assets; • Reviews, challenges and approves base macroeconomic forecasts and the multiple macroeconomic scenarios approach that are util ised 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 projections and mult iple macroeconomic scenarios. The Expert Panel consists of members of Enterprise Risk Management (which includes the Scenario Design team), Finance, Group Economic Research and country representatives of major jur isd ict ions. PMAs may be applied to account for ident ified weaknesses in model estimates. The processes for ident ify ing the need for, calculating the level of, and approving PMAs are prescribed in the Credit Risk IFRS 9 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 ion plan to fix the ident ified model weakness, and these plans are reported to and tracked at CMAC. In addit ion, judgemental management adjustments account for events are not captured in the Base Case Forecast or the resulting ECL calculated by the models (for example, caused by sudden events or as a result of sign ificant levels of uncertainty). All judgemental management adjustments 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. Judgemental management adjustments are subject to quarterly review and re-approval by the IIC and will be released when the risks are no longer relevant. ![]() 282 Standard Chartered – Annual Report 2022 Risk review Risk profile Traded Risk Traded Risk is the potential for loss resulting from activ it ies undertaken by the Group in financ ial markets. Under the Enterprise Risk Management Framework, the Traded Risk Framework brings together Market Risk, Counterparty Credit Risk and Algorithm ic Trad ing. Traded Risk Management is the core risk management function supporting market-facing businesses, predominantly Financ ial Markets and Treasury Markets. Market Risk (audited) Market Risk is the potential for fair value loss due to adverse moves in financ ial markets. The Group’s exposure to Market Risk arises predominantly from the following sources: • Trading book: – The Group provides clients access to financ ial markets, facil itat ion of which entails the Group taking moderate Market Risk posit ions. All trad ing teams support client activ ity. There are no propr ietary trading teams. Hence, income earned from Market Risk-related activ it ies is primar ily dr iven by the volume of client activ ity rather than risk-taking • Non-trading book: – The Treasury Markets desk is required to hold a liqu id assets buffer, much of which is held in high-quality marketable debt securit ies – 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 to Structural Foreign Exchange Risk which is reflected in reserves A summary of our current polic ies and pract ices regarding Market Risk management is provided in the Princ ipal R isks section (page 304). The primary categories of Market Risk for the Group are: • Interest Rate Risk: aris ing from changes in yield curves and impl ied volat il it ies on interest rate options • Foreign Exchange Rate Risk: aris ing from changes in currency exchange rates and impl ied volat il it ies on foreign exchange options • Commodity Risk: aris ing from changes in commodity prices and impl ied volat il it ies on commodity options; covering energy, precious metals, base metals and agriculture as well as commodity baskets • Credit Spread Risk: aris ing from changes in the price of debt instruments and credit-linked derivat ives, dr iven by factors other than the level of risk-free interest rates • Equity Risk: aris ing from changes in the prices of equit ies, equity ind ices, equ ity baskets and impl ied volat il it ies on related options Market Risk movements (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. The average level of total trading and non-trading VaR in 2022 was $52.5 mill ion, 4.2 per cent lower than 2021 ($54.8 mill ion). The actual level of total trad ing and non-trading VaR as at the end of 2022 was $55.8 mill ion, 28.6 per cent h igher than 2021 ($43.4 mill ion), due to an increase in market volatil ity in H2 2022, driven by a number of Central Banks increas ing interest rates to curb inflat ion. For the trading book, the average level of VaR in 2022 was $18.0 mill ion, 4.6 per cent h igher than 2021 ($17.2 mill ion). Trading activ it ies have remained relatively unchanged, and client driven. Daily value at risk (VaR at 97.5%, one day) (audited) Trading 1 and non-trading 2 2022 2021 Average $mill ion High $ mill ion Low $mill ion Year End $mill ion Average $mill ion High $mill ion Low $mill ion Year End $mill ion Interest Rate Risk 27.8 42.1 21.0 24.7 31.3 68.3 16.4 26.0 Credit Spread Risk 34.2 47.1 20.3 32.9 34.0 97.6 14.8 21.5 Foreign Exchange Risk 6.5 10.3 4.8 6.8 7.3 19.0 4.2 7.0 Commodity Risk 7.0 11.9 3.5 8.3 4.5 10.4 2.3 3.6 Equity Risk 0.1 0.2 – 0.1 1.3 1.7 1.0 1.4 Total 52.5 64.1 40.3 55.8 54.8 140.7 30.7 43.4 Trading 1 2022 2021 Average $mill ion High $mill ion Low $mill ion Year End $mill ion Average $mill ion High $mill ion Low $mill ion Year End $mill ion Interest Rate Risk 8.1 11.7 5.3 9.0 7.6 10.2 5.2 7.2 Credit Spread Risk 9.5 14.9 5.0 8.7 8.6 19.2 4.2 6.2 Foreign Exchange Risk 6.5 10.3 4.8 6.8 7.3 19.0 4.2 7.0 Commodity Risk 7.0 11.9 3.5 8.3 4.5 10.4 2.3 3.6 Equity Risk – – – – – – – – Total 18.0 24.4 12.6 21.8 17.2 28.4 12.3 15.3 ![]() 283 Standard Chartered – Annual Report 2022 Risk review and Capital review Non-trading 2 2022 2021 Average $mill ion High $mill ion Low $mill ion Year End $mill ion Average $mill ion High $mill ion Low $mill ion Year End $mill ion Interest Rate Risk 26.3 44.5 18.1 23.5 32.4 68.2 18.2 24.3 Credit Spread Risk 28.8 37.8 18.7 29.2 29.2 80.0 14.4 20.2 Equity Risk 3 0.1 0.2 – 0.1 1.3 1.7 1.0 1.4 Total 44.6 52.5 35.1 41.3 47.1 106.3 25.3 38.3 The following table sets out how trading and non-trading VaR is distr ibuted across the Group’s bus inesses: 2022 2021 Average $mill ion High $mill ion Low $mill ion Year End $mill ion Average $mill ion High $mill ion Low $mill ion Year End $mill ion Trading 1 and non-trading 2 52.5 64.1 40.3 55.8 54.8 140.7 30.7 43.4 Trading 1 Macro Trading 4 12.8 17.4 10.2 16.9 12.7 21.2 9.0 12.2 Global Credit 10.1 15.7 4.2 8.4 6.9 18.7 3.6 4.8 Equit ies – – – – – – – – XVA 3.9 5.0 2.4 4.6 5.2 11.9 2.5 2.5 Total 18.0 24.4 12.6 21.8 17.2 28.4 12.3 15.3 Non-trading 2 Treasury Markets 38.7 47.5 29.7 40.3 40.5 83.1 22.7 36.4 Treasury Capital Management 9.1 15.3 6.4 9.1 9.2 22.7 4.9 6.5 Global Credit 3.4 5.0 2.3 3.5 5.2 11.7 2.3 2.5 Listed Private Equity 0.1 0.2 – 0.1 1.3 1.7 1.0 1.4 Total 44.6 52.5 35.1 41.3 47.1 106.3 25.3 38.3 1 The trading 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 ions perm itted in the trading book 2 The non-trading book VaR does not include syndicated loans 3 Non-trading Equity Risk VaR includes only listed equit ies 4 Macro Trading comprises the Rates, FX and Commodit ies bus inesses Risks not in VaR In 2022, the main market risks not reflected in VaR were: • Basis risks for which the histor ical market pr ice data is lim ited and is therefore proxied, giv ing r ise to potential proxy basis risk that is not captured in VaR • Potential depeg risk from currencies currently pegged or managed, as the histor ical one-year VaR observat ion period does not reflect the possib il ity of a change in the currency regime such as sudden depegging • Deal contingent risk where a client is granted the right to cancel a hedging trade contingent on condit ions not be ing met with in a t ime window • Volatil ity skew r isk due to movements in options volatil it ies at different strikes while VaR reflects only movements in at-the- money volatil it ies Addit ional cap ital is set aside to cover such ‘risks not in VaR’. Backtesting In 2022, there were eight regulatory backtesting negative exceptions at Group level (in 2021, there were three regulatory backtesting negative exceptions at Group level). Group exceptions occurred on: • 9 March: When risk assets rallied on hope of a truce agreement between Russia and Ukraine • 29 March: When oil and base metal prices fell on the prospect of further ceasefire talks between Russia and Ukraine, and following a resurgence of COVID-19 cases in China • 25 April: When risk assets fell following an announcement by Chinese authorit ies of expanded COVID-19 test ing requirements amidst ris ing cases • 29 September: When the Bank of England intervened in the gilts market to protect UK pension funds with Liab il ity Driven Investment (LDI) exposures • 4 October: When the Reserve Bank of Australia raised Australian interest rates by less than expected. US Treasury yields fell and the USD currency depreciated • 25 October: When the new UK Prime Min ister was appo inted and Sterling appreciated sharply • 26 October: When new economic data ind icated that the Federal Reserve would slow ant ic ipated US interest rate rises. USD yields fell and the USD currency depreciated ![]() 284 Standard Chartered – Annual Report 2022 Risk review Risk profile • 27 October: When the Central Bank of Egypt announced that the Egyptian Pound (EGP) would move to a durably flexible exchange rate regime and raised EGP interest rates by 200 basis points The VaR model is currently being enhanced to increase its responsiveness to abrupt upturns in market volatil ity In total, there have been eight Group exceptions in the previous 250 business days which is with in the ‘amber zone’ appl ied internat ionally to internal models by bank supervisors (Basel Committee on Banking Supervis ion, Superv isory framework for the use of backtesting in conjunct ion w ith 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 ity. -30 -20 -10 0 10 20 30 40 2022 Backtesting chart Internal model approach regulatory trading book at Group level Hypothetical profit and loss (P&L) versus VaR (99 per cent, one day) Hypothetical P&L Posit ive VaR at 99% Negative VaR at 99% Negative exceptions Jan 2022 Feb 2022 Mar 2022 Apr 2022 May 2022 Jun 2022 Jul 2022 Aug 2022 Sep 2022 Oct 2022 Nov 2022 Dec 2022 Posit ive except ions Trading loss days 2022 2021 Number of loss days reported for Financ ial Markets trad ing book total product income¹ 15 15 1 Reflects total product income for Financ ial Markets: • Including credit valuation adjustment (CVA) and funding valuation adjustment (FVA) • Excluding Treasury Markets business (non-trading) and period ic valuat ion changes for Capital Markets, expected loss provis ions and overn ight indexed swap (OIS) discount ing and account ing adjustments such as debit valuation adjustments Average daily income earned from Market Risk-related activ it ies¹ (audited) The average level of total trading daily income in 2022 was $14 mill ion, 43 per cent h igher than in 2021 ($9.8 mill ion). The increase is largely attributable to higher client income in Macro Trading driven by increased flows and trading income driven by higher market volatil ity and a rally in commodity prices. Trading 2022 $mill ion 2021 $mill ion Interest Rate Risk 5.0 3.3 Credit Spread Risk 1.4 0.9 Foreign Exchange Risk 6.3 4.7 Commodity Risk 1.3 0.9 Equity Risk – – Total 14.0 9.8 Non-trading $mill ion $mill ion Interest Rate Risk – 0.4 Credit Spread Risk 0.6 0.2 Equity Risk – – Total 0.6 0.6 1 Reflects 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 it ies. Rates, XVA and Treasury income are included under Interest Rate Risk whilst Credit Trading income is included under Credit Spread Risk ![]() 285 Standard Chartered – Annual Report 2022 Risk review and Capital review Structural foreign exchange exposures The table below sets out the princ ipal structural fore ign exchange exposures (net of investment hedges) of the Group. 2022 $mill ion 2021 $mill ion Indian rupee 4,396 4,323 Renminb i 3,497 4,186 Hong Kong dollar 3,333 4,757 Korean won 2,409 1,756 Singapore dollar 1,888 2,228 Malaysian ringg it 1,571 1,532 Taiwanese dollar 1,055 1,188 Thai baht 782 775 UAE dirham 670 643 Pakistan i rupee 352 429 Indonesian rupiah 261 289 Other 4,958 4,976 25,172 27,082 As at 31 December 2022, the Group had taken net investment hedges using derivat ive financial investments to partly cover its exposure to the Hong Kong dollar of $6,236 mill ion (2021: $4,975 mill ion), Korean won of $3,330 m ill ion (2021: $2,856 mill ion), S ingapore dollar of $1,608 mill ion (2021: $729 m ill ion), Renminb i of $1,608 m ill ion (2021: $1,642 m ill ion), UAE d irham of $1,334 mill ion (2021: $1,198 m ill ion), Ta iwanese dollar of $1,075 mill ion (2021: $1,149 m ill ion) and Ind ian rupee of $620 mill ion (2021: $656 mill ion). An analys is has been performed on these exposures to assess the impact of a 1 per cent fall in the US dollar exchange rates, adjusted to incorporate the impacts of correlations of these currencies to the US dollar. The impact on the posit ions above would be an increase of $421 mill ion (2021: $399 mill ion). Changes in the valuation of these posit ions are taken to reserves. For analysis of the Group’s capital posit ion and requirements, refer to the Capital Review (page 320). Counterparty Credit Risk Counterparty Credit Risk is the potential for loss in the event of the default of a derivat ive counterparty, after tak ing into account the value of elig ible collaterals and r isk mit igat ion techniques. The Group’s counterparty credit exposures are included in the Credit Risk section. Derivat ive financial instruments Credit Risk mit igat ion The Group enters into master netting agreements, which in the event of default result in a single amount owed by or to the counterparty through netting the sum of the posit ive and negative mark-to-market values of applicable derivat ive transactions. In addit ion, the Group enters into credit support annexes (CSAs) with counterparties where collateral is deemed a necessary or desirable mit igant to the exposure. Cash collateral includes collateral called under a variat ion marg in process from counterparties if total uncollateralised mark-to- market exposure exceeds the threshold and min imum transfer amount specif ied 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 ions are in the counterparty’s favour and exceed an agreed threshold. Liqu id ity and Funding Risk Liqu id ity and Funding Risk is the risk that the Group may not have sufficient stable or d iverse sources of funding to meet its obligat ions as they fall due. The Group’s Liqu id ity and Funding Risk framework requires each country to ensure that it operates with in predefined liqu id ity lim its and rema ins in compliance with Group liqu id ity polic ies and pract ices, as well as local regulatory requirements. The Group achieves this through a combinat ion of sett ing Risk Appetite and associated lim its, pol icy formation, risk measurement and monitor ing, prudent ial and internal stress testing, governance and review. Despite the challenging macroeconomic environment, the Group has mainta ined res il ience and reta ined a robust liqu id ity posit ion. The Group cont inues to focus on improv ing the quality and divers ification of its funding mix, and remains committed to supporting its clients. Primary sources of funding (audited) The Group’s funding strategy is largely driven by its policy to mainta in adequate l iqu id ity at all times, in all geographic locations and for all currencies. This is done to ensure the Group can meet all of its obligat ions as they fall due. The Group’s funding profile is therefore well divers ified across different sources, maturit ies and currenc ies. The Group’s assets are funded predominantly by customer deposits, supplemented with wholesale funding, which is divers ified by type and matur ity. The Group mainta ins access to wholesale fund ing markets in all major financial centres in which it operates. This seeks to ensure that the Group has market intell igence, ma inta ins stable funding lines and can obtain optimal pric ing when performing Interest Rate Risk management activ it ies. In 2022, the Group issued approximately $5.2 bill ion of sen ior debt securit ies, $0.75 b ill ion of subord inated debt securit ies and $1.25 bill ion of Add it ional T ier 1 securit ies from its holding company (HoldCo) Standard Chartered PLC (2021: $6.8 bill ion of senior debt securit ies, $1.2 b ill ion of subord inated debt securit ies and $2.75 b ill ion of Add it ional T ier 1 securit ies). In the next 12 months, approximately $5.4 bill ion of the Group’s sen ior debt, subordinated debt and Addit ional T ier 1 securit ies in total are either falling due for repayment contractually or callable by the Group. ![]() 286 Standard Chartered – Annual Report 2022 Risk review Risk profile Group’s composition of liabilities 31 December 2022 4.5 8.5 8.5 Geographic distr ibut ion of customer accounts 31 December 2022 Derivat ive financial instruments Deposits by banks Debt securit ies in issue Customer accounts Other liab il it ies Equity Subordinated liab il it ies and other borrowed funds 63.4 7.3 1.7 6.1 100% Asia Africa & Middle East Europe & Americas 100% 65.7 6.1 28.2 Liqu id ity and Funding Risk metrics The Group continually monitors key liqu id ity metrics, both on a country basis and consolidated across the Group. The following liqu id ity and funding Board Risk Appetite metrics define the maximum amount and type of risk that the Group is will ing to assume in pursuit of its strategy: liqu id ity coverage ratio (LCR), liqu id ity stress survival horizons, external wholesale borrowing, advances-to-deposits ratio (ADR) and net stable funding ratio (NSFR). Liqu id ity coverage ratio (LCR) The LCR is a regulatory requirement set to ensure the Group has sufficient unencumbered h igh-quality liqu id assets to meet its liqu id ity needs in a 30-calendar-day liqu id ity stress scenario. The Group monitors and reports its liqu id ity posit ions under the Liqu id ity Coverage Ratio (CRR) part of the PRA rulebook and has mainta ined its LCR above the prudential requirement. The Group mainta ined strong l iqu id ity ratios despite a challenging macroeconomic and geopolit ical env ironment. At the reporting date, the Group LCR was 147 per cent (2021: 143 per cent), with a surplus to both Board-approved Risk Appetite and regulatory requirements. Adequate liqu id ity was held across our footprint to meet all local prudential LCR requirements where applicable. 2022 $mill ion 2021 $mill ion Liqu id ity buffer 177,037 172,178 Total net cash outflows 120,720 120,788 Liqu id ity coverage ratio 147% 143% Stressed coverage The Group intends to mainta in a prudent and susta inable funding and liqu id ity posit ion, in all countries and currencies, such that it can withstand a severe but plausible liqu id ity stress. The Group’s approach to managing liqu id ity and funding is reflected in the Board-level Risk Appetite Statement which includes the following: “The Group should have sufficient stable and d iverse sources of funding to meet its contractual and contingent obligat ions as they fall due.” The Group’s internal liqu id ity stress testing framework covers the following stress scenarios: • Standard Chartered-specif ic – wh ich captures the liqu id ity impact from an id iosyncrat ic event affecting Standard Chartered only with the rest of the market assumed to be operating normally; • Market wide – which captures the liqu id ity impact from a market-wide cris is affect ing all partic ipants in a country, region or globally; and • Combined – which assumes both Standard Chartered- specif ic and Market-w ide events affect the Group simultaneously and hence is the most severe scenario. All scenarios include, but are not lim ited 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 ion of a firm’s cred it rating. Stress testing results show that a posit ive surplus was mainta ined under all scenar ios at 31 December 2022, 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 il ity and portabil ity constra ints while calculating the liqu id ity surplus at Group level. Standard Chartered Bank’s credit ratings as at 31 December 2022 were A+ with stable outlook (Fitch), A+ with stable outlook (S&P) and A1 with stable outlook (Moody’s). As of 31 December 2022, the estimated contractual outflow of a three-notch long-term ratings downgrade is $1.5 bill ion. ![]() 287 Standard Chartered – Annual Report 2022 Risk review and Capital review External wholesale borrowing The Board sets a risk lim it to prevent excess ive reliance on wholesale borrowing. With in the definit ion of wholesale borrowing, lim its are appl ied to all branches and operating subsid iar ies in the Group and as at the reporting date, the Group remained with in Board R isk Appetite. Advances-to-deposits ratio This is defined as the ratio of total loans and advances to customers relative to total customer deposits. An advances- to-deposits ratio below 100 per cent demonstrates that customer deposits exceed customer loans as a result of the emphasis placed on generating a high level of funding from customers. The Group’s advances-to-deposits ratio has decreased by 1.7 per cent to 57.4 per cent, driven by a reduction of 2 per cent in customer deposits and 5 per cent in customer loans and advances. 2022 $mill ion 2021 $mill ion Total loans and advances to customers 1,2 271,897 285,922 Total customer accounts 3 473,383 483,861 Advances-to-deposits ratio 57.4% 59.1% 1 Excludes reverse repurchase agreement and other sim ilar secured lend ing of $24,498 mill ion and includes loans and advances to customers held at fair value through profit and loss of $6,546 mill ion 2 Loans and advances to customers for the purpose of the advances-to-deposits ratio excludes $20,798 mill ion of approved balances held w ith central banks, confirmed as repayable at the point of stress (31 December 2021: $15,168 mill ion) 3 Includes customer accounts held at fair value through profit or loss of $11,706 mill ion (31 December 2021: $9,291 m ill ion) Net stable funding ratio (NSFR) The NSFR is a PRA regulatory requirement that stipulates inst itut ions to mainta in a stable fund ing profile in relation to an assumed duration of their assets and off-balance sheet activ it ies 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 il it ies and cap ital, based on their perceived stabil ity and the amount of stable fund ing they provide. Likew ise, RSF factors are appl ied to assets and off-balance sheet exposures according to the amount of stable funding they require. The regulatory requirements for NSFR are to mainta in a rat io of at least 100 per cent. The average ratio for the past four quarters is 129.6 per cent. Liqu id ity pool The liqu id ity value of the Group’s LCR elig ible l iqu id ity pool at the reporting date was $177 bill ion. The figures in the table below account for haircuts, currency convertib il ity and portabil ity constra ints, and therefore are not directly comparable with the consolidated balance sheet. A liqu id ity pool is held to offset stress outflows as defined in the Liqu id ity Coverage Ratio (CRR) part of the PRA rulebook. 2022 Asia $mill ion Africa & Middle East $mill ion Europe & Americas $mill ion Total $mill ion Level 1 securit ies Cash and balances at central banks 34,101 1,066 36,522 71,689 Central banks, governments/public sector entit ies 50,881 2,712 23,680 77,273 Multilateral development banks and internat ional organ isat ions 3,510 837 10,843 15,190 Other 37 7 1,430 1,474 Total Level 1 securit ies 88,529 4,622 72,475 165,626 Level 2A securit ies 4,044 139 6,033 10,216 Level 2B securit ies 71 21 1,103 1,195 Total LCR elig ible assets 92,644 4,782 79,611 177,037 2021 Asia $mill ion Africa & Middle East $mill ion Europe & Americas $mill ion Total $mill ion Level 1 securit ies Cash and balances at central banks 28,076 890 46,973 75,939 Central banks, governments/public sector entit ies 40,328 2,096 27,389 69,813 Multilateral development banks and internat ional organ isat ions 7,812 356 7,366 15,534 Other – – 478 478 Total Level 1 securit ies 76,216 3,342 82,206 161,764 Level 2A securit ies 3,447 186 5,047 8,680 Level 2B securit ies 114 – 1,620 1,734 Total LCR elig ible assets 79,777 3,528 88,873 172,178 ![]() 288 Standard Chartered – Annual Report 2022 Risk review Risk profile Encumbrance Encumbered assets Encumbered assets represent on-balance sheet assets pledged or subject to any form of arrangement to secure, collateralise or credit enhance a transaction from which it cannot be freely withdrawn. Cash collateral pledged against derivat ives and Hong Kong Government cert if icates of indebtedness, which secure the equivalent amount of Hong Kong currency notes in circulat ion, are included with in 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 ions on the ir use for these purposes. 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 ions on the ir use for these purposes. Included with in th is category are loans and advances which could be suitable for use in secured funding structures such as securit isat ions. 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 ives, reverse repurchase assets and stock lend ing 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 ional fund ing requirements. The following table provides a reconcil iat ion of the Group’s encumbered assets to total assets. 2022 Assets $mill ion Assets encumbered as a result of transactions with counterparties other than central banks Other assets (compris ing assets encumbered at the central bank and unencumbered assets) As a result of securit isat ions $mill ion Other $mill ion Total $mill ion Assets posit ioned at the central bank (ie pre- posit ioned plus encumbered) $mill ion Assets not posit ioned at the central bank Readily available for encumbrance $mill ion Other assets that are capable of being encumbered $mill ion Derivat ives and reverse repo/stock lending $mill ion Cannot be encumbered $mill ion Total $mill ion Cash and balances at central banks 58,263 – – – 9,166 49,097 – – – 58,263 Derivat ive financial instruments 63,717 – – – – – – 63,717 – 63,717 Loans and advances to banks 1 64,449 – 163 163 – 27,735 11,048 24,932 571 64,286 Loans and advances to customers 1 357,730 – 4,635 4,635 – – 274,695 65,035 13,365 353,095 Investment securit ies 2 206,240 – 16,989 16,989 222 152,962 31,550 – 4,517 189,251 Other assets¹ 50,390 – 19,621 19,621 – – 11,640 – 19,129 30,769 Current tax assets 503 – – – – – – – 503 503 Prepayments and accrued income 3,149 – – – – – 1,753 – 1,396 3,149 Interests in associates and joint ventures 1,631 – – – – – – – 1,631 1,631 Goodwill and intang ible assets 5,869 – – – – – – – 5,869 5,869 Property, plant and equipment 5,522 – – – – – 448 – 5,074 5,522 Deferred tax assets 834 – – – – – – – 834 834 Assets classif ied as held for sale 1,625 – – – – – – – 1,625 1,625 Total 819,922 – 41,408 41,408 9,388 229,794 331,134 153,684 54,514 778,514 1 Includes held at fair value through profit or loss and amortised cost balances 2 Includes held at fair value through profit or loss, fair value through other comprehensive income and amortised cost balances ![]() 289 Standard Chartered – Annual Report 2022 Risk review and Capital review 2021 Assets $mill ion Assets encumbered as a result of transactions with counterparties other than central banks Other assets (compris ing assets encumbered at the central bank and unencumbered assets) As a result of securit isat ions $mill ion Other $mill ion Total $mill ion Assets posit ioned at the central bank (ie pre- posit ioned plus encumbered) $mill ion Assets not posit ioned at the central bank Readily available for encumbrance $mill ion Other assets that are capable of being encumbered $mill ion Derivat ives and reverse repo/stock lending $mill ion Cannot be encumbered $mill ion Total $mill ion Cash and balances at central banks 72,663 – – – 8,147 64,516 – – – 72,663 Derivat ive financial instruments 52,445 – – – – – – 52,445 – 52,445 Loans and advances to banks 1 66,957 – 89 89 – 34,834 9,931 19,806 2,297 66,868 Loans and advances to customers 1 369,703 – 4,539 4,539 – – 282,761 68,612 13,791 365,164 Investment securit ies 2 198,723 – 13,940 13,940 96 142,965 35,637 – 6,085 184,783 Other assets¹ 49,958 – 16,501 16,501 – – 13,140 – 20,317 33,457 Current tax assets 766 – – – – – – – 766 766 Prepayments and accrued income 2,176 – – – – – 937 – 1,239 2,176 Interests in associates and joint ventures 2,147 – – – – – – – 2,147 2,147 Goodwill and intang ible assets 5,471 – – – – – – – 5,471 5,471 Property, plant and equipment 5,616 – – – – – 448 – 5,168 5,616 Deferred tax assets 859 – – – – – – – 859 859 Assets classif ied as held for sale 334 – – – – – – – 334 334 Total 827,818 – 35,069 35,069 8,243 242,315 342,854 140,863 58,474 792,749 1 Includes held at fair value through profit or loss and amortised cost balances 2 Includes held at fair value through profit or loss, fair value through other comprehensive income and amortised cost balances The Group received $123,759 mill ion (31 December 2021: $117,408 m ill ion) as collateral under reverse repurchase agreements that was elig ible for repledg ing; of this, the Group sold or repledged $44,628 mill ion (31 December 2021: $57,879 m ill ion) under repurchase agreements. ![]() 290 Standard Chartered – Annual Report 2022 Risk review Risk profile Liqu id ity analysis of the Group’s balance sheet (audited) Contractual maturity of assets and liab il it ies The following table presents assets and liab il it ies by matur ity groupings based on the remain ing per iod to the contractual maturity date as at the balance sheet date on a discounted basis. Contractual maturit ies do not necessar ily reflect actual repayments or cashflows. With in the tables below, cash and balances w ith central banks, interbank placements and investment securit ies that are fa ir value through other comprehensive income are used by the Group princ ipally for l iqu id ity management purposes. As at the reporting date, assets remain predominantly short-dated, with 61 per cent maturing in less than one year. The less than three-month cumulative net funding gap improved by $22 bill ion from the prev ious year. 2022 One month or less $mill ion Between one month and three months $mill ion Between three months and six months $mill ion Between six months and nine months $mill ion Between nine months and one year $mill ion Between one year and two years $mill ion Between two years and five years $mill ion More than five years and undated $mill ion Total $mill ion Assets Cash and balances at central banks 49,097 – – – – – – 9,166 58,263 Derivat ive financial instruments 15,558 12,030 8,352 4,446 3,602 6,026 8,410 5,293 63,717 Loans and advances to banks 1,2 24,135 15,293 11,595 4,971 4,138 2,608 1,022 687 64,449 Loans and advances to customers 1,2 96,351 58,605 27,751 12,540 13,444 19,150 33,413 96,476 357,730 Investment securit ies¹ 14,175 26,008 23,364 13,024 12,891 22,805 41,217 52,756 206,240 Other assets¹ 15,210 31,276 1,341 181 698 89 23 20,705 69,523 Total assets 214,526 143,212 72,403 35,162 34,773 50,678 84,085 185,083 819,922 Liab il it ies Deposits by banks 1,3 29,733 2,042 2,245 871 349 1,432 144 7 36,823 Customer accounts 1,4 402,069 49,769 25,110 15,961 15,216 7,830 2,451 1,823 520,229 Derivat ive financial instruments 15,820 15,810 8,645 5,002 4,102 6,795 7,904 5,784 69,862 Senior debt 5 204 342 509 963 711 5,855 19,673 12,086 40,343 Other debt securit ies in issue 1 2,758 5,504 8,732 7,316 2,935 1,088 870 268 29,471 Other liab il it ies 19,857 24,725 1,616 521 503 902 1,043 10,296 59,463 Subordinated liab il it ies and other borrowed funds 2,004 105 22 248 25 1,882 2,045 7,384 13,715 Total liab il it ies 472,445 98,297 46,879 30,882 23,841 25,784 34,130 37,648 769,906 Net liqu id ity gap (257,919) 44,915 25,524 4,280 10,932 24,894 49,955 147,435 50,016 1 Loans and advances, investment securit ies, other assets, depos its by banks, customer accounts and debt securit ies in issue include financ ial instruments held at fair value through profit or loss, see Note 13 Financ ial instruments (pages 376 to 378) 2 Loans and advances include reverse repurchase agreements and other sim ilar secured lend ing of $90 bill ion 3 Deposits by banks include repurchase agreements and other sim ilar secured borrow ing of $7.0 bill ion 4 Customer accounts include repurchase agreements and other sim ilar secured borrow ing of $46.8 bill ion 5 Senior debt maturity profiles are based upon contractual maturity, which may be later than call options over the debt held by the Group ![]() 291 Standard Chartered – Annual Report 2022 Risk review and Capital review 2021 One month or less $mill ion Between one month and three months $mill ion Between three months and six months $mill ion Between six months and nine months $mill ion Between nine months and one year $mill ion Between one year and two years $mill ion Between two years and five years $mill ion More than five years and undated $mill ion Total $mill ion Assets Cash and balances at central banks 64,516 – – – – – – 8,147 72,663 Derivat ive financial 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 ies¹ 11,813 13,590 12,070 13,266 13,407 26,424 53,189 54,964 198,723 Other assets¹ 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 il it ies Deposits by banks 1,3 34,858 1,134 1,244 408 477 116 206 4 38,447 Customer accounts 1,4 430,071 52,051 27,436 11,738 12,023 4,857 2,152 2,127 542,455 Derivat ive financial instruments 11,715 11,573 7,254 4,061 2,788 5,042 7,117 3,849 53,399 Senior debt 5 190 642 1,036 320 397 5,336 15,225 11,845 34,991 Other debt securit ies in issue 1 2,233 12,968 7,786 3,118 3,281 782 1,411 320 31,899 Other liab il it ies 14,545 22,582 2,044 1,148 1,180 797 990 14,059 57,345 Subordinated liab il it ies and other borrowed funds 1,007 64 24 240 894 2,430 2,593 9,394 16,646 Total liab il it ies 494,619 101,014 46,824 21,033 21,040 19,360 29,694 41,598 775,182 Net liqu id ity gap (264,645) 29,189 11,190 13,553 15,087 34,683 67,785 145,794 52,636 1 Loans and advances, investment securit ies, other assets, depos its by banks, customer accounts and debt securit ies in issue include financ ial instruments held at fair value through profit or loss, see Note 13 Financ ial instruments (pages 376 to 378) 2 Loans and advances include reverse repurchase agreements and other sim ilar secured lend ing of $88.4 bill ion 3 Deposits by banks include repurchase agreements and other sim ilar secured borrow ing of $7.1 bill ion 4 Customer accounts include repurchase agreements and other sim ilar secured borrow ing of $58.6 bill ion 5 Senior 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 ial assets and l iab il it ies 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 ies do not necessar ily reflect the tim ing of actual repayments or cashflow. In practice, certain assets and liab il it ies behave d ifferently from their contractual terms, especially for short-term customer accounts, credit card balances and overdrafts, which extend to a longer period than their contractual maturity. On the other hand, mortgage balances tend to have a shorter repayment period than their contractual maturity date. Expected customer behaviour is assessed and managed on a country basis using qualitat ive and quant itat ive techn iques, includ ing analysis of observed customer behaviour over time. ![]() 292 Standard Chartered – Annual Report 2022 Risk review Risk profile Maturity of financ ial l iab il it ies on an und iscounted basis (audited) The following table analyses the contractual cashflows payable for the Group’s financ ial l iab il it ies by rema in ing contractual maturit ies on an und iscounted basis. The financ ial l iab il ity 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 ipal and interest payments. Derivat ives not treated as hedg ing derivat ives are included in the ‘On demand’ time bucket and not by contractual maturity. With in the ‘More than five years and undated’ matur ity band are undated financ ial l iab il it ies, the majority of wh ich relate to subordinated debt, on which interest payments are not included as this informat ion would not be mean ingful, given the instruments are undated. Interest payments on these instruments are included with in the relevant matur it ies up to five years. 2022 One month or less $mill ion Between one month and three months $mill ion Between three months and six months $mill ion Between six months and nine months $mill ion Between nine months and one year $mill ion Between one year and two years $mill ion Between two years and five years $mill ion More than five years and undated $mill ion Total $mill ion Deposits by banks 29,742 2,048 2,275 876 362 1,455 144 8 36,910 Customer accounts 401,893 49,196 24,713 15,614 15,283 8,280 5,937 2,591 523,507 Derivat ive financial instruments 1 65,912 48 12 116 213 940 1,185 1,436 69,862 Debt securit ies in issue 3,060 5,912 9,631 8,574 3,979 7,844 22,259 18,465 79,724 Subordinated liab il it ies and other borrowed funds 2,097 165 44 273 28 2,029 2,610 14,004 21,250 Other liab il it ies 17,275 25,751 1,517 504 496 895 901 9,669 57,008 Total liab il it ies 519,979 83,120 38,192 25,957 20,361 21,443 33,036 46,173 788,261 2021 One month or less $mill ion Between one month and three months $mill ion Between three months and six months $mill ion Between six months and nine months $mill ion Between nine months and one year $mill ion Between one year and two years $mill ion Between two years and five years $mill ion More than five years and undated $mill ion Total $mill ion Deposits by banks 34,866 1,140 1,246 409 481 117 208 3 38,470 Customer accounts 430,190 52,112 27,510 11,813 12,120 4,930 2,212 2,495 543,382 Derivat ive financial instruments 1 52,783 9 22 12 106 76 212 179 53,399 Debt securit ies in issue 2,526 13,618 9,015 3,586 3,891 6,743 17,966 17,659 75,004 Subordinated liab il it ies and other borrowed funds 1,114 134 48 261 928 2,546 3,030 16,044 24,105 Other liab il it ies 17,759 22,460 1,952 1,133 1,170 797 990 9,955 56,216 Total liab il it ies 539,238 89,473 39,793 17,214 18,696 15,209 24,618 46,335 790,576 1 Derivat ives are on a d iscounted basis ![]() 293 Standard Chartered – Annual Report 2022 Risk review and Capital review Interest Rate Risk in the Banking Book The following table provides the estimated impact to a hypothetical base case project ion of the Group’s earn ings under the following scenarios: • A 50 basis point parallel interest rate shock (up and down) to the current market-impl ied path of rates, across all y ield curves • A 100 basis point parallel interest rate shock (up) to the current market-impl ied path of rates, across all y ield curves These interest rate shock scenarios assume all other economic variables remain constant. The sensit iv it ies shown represent the estimated change to a hypothetical base case projected net interest income (NII), plus the change in interest rate impl ied income and expense from FX swaps used to manage banking book currency posit ions, under the d ifferent interest rate shock scenarios. The base case projected NII is based on the current market- impl ied path of rates and forward rate expectat ions. The NII sensit iv it ies below stress th is base case by a further 50 or 100bps. Actual observed interest rate changes will lag behind market expectation. Accordingly, the shocked NII sensit iv ity does not represent a forecast of the Group’s net interest income. The interest rate sensit iv it ies are ind icat ive stress tests and based on simpl ified scenar ios, estimat ing the aggregate impact of an unantic ipated, instantaneous parallel shock across all yield curves over a one-year horizon, includ ing the time taken to implement changes to pric ing before becom ing effective. The assessment assumes that the size and mix of the balance sheet remain constant and that there are no specif ic management act ions 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 ificant modell ing and behavioural assumptions are made regarding scenario simpl ification, market compet it ion, pass-through rates, asset and liab il ity re-pric ing tenors, and price flooring. The assumption that interest rates of all currencies and maturit ies sh ift by the same amount concurrently, and that no actions are taken to mit igate the impacts aris ing from th is are considered unlikely. Reported sensit iv it ies w ill vary over time due to a number of factors includ ing changes in balance sheet composit ion, customer behaviour and risk management strategy, the interest rates assumed in setting the base case and other market condit ions. Therefore, wh ile the NII sensit iv it ies are a relevant measure of the Group’s interest rate exposure, they should not be considered an income or profit forecast. Estimated one-year impact to earnings from a parallel shift in yield curves at the beginn ing of the period of: 2022 USD bloc $mill ion HKD bloc $mill ion SGD bloc $mill ion KRW bloc $mill ion CNY bloc $mill ion Other currency bloc $mill ion Total $mill ion + 50 basis points 80 20 40 50 30 150 370 - 50 basis points (80) (20) (40) (60) (30) (140) (370) + 100 basis points 160 40 90 100 50 300 740 Estimated one-year impact to earnings from a parallel shift in yield curves at the beginn ing of the period of: 2021 USD bloc $mill ion HKD bloc $mill ion SGD bloc $mill ion KRW bloc $mill ion CNY bloc $mill ion Other currency bloc $mill ion Total $mill ion + 50 basis points 200 150 70 50 50 140 660 - 50 basis points (210) (170) (70) (40) (50) (130) (670) + 100 basis points 380 280 130 80 90 300 1,260 As at 31 December 2022, 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 $370 mill ion. The equ ivalent impact from a parallel decrease of 50 basis points would result in a reduction in projected NII of $370 mill ion. The Group est imates the one-year impact of an instantaneous, parallel increase across all yield curves of 100 basis points to increase projected NII by $740 mill ion. The benefit from ris ing interest rates is primar ily from reinvest ing at h igher yields and from assets re-pric ing faster and to a greater extent than deposits. NII sensit iv ity in all scenarios has decreased versus 31 December 2021. The change in NII sensit iv ity reflects updates to the Group’s base case scenario to factor in higher interest rates as at 31 December 2022. In addit ion, NII sens it iv it ies have reduced due to the migrat ion of the HKD mortgage book from HIBOR to Prime rate, the dampening effect of USD hedging strategies intended to provide short term income certainty and smooth longer term NII volatil ity, and due to changes in modelling assumptions to reflect expected re-pric ing act iv ity on Reta il and Transaction Banking current accounts and savings accounts in the current interest rate environment. ![]() 294 Standard Chartered – Annual Report 2022 Risk review Risk profile Operational and Technology Risk Operational and Technology 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 ing legal r isks)”. The Group can be impacted from a range of operational risks which are inherent in the Group’s strategy and business model. Operational and Technology Risk profile Risk management practices help the business grow safely and ensures governance and management of Operational and Technology Risk through the delivery and embedding of effective frameworks and polic ies, together w ith continuous oversight and assurance. The Group continues to ensure the operational and technology risk framework supports the business and functions in effectively managing risk and controls with in r isk appetite to meet their strategic object ives. Overall, the Group’s Operational Risk profile has remained stable with the quality of risk understanding and ident ification improv ing. Operat ional and Technology Risks remain heightened in areas such as Fraud, Data Management, and Information and Cyber Security. Other focus risk areas are Third Party Risk, Technology Risk, People Risk and Change Management. The Group continues to enhance its operational resil ience and defences against these risks, as well as continue to monitor impacts of the ongoing pandemic, through vigorous enhancement programmes. Dig ital isat ion and w ider technological improvements remain a key focus for the Group, to keep pace with new business developments whilst ensuring control frameworks and Risk Appetite evolve accordingly. Operational resil ience In line with regulatory expectations, the Standard Chartered PLC Board has approved the Group’s Important Business Services, Impact Tolerance Statements and the Operational Resil ience self-assessment. By 31 March 2025, the author it ies expect the Group to complete mapping, continue scenario testing to ident ify vulnerab il it ies, remediate ident ified vulnerabil it ies, and embed sustainable governance, assurance and testing. Operational Risk events and losses Operational losses are one ind icator of the effect iveness and robustness of the non-financial r isk control environment. The Group’s profile of operational loss events in 2022 and 2021 is summarised in the table below. It shows the percentage distr ibut ion of gross operational losses by Basel business line. Distr ibut ion of Operational Losses by Basel business line % Loss 2022 2021¹ Agency Services 2.6% 0.6% Asset Management 0.2% 0.0% Commercial Banking 9.2% 3.1% Corporate Finance 0.0% 2.9% Corporate Items 3.8% 41.6% Payment and Settlements 45.0% 32.9% Retail Banking 24.1% 12.6% Retail Brokerage 0.0% 0.0% Trading and Sales 15.1% 6.3% 1 Losses in 2021 have been restated to include incremental events recognised in 2022 The Group’s profile of operational loss events in 2022 and 2021 is also summarised by Basel event type in the table below. It shows the percentage distr ibut ion of gross operational losses by Basel event type. Distr ibut ion of Operational Losses by Basel event type % Loss 2022 2021¹ Business disrupt ion and system fa ilures 4.5% 0.3% Clients products and business practices 6.9% 3.1% Damage to physical assets 0.0% 0.0% Employment practices and workplace safety 0.1% 0.0% Execution delivery and process management 79.4% 87.6% External fraud 8.1% 8.8% Internal fraud 1.0% 0.2% 1 Losses in 2021 have been restated to include incremental events recognised in 2022 Other princ ipal r isks Losses aris ing from operat ional failures for other princ ipal and integrated risks are reported as operational losses. Operational losses do not include Operational Risk-related credit impa irments. ![]() 295 Standard Chartered — Annual Report 2022 Risk review and Capital review #### Enterprise Risk Management Framework Effective risk management is essential in delivering consistent and #### sustainable performance for all our stakeholders and is a central part of the financial and operat ional management of the Group. The Group adds value to clients and the communitiesin which they operate by #### taking and managing appropriate levels of risk, which in turn generates returns for shareholders. The Enterprise Risk Management Framework (ERMF) enables the Group to manage enterprise-wide risks, with the object ive of maxim is ing risk-adjusted returns while remain ing w ith in our Risk Appetite. The ERMF has been designed with the explic it goal of improv ing the Group’s r isk management, and since its launch in January 2018, it has been embedded across the Group and rolled out to its branches and subsid iar ies 1 . The ERMF is reviewed annually and the latest version is effective from January 2023. Risk culture The Group’s risk culture provides guid ing pr inc iples for the behaviours expected from our people when managing risk. The Board has approved a risk culture statement that encourages the following behaviours and outcomes: • An enterprise-level abil ity to ident ify and assess current and future risks, openly discuss these and take prompt actions. • The highest level of integr ity by be ing transparent and proactive in disclos ing and manag ing all types of risks. • A constructive and collaborative approach in provid ing oversight and challenge, and taking decis ions in a timely manner. • Everyone to be accountable for their decis ions and feel safe in using their judgement to make these considered decis ions. 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 ify ing 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 it iat ives and business model vulnerabil it ies, with the aim of proactively ident ify ing and managing new risks or exist ing r isks that need to be reprior it ised as part of the strategy review process. • By confirming that growth plans and strategic in it iat ives can be del ivered with in the approved R isk Appetite and/or proposing addit ional R isk Appetite for Board considerat ion as part of the strategy review process. • By validat ing the Corporate Plan aga inst 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 ion from the Group Ch ief Risk Officer (GCRO) that it is aligned with the ERMF and the Group Risk Appetite Statement where project ions allow. • Country Risk management approach and Country Risk reviews are used to ensure the country lim its and exposures are reasonable and in line with Group strategy, country strategy, and the operating environment, consider ing the ident ified r isks. Roles and responsib il it ies Senior Managers Regime 2 Roles and responsib il it ies under the ERMF are al igned to the objectives of the Sen ior Managers Regime. The GCRO is responsible for the overall development and maintenance of the Group’s ERMF and for ident ify ing material risk types to which the Group may be potentially exposed. The GCRO delegates effective implementat ion of the R isk Type Frameworks (RTFs) to Risk Framework Owners who provide second line of defence oversight for the Princ ipal R isk Types (PRTs). In addit ion, the GCRO has been formally ident ified as the relevant senior manager responsible for the development of the Group’s Dig ital Asset R isk Assessment Approach, as well as the senior manager responsible for Climate Risk management as it relates to financ ial and non-financial r isks to the Group aris ing from cl imate change. This does not include elements of corporate social responsib il ity, the Group’s contribut ion to cl imate change and the Sustainable Finance strategy supporting a low-carbon transit ion, wh ich are the responsib il ity of other relevant senior managers. Risk ident ification Group strategy Stress testing Risk Appetite 1 The Group’s Risk Management Framework and System of Internal Control applies only to wholly controlled subsid iar ies of the Group, and not to Associates, Joint Ventures or Structured Entit ies of the Group. 2 Senior managers refer to ind iv iduals designated as senior management functions under the FCA and PRA Senior Managers Regime (SMR). ![]() 296 Standard Chartered — Annual Report 2022 Risk review Risk management approach The Risk function The Risk function is responsible for the sustainab il ity of our business through good management of risk across the Group by provid ing overs ight and challenge, thereby ensuring that business is conducted in line with regulatory expectations. The GCRO directly manages the Risk function, which is separate and independent from the orig inat ion, trading and sales functions of the businesses. The Risk function is responsible for: • Mainta in ing the ERMF, ensuring that it remains relevant and appropriate to the Group’s business activ it ies, and is effectively communicated and implemented across the Group, and admin ister ing related governance and reporting processes. • Upholding the overall integr ity of the Group’s r isk and return decis ions to ensure that r isks are properly assessed, that these decis ions are made transparently on the bas is 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 ipal Risk Types and Integrated Risk Types under the ERMF. The independence of the Risk function ensures that the necessary balance in making risk and return decis ions is not compromised by short-term pressures to generate revenues. In addit ion, the R isk function is a centre of excellence that provides special ist capab il it ies relevant to risk management processes in the broader organisat ion. The Risk function supports the Group’s commitment to be here for good by build ing a susta inable framework that places regulatory and compliance standards and a culture of appropriate conduct at the forefront of the Group’s agenda, in a manner proportionate to the nature, scale and complexity of the Group’s business. Conduct, Financ ial Cr ime and Compliance (CFCC), under the Management Team leadership of the Group Head, CFCC, works alongside the Risk function with in the framework of the ERMF to deliver a unif ied second l ine of defence. Three lines of defence model Roles and responsib il it ies for r isk management are defined under a three lines of defence model. Each line of defence has a specif ic set of respons ib il it ies for r isk management and control, as shown in the table below. Lines of defence Definit ion Key responsib il it ies include 1 st The businesses and functions engaged in or supporting revenue-generating activ it ies that own and manage the risks • Propose the risks required to undertake revenue-generating activ it ies • Identify, assess, monitor and escalate risks and issues to the second line and senior management and promote a healthy risk culture and good conduct • Validate and self-assess compliance to RTFs and polic ies, confirm the quality of validat ion, and prov ide evidence-based affirmation to the second l ine • Manage risks with in R isk Appetite, set and execute remediat ion plans and ensure laws and regulat ions are being complied with • Ensure systems meet risk data aggregation, risk reporting and data quality requirements set by the second line. 2 nd The control functions independent of the first line that provide oversight and challenge of risk management to provide confidence to the GCRO, senior management and the Board • Identify, monitor and escalate risks and issues to the GCRO, senior management and the Board and promote a healthy risk culture and good conduct • Oversee and challenge first-line risk-taking activ it ies and review first-line risk proposals • Propose Risk Appetite to the Board, monitor and report adherence to Risk Appetite and intervene to curtail business if it is not in line with an exist ing or adjusted R isk Appetite, there is material non-compliance with policy requirements, or when operational controls do not effectively manage risk • Set risk data aggregation, risk reporting and data quality requirements • Ensure that there are appropriate controls to comply with applicable laws and regulations, and escalate sign ificant non-compliance matters to senior management and the appropriate committees. 3 rd The Internal Audit function provides independent assurance on the effectiveness of controls that support first line’s risk management of business activ it ies, and the processes mainta ined by the second l ine • Independently assess whether management has ident ified the key risks in the businesses and whether these are reported and governed in line with the established risk management processes • Independently assess the adequacy of the design of controls and their operating effectiveness. ![]() 297 Standard Chartered — Annual Report 2022 Risk review and Capital review Risk Appetite and profile We recognise the following constraints which determine the risks that we are will ing 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, before breaching constraints determined by capital and liqu id ity requirements and internal operational environment, or otherwise fail ing to meet the expectat ions of regulators and law enforcement 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 ing to assume in pursuit of its strategy. Risk Appetite cannot exceed risk capacity. The Board is responsible for approving the Risk Appetite Statement, which is underpinned by a set of financ ial and operational control parameters known as Risk Appetite metrics and their associated thresholds. These directly constrain the aggregate risk exposures that can be taken across the Group. The Group Risk Appetite is reviewed at least on an annual basis to ensure that it is fit for purpose and aligned with strategy, and focus is given to emerging or new risks. The Risk Appetite Statement is supplemented by an overarching statement outlin ing the Group’s R isk Appetite princ iples. Risk Appetite princ iples The Group Risk Appetite is defined in accordance with risk management princ iples that inform our overall approach to risk management and our risk culture. We follow the highest ethical standards and ensure a fair outcome for our clients, as well as facil itat ing the effective operation of financ ial markets, while at the same time meeting the 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 ial 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 is supplemented by risk control tools such as granular level lim its, pol ic ies, standards and other operat ional control parameters that are used to keep the Group’s risk profile with in R isk 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 ing the status of breaches and remed iat ion plans where applicable. To keep the Group’s risk profile with in R isk Appetite (and therefore also risk capacity), we have cascaded crit ical Group Risk Appetite metrics across our Princ ipal R isk Types to our footprint markets with sign ificant bus iness operations. Risk ident ification and assessment Identif icat ion and assessment of potentially adverse risk events is an essential first step in managing the risks of any business or activ ity. To ensure cons istency in communicat ion, we use Princ ipal R isk Types to classify our risk exposures. Nevertheless, we also recognise the need to mainta in a holist ic perspect ive since a single transaction or activ ity may give rise to multiple types of risk exposure; risk concentrations may arise from multiple exposures that are closely correlated; and a given risk exposure may change its form from one risk type to another. There are also sources of risk that arise beyond our own operations, such as the Group’s dependency on suppliers for the provis ion of serv ices and technology. As the Group remains accountable for risks aris ing from the actions of such third-parties, failure to adequately monitor and manage these relationsh ips could mater ially impact the Group’s abil ity to operate and could have an impact on our abil ity to cont inue to provide services that are material to the Group. To facil itate r isk ident ification and assessment, the Group mainta ins a dynam ic risk-scanning process with inputs on the internal and external risk environment, as well as potential threats and opportunit ies from the bus iness and client perspectives. The Group mainta ins a taxonomy of the Princ ipal R isk Types, Integrated Risk Types and risk sub-types that are inherent to the strategy and business model; as well as Topical and Emerging Risks (TERs) inventory that includes near-term as well as longer-term uncertaint ies. Near-term r isks are those that are on the horizon and can be measured and mit igated to some extent, wh ile uncertaint ies are longer-term matters that should be on the radar but are not yet fully measurable. The GCRO and the Group Risk Committee review regular reports on the risk profile for the Princ ipal R isk Types, adherence to the approved Risk Appetite and the Group risk inventory includ ing emerg ing risks and uncertaint ies. They use this informat ion to escalate mater ial developments in each risk event and make recommendations to the Board annually on any potential changes to our Corporate Plan. Stress testing The objective of stress test ing 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 sufficient financial resources to w ithstand severe but plausible scenarios • has the financial flex ib il ity to respond to extreme but plausible scenarios; and • understands the Group’s key business model risks and considers what kind of event might crystallise those risks - even if extreme with a low likel ihood of occurr ing - and ident ifies as requ ired, actions to mit igate the l ikel ihood or impact of those events Enterprise stress tests incorporate Capital and Liqu id ity Adequacy Stress Tests, includ ing in the context of capital adequacy, recovery and resolution, and stress tests that assess scenarios where our business model becomes challenged, such as the Bank of England (BoE) Bienn ial Exploratory Scenario, or unviable, such as reverse stress tests. Stress tests are performed at the Group, country, business and portfolio level under a wide range of risks and at varying degrees of severity. Unless set by the BoE, scenario design is a bespoke process that aims to explore risks that can adversely impact the Group. ![]() 298 Standard Chartered — Annual Report 2022 Risk review Risk management approach The Board delegates approval of stress test submiss ions to the BoE to the Board Risk Committee, which reviews the recommendations from the Group Risk Committee. Based on the stress test results, the Group Chief Financ ial Officer and Group Chief Risk Officer can recommend strategic actions to the Board to ensure that the Group strategy remains with in the Board-approved R isk Appetite. Princ ipal R isk Types Princ ipal R isk Types are those 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 inct RTFs which are approved by the Group Chief Risk Officer. The Princ ipal R isk Types and associated Risk Appetite Statements are approved by the Board. The Group currently recognises Climate Risk, Dig ital Asset R isk and Third-Party Risk as Integrated Risk Types. Climate Risk is defined as “the potential for financ ial loss and non-financial detriments aris ing from cl imate change and society’s response to it”; Dig ital Asset R isk is defined as “the potential for regulatory penalties, financ ial loss and or reputat ional damage to the Group resulting from dig ital asset exposure or dig ital asset related act iv it ies aris ing from the Group’s Cl ients, Products and Projects” and Third-Party Risk is defined as “the potential for loss or adverse impact from failure to manage multiple risks aris ing from the use of th ird parties, and is the aggregate of these risks.” In future reviews, we will continue to consider if exist ing Princ ipal R isk Types or incremental risks should be treated as Integrated Risk Types. The table below shows the Group’s current Princ ipal R isk Types. Princ ipal R isk Types Definit ion Credit Risk • Potential for loss due to the failure of a counterparty to meet its agreed obligat ions to pay the Group. Traded Risk • Potential for loss resulting from activ it ies undertaken by the Group in financ ial markets. Treasury Risk • Potential for insuff ic ient capital, liqu id ity or funding to support our operations, the risk of reductions in earnings or value from movements in interest rates impact ing bank ing book items and the potential for losses from a shortfall in the Group’s pension plans. Operational and Technology Risk • Potential for loss resulting from inadequate or failed internal processes, technology events, human error, or from the impact of external events (includ ing legal r isks). Information and Cyber Security Risk • Risk to the Group’s assets, operations and ind iv iduals due to the potential for unauthorised access, use, disclosure, disrupt ion, mod if icat ion, or destruction of informat ion assets and/or informat ion systems. Compliance Risk • Potential for penalties or loss to the Group or for an adverse impact to our clients, stakeholders or to the integr ity of the markets we operate in through a failure on our part to comply with laws or regulations. Financ ial Cr ime Risk • Potential for legal or regulatory penalties, material financ ial loss or reputat ional damage resulting from the failure to comply with applicable laws and regulations relating to internat ional sanct ions, anti-money laundering, anti-bribery and corruption, and fraud. Model Risk • Potential loss that may occur as a consequence of decis ions or the r isk of mis-estimat ion that could be princ ipally based on the output of models, due to errors in the development, implementat ion or use of such models. Reputational and Sustainab il ity Risk • Potential for damage to the franchise (such as loss of trust, earnings or market capital isat ion), because of stakeholders taking a negative view of the Group through actual or perceived actions or inact ions, includ ing a fa ilure to uphold responsible business conduct or lapses in our commitment to do no sign ificant env ironmental and social harm through our client, third-party relationsh ips, or our own operat ions. ERMF effectiveness reviews The GCRO is responsible for annually affirm ing the effectiveness of the ERMF to the Board Risk Committee. An ERMF effectiveness review was established in 2018 to facil itate this affirmat ion, wh ich follows the princ iple of ev idence-based self-assessments for all the Risk Type Frameworks and relevant polic ies. A top-down rev iew and challenge of the results is conducted by the GCRO with all Risk Framework Owners and an opin ion 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 2022 effectiveness review are: • The focus in 2022 continued on the effective embedding of the framework across the organisat ion. • While the more mature financ ial r isks continued to be more effectively managed, the Group continues to make progress in embedding the non-financ ial r isk management • Other aspects of the ERMF, includ ing the key r isk committees and key supporting standards, are established. • Self-assessments performed in our footprint markets reflect the embeddedness of ERMF adoption with an emphasis on first-line ownership of risks. Country and regional risk committees continue to play an active role in managing and overseeing material issues aris ing in countries. Ongoing ERMF effectiveness reviews allow for a structured approach to ident ify improvement opportunit ies and bu ild plans to address them. Over the course of 2023, the Group aims to further strengthen its risk management practices by further improv ing on the management of non-financial r isks and integrated risks with in its businesses, functions and across the footprint. Executive and Board risk oversight Overview The Board has ultimate responsib il ity for risk management and is supported by five core 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 ipal R isk Types. In addit ion, the Culture and Susta inab il ity Committee oversees the Group’s culture and key sustainab il ity prior it ies. ![]() 299 Standard Chartered — Annual Report 2022 Risk review and Capital review Board and Executive level risk committee governance structure The Committee governance structure below presents the view as of 2022. Group Asset and Liab il ity Committee Group Risk Committee Board of Directors Board Risk Committee Governance and Nominat ion Committee Culture and Sustainab il ity Committee Remuneration Committee Audit Committee Group Non-Financ ial R isk Committee Group Financ ial Cr ime Risk Committee Group Responsib il ity and Reputational Risk Committee IFRS 9 Impairment Committee Model Risk Committee Corporate, Commercial and Institut ional Bank ing Risk Committee Consumer, Private and Business Banking Risk Committee Asia Risk Committee Africa and Middle East Risk Committee Investment Committee Investment Committee for Transportation Assets Standard Chartered Ventures Committee Regulatory Interpretation Committee Climate Risk Management Committee Dig ital Assets R isk Committee The committee governance structure ensures that risk-taking authority and risk management polic ies 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 ies and standards is communicated to the appropriate country, client segment, functional and Group-level senior management and committees. Board level 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 ited (“SCBHK”) for overs ight of SCBHK Group. ![]() 300 Standard Chartered — Annual Report 2022 Risk review Risk management approach Group Risk Committee The Group Risk Committee, which derives its authority from the GCRO, is responsible for ensuring the effective management of risk throughout the Group in support of the Group’s strategy. The GCRO chairs the Group Risk Committee, whose members are drawn from the Group’s Management Team. The Committee oversees the effective implementat ion of the ERMF for the Group, includ ing the delegat ion of any part of its authorit ies to appropr iate ind iv iduals or properly constituted sub-committees. Group Risk Committee sub-committees The Group Non-Financ ial R isk Committee, chaired by the Global Head, Risk Functions and Operational Risk, governs the non-financial r isks across clients, businesses, products and functions. The Committee also reviews the adequacy of the internal control system across all Princ ipal R isk Types. The Group Financ ial Cr ime Risk Committee, chaired by the Group Head, Conduct, Financ ial Cr ime and Compliance, governs the Financ ial Cr ime Risk Type (excluding Fraud Risk and Secondary Reputational Risk that is consequential in nature aris ing from r isks pertain ing to F inanc ial Cr ime Risk) across the Group. The Committee ensures that the Financ ial Crime Risk profile is managed with in approved R isk Appetite and polic ies. The Group Responsib il ity and Reputational Risk Committee, chaired by the Group Head, Conduct, Financ ial Cr ime and Compliance, ensures the effective management of Reputational and Sustainab il ity Risk across the Group. This includes provid ing overs ight of matters aris ing from cl ients, products, transactions and strategic coverage-related decis ions and matters escalated by the respect ive Risk Framework Owners. The IFRS 9 Impairment Committee, co-chaired by the Global Head Enterprise Risk Management and Group Head, Central Finance, ensures the effective management of the expected credit loss computations as well as stage allocation of financial assets for quarterly financial report ing with in the authorit ies set by the Group R isk 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 ies and Model R isk Appetite. The Corporate, Commercial and Institut ional Bank ing (CCIB) Risk Committee, chaired by the Chief Risk Officer, CCIB and Europe & Americas, ensures the effective management of risk throughout CCIB and Europe & Americas, 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 Asia Risk Committee and the Africa and Middle East Risk Committee 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, chaired by a representative of the Risk function, ensures the optim ised w ind-down of the Group’s exist ing d irect investment activ it ies in equit ies, quas i-equit ies (excluding mezzanine), funds and other alternative investments (excluding debt/debt-like instruments) as well as equity or quasi-equity stake obtained as a result of restructuring of distressed debt, non-core equit ies and l im ited partner investments in funds linked to CCIB and managed by Credit and Portfolio Management. The Investment Committee for Transportation Assets, chaired by the Chief Risk Officer, CCIB and Europe & Americas or Global Head, Credit and Portfolio Management, CCIB ensures the optim isat ion of the Group’s investment in aviat ion operating lease assets with the aim of deliver ing better returns through the cycle and wind down of shipp ing operating lease assets. The SC Ventures (SCV) Risk Committee, chaired by the Chief Risk Officer, SCV, receives authority directly from the GCRO and oversees the effective management of risk throughout SCV and the ind iv idual entit ies operat ing under SCV. The Climate Risk Management Committee, chaired by the Global Head, Enterprise Risk Management, oversees the effective implementat ion of the Group’s Cl imate Risk workplan. This includes relevant regulatory requirements and covers Climate Risk related financ ial and non-financial r isks. The Regulatory Interpretation Committee, co-chaired by the Global Head Enterprise Risk Management and Group Head, Central Finance, provides oversight of material regulatory interpretat ions for the Cap ital Requirements Regulation (as amended by UK legislat ion), the PRA rulebook and other relevant regulations impact ing Group regulatory cap ital calculations and reporting. The areas and risk types in scope are credit risk, traded risk, operational risk, large exposures and leverage ratio. The Dig ital Assets R isk Committee, chaired by the Global Head, Enterprise Risk Management, ensures effective management of Dig ital Assets (DA) related r isks across the Group. This includes provid ing overs ight of DA risk related matters aris ing from projects, products and cl ients and third parties in relation to the DA services that they will be provid ing to any of the Businesses. Group Asset and Liab il ity Committee The Group Asset and Liab il ity Committee is chaired by the Group Chief Financ ial Officer. Its members are drawn princ ipally from the Management Team. The Comm ittee is responsible for determin ing the Group’s approach 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 in the internally approved Risk Appetite and external requirements relating to capital, loss-absorbing capacity, liqu id ity, leverage, Interest Rate Risk in the Banking Book, Banking Book Basis Risk and Structural Foreign Exchange Risk, as well as monitor ing the structural impact of decis ions around susta inable finance, net zero and climate risk. The Committee is also responsible for ensuring that internal and external recovery planning requirements are met. ![]() 301 Standard Chartered – Annual Report 2022 Risk review and Capital review #### Principal risks #### We manage and control our Principal Risk Types through distinct Risk Type Frameworks, policies #### 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 #### ions to pay the Group. Risk Appetite Statement The Group manages its credit exposures following the princ iple of d ivers ification across products, geographies, client segments and industry sectors. Roles and responsib il it ies 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 independent challenge, monitor ing and oversight of the Credit Risk management practices of the business and functions engaged in or supporting revenue- generating activ it ies which constitute the first line of defence. In addit ion, they ensure that cred it risks are properly assessed and transparent; and that credit decis ions are controlled in accordance with the Group’s Risk Appetite, credit polic ies and standards. Mit igat ion Segment-specif ic pol ic ies are in place for the management of Credit Risk. The Credit Policy for CCIB Client Coverage sets the princ iples that must be followed for the end-to-end cred it process, includ ing cred it in it iat ion, cred it grading, credit assessment, product structuring, Credit Risk mit igat ion, monitor ing and control, and documentat ion. The CPBB Credit Risk Management Policy sets the princ iples for the management of CPBB segments, that must be followed for end-to-end credit process includ ing cred it in it iat ion, cred it assessment and monitor ing for lend ing to these segments. The Group also sets out standards for the elig ib il ity, enforceabil ity and effect iveness of Credit Risk mit igat ion arrangements. Potential credit losses from a given account, client or portfolio are mit igated us ing a range of tools, such as collateral, netting agreements, credit insurance, credit derivat ives and guarantees. Risk mit igants are also carefully assessed for the ir market value, legal enforceabil ity, correlat ion and counterparty risk of the protection provider. Collateral must be valued prior to drawdown and regularly thereafter as required, to reflect current market condit ions, the probabil ity of recovery and the per iod of time to realise the collateral in the event of liqu idat ion. The Group also seeks to divers ify its collateral holdings across asset classes and markets. Where guarantees, credit insurance, standby letters of credit or credit derivat ives are used as Cred it Risk mit igat ion, the creditworth iness of the protect ion 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 among other risks with in the bank. At the executive level, the Group Risk Committee (GRC) oversees and appoints sub-committees for the management of all risk types includ ing Cred it Risk – in particular the Corporate, Commercial and Institut ional 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 (which cover Credit risk as well). These committees are responsible for overseeing all Risk profiles includ ing Cred it Risk of the Group with in the respect ive 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 ensure that appropriate action is taken. Decis ion-mak ing authorit ies and delegat ion The Credit Risk Type Frameworks are the formal mechanism by which delegate Credit Risk authorit ies cascad ing from the GCRO, as the Senior Manager of the Credit Risk Type, to ind iv iduals such as the business segments’ Chief Risk Officers. Named ind iv iduals further delegate credit authorit ies to ind iv idual credit officers based on risk-adjusted scales by customer type or portfolio. Credit Risk authorit ies are rev iewed at least annually to ensure that they remain appropriate. In CCIB Client Coverage, the ind iv iduals delegating the Credit Risk authorit ies perform oversight by review ing a sample of the l im it appl icat ions approved by the delegated credit officers on a monthly basis. In CPBB, where credit decis ion systems and tools (e.g. applicat ion scorecards) are used for cred it decis ion ing, such risk models are subject to performance monitor ing and period ic val idat ion. Where manual or d iscret ionary cred it decis ions are appl ied, period ic qual ity control assessments and assurance checks are performed by the ind iv iduals delegating the Credit Risk authorit ies. #### Credit Risk ![]() 302 Standard Chartered – Annual Report 2022 Risk review Risk management approach Monitor ing We regularly monitor credit exposures, portfolio performance, external trends and emerging risks that may impact risk management outcomes. Internal risk management reports that are presented to risk committees contain informat ion on key polit ical and econom ic trends across major portfolios and countries, portfolio delinquency and loan impa irment performance. The Industry Portfolio Mandate, developed jo intly by the CCIB Client Coverage business and the Risk function, provides a forward-looking assessment of risk using a platform from which business strategy, risk considerat ions and cl ient planning are performed with one consensus view of the external industry outlook, portfolio overviews, Risk Appetite, underwrit ing pr inc iples and stress test ins ights. In CCIB Client Coverage, clients and portfolios are subjected to addit ional rev iew when they display signs of actual or potential weakness; for example, where there is a decline in the client’s posit ion w ith in the industry, financ ial deter iorat ion, a breach of covenants, or non-performance of an obligat ion with in the st ipulated period. Such accounts are subjected to a dedicated process overseen by the Credit Issues Committees in the relevant countries where client account strategies and credit grades are re-evaluated. In addit ion, remed ial actions, includ ing plac ing accounts on early alert for increased scrutiny, exposure reduction, security enhancement or exit ing the account could be undertaken. Certain accounts could also be transferred into the control management of the Stressed Assets Group (SAG), which is our special ist recovery un it for CCIB Client Coverage that operates independently from our main business. Any material in-country developments that may impact the sovereign ratings are monitored closely by the Country Risk Team. A Country Risk Early Warning system, a triage-based risk ident ification system was developed to categor ise countries based on forward looking view of possible downgrade and expected incremental RWA impact of potential downgrade. For CPBB, exposures and collateral monitor ing are performed at the counterparty and/or portfolio level across different client segments to ensure transactions and portfolio exposures remain with in R isk Appetite. Portfolio delinquency trends are monitored on an ongoing basis. Accounts that are past due (or perceived as high risk but not yet past due) are subject to a collections or recovery process managed by a special ist funct ion independent from the orig inat ion function. In some countries, aspects of collections and recovery activ it ies are outsourced. For discret ionary lend ing portfolios, sim ilar processes as those of Commerc ial client coverage are followed. In addit ion, 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 CCIB and CPBB are well managed with in our R isk Appetite and polic ies through prompt and forward-looking mit igat ing actions. Credit rating and measurement All credit proposals are subject to a robust Credit Risk assessment. It includes a comprehensive evaluation of the client’s credit quality, includ ing w ill ingness, ab il ity and capacity to repay. The primary lending considerat ion is based on the client’s credit quality and the repayment capacity from operating cashflows for counterparties, and personal income or wealth for ind iv idual borrowers. The risk assessment gives due considerat ion to the cl ient’s liqu id ity and leverage posit ion. Where appl icable, the assessment includes a detailed analysis of the Credit Risk mit igat ion arrangements to determine the level of reliance on such arrangements as the secondary source of repayment in the event of a sign ificant deter iorat ion in a client’s credit quality leading to default. For Wealth Lending, Collateral is considered primary source of repayment hereby loan agreement envisages that the repayment of loan is based on sale of collateral provided. Risk measurement plays a central role, along with judgement and experience, in inform ing r isk-taking and portfolio management decis ions. We adopt the advanced internal ratings-based approach under the Basel regulatory framework to calculate Credit Risk capital requirements. The Group has also established a global programme to undertake a comprehensive assessment of capital requirements necessary to be implemented to meet the latest revised Basel III finalisat ion (Basel IV) regulations. A standard alphanumeric Credit Risk grade system is used for CCIB Client Coverage. The numeric grades run from 1 to 14 and some of the grades are further sub-classif ied. Lower numer ic credit grades are ind icat ive of a lower likel ihood 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. CPBB internal ratings-based portfolios use applicat ion and behavioural credit scores that are calibrated to generate a probabil ity of default. R isk Decis ion Framework as a cred it rating system supports the delivery of optimum risk-adjusted- returns with controlled volatil ity and is used to define the portfolio/new booking segmentation, shape and decis ion criter ia for the unsecured consumer bus iness segment. Advanced internal ratings-based models cover a substantial majority of our exposures and are used in assessing risks at a customer and portfolio level, setting strategy and optim is ing our risk-return decis ions. Mater ial internal ratings-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 ion team, which is separate from the teams that develop and mainta in the models. Models undergo annual val idat ion by an independent model validat ion team. Rev iews are also triggered if the performance of a model deteriorates materially against predetermined thresholds during the ongoing model performance monitor ing process wh ich takes place between the annual validat ions. ![]() 303 Standard Chartered – Annual Report 2022 Risk review and Capital review Credit Concentration Risk Credit Concentration Risk may arise from a single large exposure to a counterparty or a group of connected counterparties, or from multiple exposures across the portfolio that are closely correlated. Large exposure Concentration Risk is managed through concentration lim its set for a counterparty or a group of connected counterparties based on control and economic dependence criter ia. R isk Appetite metrics are set at portfolio level and monitored to control concentrations, where appropriate, by industry, specif ic products, tenor, collateralisat ion level, top cl ients 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 Risk Committees. Credit impa irment Expected credit losses (ECL) are determined for all financ ial assets that are classif ied as amort ised cost or fair value through other comprehensive income. ECL is computed as an unbiased, probabil ity-we ighted provis ion determ ined by evaluating a range of plausible outcomes, the time value of money, and forward-looking informat ion such as cr it ical global or country-specif ic macroeconom ic variables. For more detailed informat ion on macroeconom ic data feeding into IFRS 9 ECL calculations, please refer to the Risk profile section (pages 269 to 281). At the time of orig inat ion or purchase of a non-credit- impa ired financial asset (stage 1), ECL represent cash shortfalls aris ing from poss ible default events up to 12 months into the future from the balance sheet date. ECL continue to be determined on this basis until there is a sign ificant 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 ime of the asset. If there is observed object ive ev idence of credit impa irment or default (stage 3), ECL cont inue to be measured on a lifet ime bas is. To provide the Board with oversight and assurance that the quality of assets orig inated are al igned 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 inated in the past 12 months. In CCIB Client Coverage, a loan is considered credit-impa ired where analysis and review ind icate that full payment of e ither interest or princ ipal, includ ing the t imel iness of such payment, is questionable, or as soon as payment of interest or princ ipal is 90 days overdue. These credit-impa ired accounts are managed by our special ist recovery un it, SAG. In CPBB, a loan to ind iv iduals and small businesses is considered credit-impa ired as soon as payment of interest or princ ipal is 90 days overdue or meets other object ive ev idence of impa irment such as bankruptcy, debt restructur ing, fraud or death. Financ ial assets are wr itten-off when it meets certain threshold condit ions wh ich are set at the point where empir ical ev idence suggests that the client is unlikely to meet their contractual obligat ions, or a loss of pr inc ipal is expected. Estimat ing the amount and t im ing of future recover ies involves sign ificant judgement and cons iders the assessment of matters such as future economic condit ions and the value of collateral, for which there may not be a readily accessible market. The total amount of the Group’s impa irment prov is ion is inherently uncertain, being sensit ive to changes in economic and credit condit ions across the reg ions in which the Group operates. For further details on sensit iv ity analysis of expected credit losses under IFRS 9, please refer to the Risk profile section (pages 269 to 281). Stress testing Stress testing is a forward-looking risk management tool that constitutes a key input into the ident ification, mon itor ing and mit igat ion of Credit Risk, as well as contribut ing to R isk Appetite calibrat ion. Per iod ic stress tests are performed on credit portfolios/segments to antic ipate vulnerab il it ies from stressed condit ions and in it iate timely right-siz ing and mit igat ion plans. Addit ionally, mult iple enterprise-wide and country-level stress tests are mandated by regulators to assess the abil ity of the Group and its subsid iar ies to continue to meet their capital requirements during a plausible, adverse shock to the business. These regulatory stress tests are conducted in line with the princ iples 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 GCRO and respective regional risk committee. ![]() 304 Standard Chartered – Annual Report 2022 Risk review Risk management approach Roles and responsib il it ies The TRTF, which sets the roles and responsib il it ies in respect of Traded Risk for the Group, is owned by the Global Head, Traded Risk Management (TRM). The business, acting as first line of defence, is responsible for the effective management of risks with in the scope of its direct organisat ional responsib il it ies set by the Board. TRM is the core second-line control function that performs independent challenge, monitor ing and overs ight of the Traded Risk management practices of the first line of defence, predominantly Financ ial Markets and Treasury Markets. The first and second lines of defence are supported by the organisat ion structure, job descr ipt ions and author it ies delegated by Traded Risk control owners. Mit igat ion The TRTF requires that Traded Risk lim its are defined at a level appropriate to ensure that the Group remains with in R isk Appetite. All businesses incurr ing Traded R isk must comply with the TRTF. The Traded Risk Policy sets the princ iples that must be followed for the end-to-end traded risk management process includ ing l im it sett ing, risk capture and measurement, lim it mon itor ing and escalat ion, risk mit igat ion and stress testing. Polic ies and standards ensure that these Traded R isk lim its are implemented. Polic ies are rev iewed and approved by the Global Head, TRM at least once every two years 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 delegates responsib il it ies to the CCIBRC to oversee the Traded Risk profile of the Group. For subsid iar ies, the authority for setting Traded Risk lim its is delegated from the local board to the local risk committee, Country Chief Risk Officer and Traded Risk managers. Meetings are held regularly, and the committees monitor all material Traded Risk exposures, as well as key internal developments and external trends, and ensure that appropriate action is taken. Decis ion-mak ing authorit ies and delegat ion The TRTF is the formal mechanism which delegates Traded Risk authorit ies cascad ing from the GCRO, as the Senior Manager of the Traded Risk Type, to the Global Head, TRM who further delegates authorit ies to named ind iv iduals. Traded Risk authorit ies are rev iewed at least annually to ensure that they remain appropriate and to assess the quality of decis ions taken by the author ised person. Key risk-taking decis ions are made only by certa in ind iv iduals with the skills, judgement and perspective to ensure that the Group’s control standards and risk-return object ives are met. Market Risk The Group uses a Value at Risk (VaR) model to measure the risk of losses aris ing from future potent ial adverse movements in market rates, prices and volatil it ies. VaR is a quantitat ive measure of Market Risk that applies recent histor ical market condit ions to est imate the potential future loss in market value that will not be exceeded in a set time period at a set statist ical confidence level. VaR prov ides a consistent measure that can be applied across trading businesses and products over time and can be set against actual daily trading profit and loss outcomes. For day-to-day risk management, VaR is calculated as at the close of business, generally at UK time for expected market movements over one business day and to a confidence level of 97.5 per cent. Intra-day risk levels may vary from those reported at the end of the day. The Group applies two VaR methodologies: • Histor ical s imulat ion: th is involves the revaluation of all exist ing pos it ions to reflect the effect of h istor ically observed changes in Market Risk factors on the valuation of the current portfolio. This approach is applied for general Market Risk factors and the major ity of spec if ic (cred it spread) risk VaRs. • Monte Carlo simulat ion: th is methodology is sim ilar to histor ical s imulat ion but w ith considerably more input risk factor observations. These are generated by random sampling techniques, but the results retain the essential variab il ity and correlations of histor ically observed r isk factor changes. This approach is applied for some of the specif ic (cred it spread) risk VaRs in relation to id iosyncrat ic exposures in credit markets. A one-year histor ical observat ion period is applied in both methods. As an input to regulatory capital, trading book VaR is calculated for expected movements over 10 business days and to a confidence level of 99 per cent. Some types of Market Risk are not captured in the regulatory VaR measure, and these Risks not in VaR are subject to capital add-ons. An analysis of VaR results in 2022 is available in the Risk profile section (pages 282 to 285). #### The Group defines Traded Risk as the potential for loss resulting from activities undertaken by the Group in #### financial markets. Risk Appetite Statement The Group should control its financ ial markets activ it ies to ensure that Traded Risk losses do not cause material damage to the Group’s franchise. #### Traded Risk ![]() 305 Standard Chartered – Annual Report 2022 Risk review and Capital review Counterparty Credit Risk The Group uses a Potential Future Exposure (PFE) model to measure the credit exposure aris ing from the pos it ive mark-to- market of traded products and future potential movements in market rates, prices and volatil it ies. PFE is a quantitat ive measure of Counterparty Credit Risk that applies recent histor ical market cond it ions to est imate 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 ion based, which is predominantly used, and an add-on based PFE methodology. Underwrit ing The underwrit ing of secur it ies and loans is in scope of the Risk Appetite set by the Group for Traded Risk. Addit ional l im its approved by the GCRO are set on the sectoral concentration, and the maximum holding period. The Underwrit ing Committee, under the authority of the GCRO, approves ind iv idual proposals to underwrite new security issues and loans for our clients. Monitor ing TRM monitors the overall portfolio risk and ensures that it is with in spec if ied l im its and therefore R isk Appetite. Lim its are typically reviewed twice a year. Most of the Traded Risk exposures are monitored daily against approved lim its. Traded Risk lim its apply at all t imes unless separate intra-day lim its have been set. L im it excess approval dec is ions are based on an assessment of the circumstances driv ing the excess and of the proposed remediat ion plan. L im its and excesses can only be approved by a Traded Risk manager with the appropriate delegated authority. Stress testing The VaR and PFE measurements are complemented by stress testing of Market Risk and Counterparty Credit Risk to highl ight the potent ial risk that may arise from severe but plausible market events. Stress testing is an integral part of the Traded Risk management framework and considers both histor ical market events and forward-looking scenarios. A consistent stress testing methodology is applied to trading and non- trading books. The stress testing methodology assumes that management action would be lim ited dur ing a stress event, reflecting the expected decrease in market liqu id ity. Stress test scenarios are applied to interest rates, credit spreads, exchange rates, commodity prices and equity prices. Stress scenarios are reviewed and updated where necessary to reflect changes in risk profile and economic events. TRM reviews the stress testing results 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 ion of R isk Appetite. Group and business- wide stress testing are supplemented by legal entity stress testing, subject to the relevant local governance. ![]() 306 Standard Chartered – Annual Report 2022 Risk review Risk management approach Roles and responsib il it ies The Global Head, Enterprise Risk Management is responsible for the Risk Type Framework for Treasury Risk under the Enterprise Risk Management Framework. The Group Treasurer is supported by teams in Treasury and Finance to implement the Treasury Risk Type Framework as the first line of defence, and is responsible for managing Treasury Risk. At Regional and Country level, Chief Executive Officers supported by Regional and Country level Finance and Treasury teams are responsible for managing Treasury Risk as the first line of defence. Regional Treasury Chief Risk Officers and Country Chief Risk Officers for Treasury Risk (except Pension Risk) and Head of Pensions (for Pension Risk) are responsible for overseeing and challenging the first line of defence. Mit igat ion The Group develops polic ies to address mater ial Treasury Risks and aims to mainta in its risk profile with in R isk Appetite. In order to do this, metrics are set against Capital Risk, Liqu id ity 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 its and Management Act ion Triggers. Capital Risk In order to manage Capital Risk, strategic business and capital plans (Corporate Plan) are drawn up covering a five-year horizon which are approved by the Board annually. The plan ensures that adequate levels of capital, includ ing loss- absorbing capacity, and an effic ient m ix of the different components of capital are mainta ined to support our strategy and business plans. Treasury is responsible for the ongoing assessment of the demand for capital and the updating of the Group’s capital plan. Risk Appetite metrics includ ing cap ital, leverage, min imum requirement for own funds and elig ible l iab il ity (MREL) and double leverage are assessed with in the Corporate Plan to ensure that the strategy can be achieved with in r isk tolerances. Structural FX Risk The Group’s structural posit ion results from the Group’s non-US dollar investment in the share capital and reserves of subsid iar ies and branches. The FX translation gains, 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 manage its structural FX posit ion 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 igate the FX impact of such posit ions on its capital ratios. Liqu id ity and Funding Risk At Group, regional and country level we implement various business-as-usual and stress risk metrics and monitor these against Lim its and Management Act ion Triggers. In addit ion to these, where relevant, Monitor ing Metr ics are also set against specif ic r isks. This ensures that the Group mainta ins an adequate and well-divers ified l iqu id ity buffer, as well as a stable funding base, and that it meets its liqu id ity and funding regulatory requirements. The approach to managing risks and the Board Risk Appetite are assessed annually through the Internal Liqu id ity Adequacy Assessment Process. A funding plan is also developed for effic ient l iqu id ity project ions to ensure that the Group is adequately funded in the required currencies, to meet its obligat ions and cl ient funding needs. The funding plan is part of the overall Corporate Plan process align ing to the cap ital requirements. Interest Rate Risk in the Banking Book This risk arises from differences in the repric ing profile, interest rate basis, and optional ity of bank ing book assets, liab il it ies 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. Pension Risk Pension Risk is the potential for loss due to having to meet an actuarially assessed shortfall in the Group’s pension plans. Pension obligat ion r isk to a firm arises from its contractual or other liab il it ies to or w ith respect to an occupational pension plan or other long term benefit obligat ion. For a funded plan it represents the risk that addit ional contr ibut ions w ill need to be made because of a future shortfall in the funding of the plan or, for unfunded obligat ions, it represents the risk that the cost of meeting future benefit payments is greater than currently antic ipated. Pens ion Risk posit ion aga inst defined Risk Appetite metrics is reported to the Group Risk Committee. These metrics include the current IAS 19 defic it, and the total capital requirement (includ ing both P illar 1 and Pillar 2A capital) in respect of Pension Risk, both expressed as a number of basis points of RWA. Treasury Risk is defined as the “potential for insufficient capital, liquidity or funding to support our operations, #### the risk of reductions in earnings or value from movements in interest rates impacting banking book #### items and the potential for losses from a shortfall in the Group’s pension plans”. Risk Appetite Statement The Group should mainta in sufficient cap ital, liqu id ity and funding to support its operations, and an interest rate profile ensuring that the reductions in earnings or value from movements in interest rates impact ing bank ing book items does not cause material damage to the Group’s franchise. In addit ion, the Group should ensure its Pension plans are adequately funded. #### Treasury Risk ![]() 307 Standard Chartered – Annual Report 2022 Risk review and Capital review Recovery and Resolution Planning In line with PRA requirements, the Group mainta ins 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 ion. The Recovery Plan includes a set of recovery ind icators, an escalat ion framework and a set of management actions capable of being implemented in a stress. A Recovery Plan is also mainta ined w ith in each major entity, and all recovery plans are subject to period ic fire-dr ill testing. As the UK resolution authority, the 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. In support of this strategy, the Group has been developing a set of capabil it ies, arrangements and resources to achieve the required outcomes. On 10 June 2022, the Group and other major UK banks published their resolvabil ity d isclosures, alongside the BoE’s public assessment of the industry’s preparations for resolution. No major defic ienc ies were ident ified by the BoE on the Group’s resolution capabil ity, but there were some shortcomings and areas for further enhancement ident ified. Addressing these points remains a key prior ity for the Group. Sign ificant progress has been made and we are on track to meet the commitments made to the BoE. 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 il ity Committee (GALCO) 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 isat ion and ensures that the Group operates with in the internally approved Risk Appetite and other internal and external requirements relating to Treasury Risk (except Pension Risk) The Group Risk Committee and Regional Risk Committees provide oversight for Pension Risk. Regional and country oversight resides with regional and country Asset and Liab il ity Committees. Regions and countries must ensure that they remain in compliance with Group Treasury polic ies and pract ices, as well as local regulatory requirements. Decis ion-mak ing authorit ies and delegat ion The Group Chief Financ ial Officer has respons ib il ity for capital, funding and liqu id ity under the Senior Managers Regime. The GCRO has delegated the Risk Framework Owner responsib il it ies assoc iated with Treasury Risk to the Global Head, Enterprise Risk Management. The Global Head, Enterprise Risk Management delegates second-line oversight and challenge responsib il it ies to the Treasury Ch ief Risk Officer and Country Chief Risk Officers for Capital Risk, Liqu id ity and Funding Risk and Interest Rate Risk in the Banking Book and to Head of Pensions for Pension Risk. Monitor ing On a day-to-day basis, Treasury Risk is managed by Treasury, Finance and Country Chief Executive Officers. The Group regularly reports and monitors Treasury Risk inherent in its business activ it ies and those that arise from internal and external events. Internal risk management reports covering the balance sheet and the capital and liqu id ity posit ion are presented to the relevant country Asset and Liab il ity Committee. The reports contain key informat ion on balance sheet trends, exposures against Risk Appetite and supporting risk measures which enable members to make informed decis ions around the overall management of the balance sheet. In addit ion, an independent Treasury Chief Risk Officer as part of Enterprise Risk Management reviews the prudency and effectiveness of Treasury Risk management. Pension Risk is actively managed by the Head of Pensions and monitored by the Head of Country Risk, Scenario Analysis, Insurable and Pension Risk. The Head of Pensions ensures that accurate, complete and timely updates on Pension Risk are shared with the Head of Country Risk, Scenario Analysis and Pension Risk; Treasury CRO and the Global Head, ERM on a period ic bas is. 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 id ity considers the impact of extreme but plausible scenarios on its risk profile. A number of stress scenarios, some designed internally, some required by regulators, are run period ically. They provide an ins ight into the potential impact of sign ificant adverse events on the Group’s capital and liqu id ity posit ion and how this could be mit igated through appropr iate management actions to ensure that the Group remains with in the approved Risk Appetite and regulatory lim its. Daily liqu id ity stress scenarios are also run to ensure that the Group holds sufficient h igh-quality liqu id assets to w ithstand extreme liqu id ity events. ![]() 308 Standard Chartered – Annual Report 2022 Risk review Risk management approach Roles and responsib il it ies The Operational and Technology Risk Type Framework (O&T RTF) sets the roles and responsib il it ies in respect of Operational Risk for the Group, and is owned by the Global Head of Risk, Functions and Operational Risk (GHRFOR). This framework collectively defines the Group’s Operational Risk sub-types which have not been classif ied as PRTs and sets standards for the ident ification, control, mon itor ing and treatment of risks. These standards are applicable across all PRTs and risk sub-types in the O&T RTF. These risk sub-types relate to execution capabil ity, governance, report ing and obligat ions, legal enforceab il ity, and operat ional resil ience (includ ing cl ient service, change management, people management, safety and security, and technology risk). The O&T RTF reinforces clear accountabil ity for manag ing risk throughout the Group and delegates second line of defence responsib il it ies to ident ified subject matter experts. For each risk sub-type, the expert sets polic ies and standards for the organisat ion to comply w ith, and provides guidance, oversight and challenge over the activ it ies of the Group. They ensure that key risk decis ions are only taken by ind iv iduals with the requis ite sk ills, judgement, and perspective to ensure that the Group’s risk-return object ives are met. Mit igat ion 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 il it ies for the ident ification, control and monitor ing of r isks (applicable to all PRTs, risk sub-types and integrated risks). The RCSA is used to determine the design strength and reliab il ity of each process, and requires: • the recording of processes run by client segments, products and functions into a process universe • the ident ification of potent ial breakdowns to these processes and the related risks of such breakdowns • an assessment of the impact of the ident ified r isks based on a consistent scale • the design and monitor ing of controls to m it igate pr ior it ised risks • assessments of residual risk and timely actions for elevated risks. Risks that exceed the Group’s Operational and Technology Risk Appetite require treatment plans to address underlying causes. Governance committee oversight At Board level, the Board Risk Committee oversees the effective management of Operational Risk. At the executive level, the Group Risk Committee is responsible for the governance and oversight of Operational Risk for the Group, monitors the Group’s Operational and Technology Risk Appetite and relies on other key Group committees for the management of Operational Risk, in particular the Group Non-Financ ial R isk Committee (GNFRC). Regional business segments and functional committees also provide enterprise oversight of their respective processes and related operational risks. In addit ion, Country Non-F inanc ial Risk Committees (CNFRCs) oversee the management of Operational Risk at the country (or entity) level. In smaller countries, the responsib il it ies of the CNFRC may be exerc ised directly by the Country Risk Committee (for branches) or Executive Risk Committee (for subsid iar ies). Decis ion-mak ing authorit ies and delegat ion The O&T RTF is the formal mechanism through which the delegation of Operational Risk authorit ies is made. The GHRFOR places reliance on the respective Senior Managers who are outside the Risk function for second-line oversight of the risk sub-types through this framework. The Senior Managers may further delegate their second-line responsib il it ies to des ignated ind iv iduals at a global business, product and function level, as well as regional or country level. Monitor ing To deliver services to clients and to partic ipate in the financ ial services sector, the Group runs processes which are exposed to operational risks. The Group prior it ises and manages risks which are sign ificant to cl ients and to the financ ial serv ices sectors. Control ind icators are regularly mon itored to determine the residual risk the Group is exposed to. The residual risk assessments and reporting of events form the Group’s Operational Risk profile. The completeness of the Operational Risk profile ensures appropriate prior it isat ion and timel iness of r isk decis ions, includ ing r isk acceptances with 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 ity and sign ificance of the r isk. These Operational and Technology Risk Appetite metrics are consolidated on a regular basis and reported at relevant Group committees. This provides senior management with the relevant informat ion to inform their risk decis ions. Stress testing Stress testing and scenario analysis are used to assess capital requirements for operational risks. This approach considers the impact of extreme but plausible scenarios on the Group’s Operational Risk profile. A number of scenarios have been ident ified 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 ion and cyber secur ity. 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 ing legal risks). Risk Appetite Statement The Group aims to control operational and technology risks to ensure that operational losses (financial or reputat ional), includ ing any related to conduct of business matters, do not cause material damage to the Group’s franchise. #### Operational and Technology Risk ![]() 309 Standard Chartered – Annual Report 2022 Risk review and Capital review Roles and responsib il it ies The Group’s Information and Cyber Security Risk Type Framework (ICS RTF) defines the roles and responsib il it ies of the first and second lines of defence in managing and governing ICS Risk across the Group. It emphasises business ownership and ind iv idual accountabil ity. The Group Chief Transformation, Technology & Operations Officer (CTTO) has overall first line of defence responsib il ity for ICS Risk and is accountable for the Group’s ICS strategy. The Group Chief Information Security Officer (CISO) leads the development and execution of the ICS strategy. The first line also manages all key ICS Risks, breaches and risk treatment plans with oversight from Group Chief Information Security Risk Officer (CISRO). ICS Risk profile, Risk Appetite breaches and remediat ion status are reported at Board and Execut ive committees, alongside Business, Function and Country governance committees. The Group CISRO function with in Group R isk, led by the Group CISRO, is the second line of defence and sets the framework, policy, standards and methodology for assessing, scoring and prior it is ing ICS R isks across the Group. This function has overall responsib il ity for governance, oversight and independent challenge of first line’s pursuit of the ICS strategy. Group ICS Risk Framework Strategy remains the responsib il ity of the ICS Risk Framework Owner (RFO), delegated from the Group CRO to the Group CISRO. Mit igat ion ICS Risk is managed through the structured ICS Risk Type Framework, compris ing a r isk assessment methodology and supporting policy, standards and methodologies. These are aligned to industry recommended practice. We undertake an annual ICS Effectiveness Review to evaluate ICS Risk management practices in alignment with the Enterprise Risk Management Framework. In 2022, we uplifted the ICS RTF to include an updated ICS end-to-end Risk Management and Governance approach and continued the roll out of the threat-led scenario risk assessment across the Group. The Group CISRO function monitors compliance to the ICS RTF by review ing Group CISO’s risk assessments and conducting independent assurance reviews. Governance committee oversight The Board Risk Committee oversees the effective management of ICS Risk. The Group Risk Committee (GRC) has delegated authority to the Group Non-Financ ial R isk Committee (GNFRC) to ensure effective implementat ion 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 ing from the Bus inesses, Countries and Functions. Meanwhile the Cyber Security Advisory Forum (CSAF), chaired by the Group Chief Executive Officer, enables the Management Team, Group Chairman and non-executive directors to engage further on ICS, asking any questions freely at this non-governance forum. Decis ion-mak ing authorit ies and delegat ion The ICS RTF defines how the Group manages ICS Risk. The Group CISRO delegates authority to designated ind iv iduals through the ICS RTF, includ ing second-l ine ownership at a Business, Function, Region and Country level. The Group CISO is responsible for implement ing ICS R isk Management with in the Group, leverag ing Group Process Owners and Business CISOs. These stakeholders cascade ICS risk management into the Businesses, Functions and Countries to comply with the ICS RTF, policy and standards. Monitor ing Group CISO perform a threat-led risk assessment to ident ify key threats, in-scope applicat ions and key controls requ ired to ensure the Group remains with in R isk Appetite. The ICS Risk postures of all businesses, functions and countries are consolidated to present a holist ic Group-level ICS R isk posture for ongoing monitor ing. During these reviews, the status of each risk is assessed against the Group’s controls to ident ify any changes to impact and likel ihood, wh ich affects the overall risk rating. Group CISO and Group CISRO monitor the ICS Risk profile and ensure that breaches of Risk Appetite are escalated to the appropriate governance committee or authority levels for adequate remediat ion and track ing. A dedicated Group CISRO team is supporting this work by executing offensive security testing exercises, which shows wider picture of risk security posture what leads to better vis ib il ity on potent ial risks “in flight”. Stress testing Stress testing and scenario analysis are used to assess capital requirements for ICS Risk. Specif ic scenar ios are developed annually in collaboration between first- and second-line ICS teams, incorporating extreme but plausible ICS Risk events. #### The Group defines Information and Cyber Security Risk as the risk to the Group’s assets, operations and indiv iduals due to the potential for unauthorised access, use, disclosure, disruption, modification, or #### destruction of information assets and/orinformation systems. Risk Appetite Statement The Group has zero appetite for very high ICS residual risks and low appetite for High ICS residual risks which result in loss of services, data or funds. The Group will implement an effective ICS control environment and proactively ident ify and respond to emerging ICS threats in order to lim it ICS inc idents impact ing the Group’s franch ise. #### Information and Cyber Security (ICS) Risk ![]() 310 Standard Chartered – Annual Report 2022 Risk review Risk management approach Roles and responsib il it ies The Group Head, Conduct, Financ ial Cr ime and Compliance (Group Head, CFCC) as Risk Framework Owner for Compliance Risk provides support to senior management on regulatory and compliance matters by: • provid ing interpretat ion and adv ice on CFCC regulatory requirements and their impact on the Group • setting enterprise-wide standards for management of compliance risks through the establishment and maintenance of the Compliance Risk Type Framework (Compliance RTF) • setting a programme for monitor ing Compl iance Risk. Group Head, CFCC also performs the Financ ial Conduct Authority (FCA) controlled function and senior management function of Compliance Risk Oversight in accordance with the requirements set out by the FCA. The Compliance RTF sets out the Group’s overall approach to the management of Compliance Risk and the associated roles and responsib il it ies. All activ it ies that the Group engages in must be designed to comply with the applicable laws and regulations in the countries in which we operate. The CFCC function provides second line oversight and challenge of the first-line risk management activ it ies that relate to Compliance Risk. Where Compliance Risk arises, or could arise, from failure to manage another Princ ipal R isk Type or sub-type, the Compliance RTF outlines that the responsib il ity rests with the respective Risk Framework Owner or control function to ensure that effective oversight and challenge of the first line can be provided by the appropriate second-line function. Each of the assigned second-line functions has responsib il it ies includ ing mon itor ing relevant regulatory developments from Non-Financ ial Serv ices regulators at both Group and country levels, policy development, implementat ion, and val idat ion as well as oversight and challenge of first-line processes and controls. In addit ion, the role of CFCC has been further clar if ied in 2022 in relation to Compliance risk and the boundary of responsib il it ies w ith other Princ ipal R isk Types. Mit igat ion The CFCC function develops and deploys relevant polic ies and standards setting out requirements and controls for adherence by the Group to ensure continued compliance with applicable laws and regulations. Through a combinat ion of standard setting, risk assessment, control monitor ing and assurance activ it ies, the Compliance Risk Framework Owner seeks to ensure that all polic ies are operat ing as expected to mit igate the risk that they cover. The installat ion of appropr iate processes and controls is the primary tool for the mit igat ion of Compliance Risk. In this, the requirements of the Operational and Technology Risk Type Framework are followed to ensure a consistent approach to the management of processes and controls. Deployment of technological solutions to improve efficienc ies and simpl ify processes has cont inued in 2022. These include launch of a new platform to manage conflict review for Outside Business Activ ity, Personal Account Deal ing, Close Financ ial Relat ionsh ip and Deals / Reportable Events, and alongside dig ital chatbots, Adv isor Connect to connect with an Advisor for complex queries. Governance committee oversight At a management level, Compliance Risk and the risk of non-compliance with laws and regulations resulting from failed processes and controls are overseen by the respective Country, Business, Product and Function Non-Financ ial R isk Committees includ ing the R isk and CFCC Non-Financ ial R isk Committee for CFCC owned processes. Relevant matters, as required, are further escalated to the Group Non-Financ ial R isk Committee and Group Risk Committee. At Board level, oversight of Compliance Risk is primar ily prov ided by the Audit Committee, and also by the Board Risk Committee for relevant issues. While not a formal committee, the CFCC Oversight Group provides oversight of CFCC risks includ ing the effect ive implementat ion of the Compl iance RTF. The Compliance Risk Framework Owner established a Regulatory Change Oversight Forum to have vis ib il ity and overs ight of material and/or complex large-scale regulatory change emanating from Financ ial serv ices regulators impact ing Non-F inanc ial R isks. A CFCC Policy Council has also been established to provide oversight, challenge and direct ion to Compl iance and FCC Policy Owners on material changes and posit ions taken in CFCC-owned polic ies, includ ing issues relating to regulatory interpretat ion and Group’s CFCC r isk appetite. Decis ion-mak ing authorit ies and delegat ion The Compliance Risk Type Framework is the formal mechanism through which the delegation of Compliance Risk authorit ies is made. The Group Head, CFCC has the authority to delegate second-line responsib il it ies w ith in the CFCC funct ion to relevant and suitably qualif ied ind iv iduals. Monitor ing The monitor ing of controls des igned to mit igate the r isk of regulatory non-compliance in processes is governed in line with the Operational and Technology Risk Type Framework. The Group has a monitor ing and report ing process in place for Compliance Risk, which includes escalation and reporting to Risk and CFCC Non-Financ ial R isk Committee, Group Non- Financ ial R isk Committee, Group Risk Committee, Board Risk Committee and Audit Committee, as appropriate. Stress testing Stress testing and scenario analysis are used to assess capital requirements for Compliance Risk and form part of the overall scenario analysis portfolio managed under the Operational and Technology Risk Type Framework. Specif ic scenar ios 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 ificant Compl iance Risk tail events. This approach considers the impact of extreme but plausible scenarios on the Group’s Compliance Risk 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 ity of the markets 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 related to regulatory non- compliance; recognis ing that wh ilst inc idents are unwanted, they cannot be entirely avoided. #### Compliance Risk ![]() 311 Standard Chartered – Annual Report 2022 Risk review and Capital review #### The Group defines Financial Crime Risk as the potential for legal or regulatory penalties, material financial loss #### or reputational damage resulting from the failure to comply with applicable laws and regulations relating to internat #### ional sanctions, anti-money laundering, anti-bribery and corruption, and fraud. Risk Appetite Statement The Group has no appetite for breaches in laws and regulations related to financ ial cr ime, recognis ing that wh ile inc idents are unwanted, they cannot be entirely avoided. #### Financial Crime Risk Roles and responsib il it ies The Group Head, CFCC has overall responsib il ity for Financ ial Crime Risk and is responsible for the establishment and maintenance of effective systems and controls to meet legal and regulatory obligat ions in respect of Financ ial Cr ime Risk. The Group Head, CFCC is the Group’s Compliance and Money-Laundering Reporting Officer and performs the FCA controlled function and senior management function in accordance with the requirements set out by the FCA, includ ing those set out in their handbook on systems and controls. As the first line, the business unit process owners have responsib il ity for the applicat ion of pol icy controls and the ident ification and measurement of r isks relating to financ ial crime. Business units must communicate risks and any policy non-compliance to the second line for review and approval following the model for delegation of authority. Mit igat ion There are four Group polic ies in support of the Financ ial Cr ime Risk Type Framework: • Group Anti-Bribery and Corruption Policy • Group Anti-Money Laundering and Counter Terrorist Financ ing Pol icy • Group Sanctions Policy • Group Fraud Risk Management Policy. The Group operates risk-based assessments and controls in support of its Financ ial Cr ime Risk programme, includ ing (but not lim ited to): • Group Risk Assessment - the Group monitors enterprise- wide Financ ial Cr ime Risks through the CFCC Risk Assessment process consist ing of F inanc ial Cr ime Risk and Compliance Risk assessments. The Financ ial Cr ime Risk assessment is a Group-wide risk assessment undertaken annually to assess the inherent Financ ial Cr ime Risk exposures and the associated processes and controls by which these exposures are mit igated. • Financ ial Cr ime Surveillance – risk-based systems and processes to prevent and detect financial cr ime. The strength of controls is tested and assessed through the Group’s Operational and Technology Risk Type Framework, in addit ion to overs ight by CFCC Assurance. Governance committee oversight Financ ial Cr ime Risk with in the Group is governed by the Group Financ ial Cr ime Risk Committee (GFCRC) and the Group Non-Financ ial R isk Committee (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 ial Crime Risk, while the GNFRC is responsible for ensuring effective oversight of Operational Risk relating to Non- Financ ial R isks includ ing Fraud R isk. Given the progress made on the Board Financ ial Cr ime Risk Committee’s (BFCRC) purpose with respect to financ ial cr ime risk management, the Board reallocated the work of the BFCRC to the Audit Committee, Board Risk Committee and Board with effect from 1 April 2022. The reallocation of BFCRC oversight enables a more holist ic and efficient exam inat ion and d iscuss ion of r isks that are closely linked. Decis ion-mak ing authorit ies and delegat ion The Financ ial Cr ime Risk Type Framework is the formal mechanism through which the delegation of Financ ial Cr ime Risk authorit ies is made. The Group Head, CFCC is the Risk Framework Owner for Financ ial Cr ime Risk under the Group’s Enterprise Risk Management Framework. Certain aspects of Financ ial Cr ime Compliance, second-line oversight and challenge, are delegated with in the CFCC funct ion. Approval frameworks are in place to allow for risk-based decis ions on client onboarding, potential breaches of sanctions regulation or policy, situat ions of potent ial money laundering (and terrorist financ ing), br ibery and corruption or internal and external fraud. Monitor ing The Group monitors Financ ial Cr ime Risk compliance against a set of Risk Appetite metrics that are approved by the Board. These metrics are reviewed period ically and reported regularly to the Group Financ ial Cr ime Risk Committee, Group Non-Financ ial R isk Committee, Board and Group Risk Committees, and Board Audit Committee. Stress testing The assessment of Financ ial Cr ime vulnerabil it ies under stressed condit ions or extreme events w ith a low likel ihood of occurring is carried out through enterprise stress testing where scenario analysis is used to assess capital requirements for Financ ial Cr ime Risk as part of the overall scenario analysis portfolio managed under the Operational and Technology Risk Type Framework. Specif ic scenar ios 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 ificant F inanc ial Cr ime Risk events. This approach considers the impact of extreme but plausible scenarios on the Group’s Financ ial Cr ime Risk profile. ![]() 312 Standard Chartered – Annual Report 2022 Risk review Risk management approach Roles and responsib il it ies The Global Head, Enterprise Risk Management is the Risk Framework Owner for Model Risk under the Group’s Enterprise Risk Management Framework. Responsib il ity for the oversight and implementat ion of the Model R isk Type Framework is delegated to the Global Head, Model Risk Management. The Model Risk Type Framework sets out clear accountabil ity and roles for Model Risk management through a Three Lines of Defence model. First-line ownership of Model Risk resides with Model Sponsors, who are business or function heads and assign a Model Owner for each model and provide oversight of Model Owner activ it ies. Model Owners are the accountable executive for the model development process, represent model users, and are responsible for the overall model design process includ ing engagement w ith Model Users to solic it feedback on the proposed model solution. Model Owners also coordinate the submiss ion of models for val idat ion and approval and ensure appropriate model implementat ion and use. Model Developers are responsible for the development of models, acting as a delegate of the Model Owner, and are responsible for documenting and testing the model in accordance with Policy requirements, and for engaging with Model Users as part of the development process. Second-line oversight is provided by Model Risk Management, which comprises Group Model Validat ion (GMV) and Model R isk Policy and Governance. The Group adopts an industry standard model defin it ion as specif ied in the Group Model Risk Policy, together with a scope of applicab il ity represented by defined model family types as detailed with in the Model R isk Type Framework. Model Owners are accountable for ensuring that all models under their purview have been independently validated by GMV. Models must be validated before use and then on an ongoing basis, with schedule determined by the perceived level of model risk associated with the model, or more frequently if there are specif ic regulatory requ irements. GMV independently reviews and grades models, in line with design object ives, bus iness uses and compliance requirements, and highl ights ident ified model r isks by rais ing model related issues. The Model Risk Policy and Governance team provides oversight of Model Risk activ it ies, performing regular Model Risk Assessment and risk profile reporting to senior management. For countries or legal entit ies that are in scope of the Model Risk Type Framework, the Group Model Risk Policy specif ies the Country Model Risk Framework Owner, delegated to the Country Chief Risk Officer, as accountable for ensuring model usage is correctly ident ified w ith in the country or legal ent ity and a suitable local governance process is established to accommodate models requir ing local regulatory approval and for any other specif ic local regulatory requ irements at the country or legal entity level. GMV will take into considerat ion any country or legal entity specif ic cons iderat ions when validat ing a model, the model would be endorsed at Group level and then approved for use in the country or legal entity via the local governance process. Mit igat ion The Model Risk policy and standards define requirements for model development and validat ion act iv it ies, includ ing regular model performance monitor ing. Any model issues or deficienc ies ident ified through the val idat ion process are mit igated through the appl icat ion of model mon itor ing, model overlays and/or a model redevelopment plan, which undergo robust review, challenge and approval. Operational controls govern all Model Risk-related processes, with regular risk assessments performed to assess appropriateness and effectiveness of those controls, in line with the Operational and Technology Risk Type Framework, with remediat ion plans implemented where necessary. Governance committee oversight At Board level, the Board Risk Committee exercises oversight of Model Risk with in the Group. At the execut ive level, the Group Risk Committee has appointed the Model Risk Committee to ensure effective measurement and management of Model Risk. Sub-committees such as the Credit Model Assessment Committee, Traded Risk Model Assessment Committee and Financ ial Cr ime Compliance Model Assessment Committee oversee their respective in-scope models and escalate material Model Risks to the Model Risk Committee. In parallel, business and function-level risk committees provide governance oversight of the models used in their respective processes. Decis ion-mak ing authorit ies and delegat ion The Model Risk Type Framework is the formal mechanism through which the delegation of Model Risk authorit ies is made. The Global Head, Enterprise Risk Management delegates authorit ies to des ignated ind iv iduals or Policy Owners through the RTF. The second-line ownership for Model Risk at country level is delegated to Country Chief Risk Officers at the applicable branches and subsid iar ies. The Model Risk Committee is responsible for approving models for use. Model approval authority is also delegated to the Credit Model Assessment Committee, Traded Risk Model Assessment Committee, Financ ial Cr ime Compliance Model Assessment Committee and ind iv idual designated model approvers for less material models. #### The Group defines Model Risk as potential loss that may occur as a consequence of decisions or the risk of mis-estimat #### ion that could be principally based on the output of models, due to errors in the development, implementat #### ion or use of such models. Risk Appetite Statement The Group has no appetite for material adverse impl icat ions aris ing from m isuse of models or errors in the development or implementat ion of models; whilst accepting model uncertainty. #### Model Risk ![]() 313 Standard Chartered – Annual Report 2022 Risk review and Capital review Monitor ing The Group monitors Model Risk via a 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 Risk Committee, Group Risk Committee and Model Risk Committee. These metrics and thresholds are reviewed on an annual basis to ensure that threshold calibrat ion rema ins appropriate and the themes adequately cover the current risks. Models undergo regular monitor ing based on the ir level of perceived Model Risk, with monitor ing results and breaches presented to Model Risk Management and delegated model approvers. Model Risk Management produces Model Risk reports covering the model landscape, which include performance metrics, ident ified model issues and remediat ion plans. These are presented for discuss ion at the Model R isk governance committees 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 ions. Compl iance with Model Risk management requirements and regulatory guidel ines are also assessed as part of each stress test, with any ident ified gaps mit igated through model overlays and defined remediat ion plans. ![]() 314 Standard Chartered – Annual Report 2022 Risk review Risk management approach #### The Group defines Reputational and Sustainability Risk as the potential for damage to the franchise (such as loss of trust, earnings, or market capitalisation), because of stakeholders taking a negative view of the #### Group through actual or perceived actions or inactions, including a failure to uphold responsible business #### conduct or lapses in our commitment to do no significant environmental and social harm through our #### client, third-party relationships or our own operations. Risk Appetite Statement The Group aims to protect the franchise from material damage to its reputation by ensuring that any business activ ity is satisfactor ily assessed and managed by the appropriate level of management and governance oversight. This includes a potential failure to uphold responsible business conduct or lapses in our commitment to do no sign ificant env ironmental and social harm. #### Reputational and Sustainability Risk Reputational and Sustainab il ity Risk continues to be an area of growing importance, driv ing a need for strateg ic transformation across business activ it ies and risk management to ensure that we uphold the princ iples of Responsible Business Conduct and continue to do the right thing for our stakeholders, the environment and affected communit ies. Our pol icy frameworks and Posit ion Statements integrate our values into our core working practices by articulat ing our approach to cl ients in sensit ive sectors and our commitments to climate change and human rights. We continue to progress on our transformation agenda, driv ing the Bank’s Net Zero commitments and build ing a lead ing sustainable franchise. Our progress to date includes the setting of public Net Zero targets, leadership in voluntary carbon markets, and ongoing support of innovat ion in green, transit ion, and soc ial finance. The growth of Sustainable Finance products offering across the banking industry has prompted stronger and more robust regulations to prevent greenwashing. We are moving quickly to integrate anti-greenwashing polic ies, standards and controls into our risk management activ it ies. As we prepare for the varying regulatory developments across our footprint, we continue to invest in data and infrastructure to reinforce our compliance efforts and are actively engaging with several of our regulatory supervisors. In 2022, we have increased our capabil it ies in horizon scanning and focused on developing an effective operating model to manage regulatory change to bolster our efforts to systematically track emerging risks across our business operations and supply chains. Roles and responsib il it ies The Global Head, Enterprise Risk Management is the Risk Framework Owner for Reputational and Sustainab il ity Risk under the Group’s Enterprise Risk Management Framework. The responsib il ity for Reputational and Sustainab il ity Risk management is delegated to Reputational and Sustainab il ity Risk Leads in ERM as well as Chief Risk Officers at region, country and client-business levels. They constitute the second line of defence, overseeing and challenging the first line of defence, which resides with the Chief Executive Officers, Business Heads, Product Heads and Function Heads in respect of risk management activ it ies of reputational and sustainab il ity-related risks respectively. In the first line of defence, we have in 2022 appointed a Chief Sustainab il ity Officer (“CSO”) whose remit spans across both Sustainab il ity strategy and client solutions. Reporting to the CSO is our Sustainab il ity Strategy team, who manages the overall Group Sustainab il ity strategy and engagement. On client solutions, the Sustainable Finance team is responsible for pan-bank sustainable finance products and frameworks to help ident ify green and susta inable finance and transit ion finance opportunit ies to a id our clients on their sustainab il ity journey. Furthermore, the Environmental and Social Risk Management team (ESRM) provides dedicated advisory and challenge to businesses on the management of environmental and social risks and impacts aris ing from the Group’s client relationsh ips and transact ions. Mit igat ion In line with the princ iples of Respons ible Business Conduct and Do No Sign ificant Harm, the Group deems Reputat ional and Sustainab il ity Risk to be driven by: • negative shifts in stakeholder perceptions, includ ing sh ifts as a result of greenwashing claims, due to decis ions related to clients, products, transactions, third parties and strategic coverage • potential material harm or degradation to the natural environment (environmental) through actions/inact ions of the Group • potential material harm to ind iv iduals or communit ies (social) risks through actions/inact ions of the Group. The Group’s Reputational Risk policy sets out the princ ipal sources of Reputational Risk driven by negative shifts in stakeholder perceptions as well as responsib il it ies, control and oversight standards for ident ify ing, assessing, escalating and effectively managing Reputational Risk. The Group takes a structured approach to the assessment of risks associated with how ind iv idual client, transaction, product and strategic coverage decis ions may affect percept ions of the organisat ion and its activ it ies, based on explic it pr inc iples includ ing, but not l im ited to human r ights, gambling, defence and dual use goods. Whenever potential for stakeholder concerns is ident ified, issues are subject to prior approval by a management authority commensurate with the material ity of matters being considered. Such authorit ies may accept or decline the risk or impose condit ions upon proposals, to protect the Group’s reputation. In 2022, the Reputational Risk Policy was enhanced to include more rigorous assessment of clients operating in sectors which have heightened climate risk. The Group’s Sustainab il ity Risk policy sets out the requirements and responsib il it ies for manag ing environmental and social risks for the Group’s clients, third parties and in our own operations, as guided by various industry standards such as the OECD’s Due Dil igence Gu idance for Responsible Business Conduct, Equator Princ iples, UN Susta inable Development Goals and the Paris Agreement. ![]() 315 Standard Chartered – Annual Report 2022 Risk review and Capital review • Clients are expected to adhere to min imum regulatory and compliance requirements, includ ing cr iter ia from the Group’s Posit ion Statements. In 2022, the Susta inab il ity Risk Policy was enhanced to include the monitor ing of inherent risks related to Sustainable Finance products and transactions and clients throughout their lifecycle - from labelling to disclosures. • Third parties such as 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. • With in our operat ions, the Group seeks to min im ise its impact on the environment and have targets to reduce energy, water and waste. Reputational and Sustainab il ity Risk polic ies and standards are applicable to all Group entit ies. However, local regulators in some markets may impose addit ional requ irements on how banks manage and track Reputational and Sustainab il ity Risk. In such cases, these are complied with in addit ion to Group polic ies and standards. Governance committee oversight At Board level, the Culture and Sustainab il ity Committee provides oversight for our Sustainab il ity strategy while the Board Risk Committee oversees Reputational and Sustainab il ity Risk as part of the ERMF. The Group Risk Committee (GRC) provides executive-level committee oversight and delegates the authority to ensure effective management of Reputational and Sustainab il ity Risk to the Group Responsib il ity and Reputational Risk Committee (GRRRC). The GRRRC’s remit is to: • Challenge, constrain and, if required, stop business activ it ies where Reputational and Sustainab il ity risks are not aligned with the Group’s Risk Appetite. • Make decis ions on Reputat ional and Sustainab il ity Risk matters assessed as high or very high based on the Group’s Reputational and Sustainab il ity Risk material ity assessment matrix, and matters escalated from the regions or client businesses. • Provide oversight of material Reputational and Sustainab il ity Risk and/or thematic issues aris ing from the potential failure of other risk types. • Identify topical and emerging risks, as part of a dynamic risk scanning process • Monitor exist ing or new regulatory pr ior it ies The Sustainable Finance Governance Committee, appointed by the GRRRC provides leadership, governance and oversight for deliver ing the Group’s susta inable finance offering. This includes: • Review ing and support ing the Group’s frameworks for Green and Sustainable Products, and Transit ion F inance for approval of GRRRC. These frameworks set out the guidel ines for approval of products and transact ions which carry the sustainable finance and/or transit ion finance label. • Decis ion-mak ing authority on the elig ib il ity of a susta inable asset for any risk-weighted assets (RWA) relief. • Approving sustainable finance and transit ion finance labels for products in addit ion to regular product management and governance • Review ing the reputat ional risks aris ing from greenwash ing claims related to Sustainable Finance products and services. The Group Non-Financ ial R isk Committee has oversight of the control environment and effective management of Reputational Risk incurred when there are negative shifts in stakeholder perceptions of the Group due to failure of other PRTs. The regional and client-business risk committees provide oversight on the Reputational and Sustainab il ity Risk profile with in the ir remit. The Country Non-Financ ial R isk Committee (CNFRC) provides oversight of the Reputational and Sustainab il ity Risk profile at a country level. Decis ion-mak ing authorit ies and delegat ion The Reputational and Sustainab il ity RTF is the formal mechanism through which the delegation of Reputational and Sustainab il ity Risk authorit ies is made. The Global Head, Enterprise Risk Management delegates risk acceptance authorit ies for stakeholder percept ion risks to designated ind iv iduals 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 team must review and support the risk assessments for clients and transactions and escalate to the Reputational and Sustainab il ity Risk leads as required. Monitor ing Exposure to stakeholder perception risks aris ing from transactions, clients, products and strategic coverage are monitored through established triggers outlined in risk material ity matr ices to prompt the right levels of risk-based considerat ion by the first l ine and escalations to the second line where necessary. Risk acceptance decis ions and themat ic trends are also being reviewed on a period ic bas is. Exposure to Sustainab il ity Risk is monitored through triggers embedded with in the first-l ine processes where environmental and social risks are considered for clients and transactions via the Environmental and Social Risk Assessments and considered for vendors in our supply chain through the Modern Slavery questionna ires. Furthermore, monitor ing and report ing on the risk appetite metrics ensures that there is appropriate oversight by Management Team and Board over performance and breaches of thresholds across key metrices namely in concentration of material reputational risk, level of alignment with Group’s Net Zero aspirat ions and Pos it ion Statements, and modern slavery risks in our suppliers. 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 id ity providers in a particular market might have, or what the impl icat ions might be for supporting part of the organizat ion in order to protect the brand. As Sustainab il ity Risk continues to evolve as an area of emerging regulatory focus with various markets developing ESG regulatory guidance, we are keeping pace with external developments to enable us to explore meaningful scenario analysis in the future with the aim of advancing Reputational and Sustainab il ity Risk management. ![]() 316 Standard Chartered – Annual Report 2022 Risk review Risk management approach The Group recognises Climate Risk as an Integrated Risk Type. Climate Risk is defined as the potential for financial loss and non-financial detr iments aris ing from climate change and society’s response to it. Risk Appetite Statement The Group aims to measure and manage financ ial and non-financial r isks from climate change, and reduce emiss ions related to our own act iv it ies and those related to the financing of cl ients 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 in the ERMF, our central risk framework in 2019. We have made further progress this year in embedding Climate risk considerat ions across the impacted PRTs and by using the results from our management scenario analysis, we are build ing a good understand ing of the markets and industr ies where the effects of cl imate change will have the greatest impact. However, it is still a relatively nascent risk area which will mature and develop over time, particularly as data availab il ity improves. Roles and responsib il it ies The three lines of defence model as per the Enterprise Risk Management Framework applies to Climate Risk. The GCRO has the ultimate second-line and senior management responsib il ity for Climate Risk. The GCRO is supported by the Global Head, Enterprise Risk Management who has day-to- day oversight and central responsib il ity for second-line Climate Risk activ it ies. As Climate Risk is integrated into the relevant PRTs, second-line responsib il it ies l ie with the Risk Framework Owner (at Group, regional and country level), with subject matter expertise support from the central Climate Risk team. Mit igat ion As an Integrated Risk Type manifests through other PRTs, risk mit igat ion activ it ies are specif ic to ind iv idual PRTs. The Group has made progress to integrate Climate Risk into PRT processes. Climate Risk assessments are considered as part of Reputational and Sustainab il ity transaction reviews for clients and transactions in high carbon sectors. We have directly engaged with clients on their adaptation and mit igat ion plans using client level Climate Risk questionna ires and integrated climate risk into the credit process for ~70% of our corporate client exposure in CCIB. As part of quarterly credit portfolio reviews in CPBB, physical risk assessments for the resident ial mortgage portfol ios are also being monitored for concentration levels. The Traded Risk stress testing framework covers market impacts from Climate Risk – this includes a transit ion r isk and two physical risk scenarios. Physical and transit ion r isk ratings for sovereigns are widely used across the Group for risk management and reporting purposes. The focus for Operational and Technology Risk was orig inally on Property, Resil ience and Th ird-Party Risk management, and is now being expanded to material technology arrangements. We have also completed liqu id ity risk assessments for our top liqu id ity providers. Relevant polic ies and standards across PRTs have been updated to factor in Climate Risk considerat ions and a focus area for 2022 was to bu ild out our risk management, data and modelling capabil it ies. 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 an executive level, the Group Risk Committee (GRC) oversees implementat ion of the Climate Risk workplan. The GRC has also appointed a Climate Risk Management Committee consist ing of sen ior representatives from the Business, Risk, Strategy and other functions such as Compliance, Audit and Finance. The Climate Risk Management Committee meets at least six times a year to oversee the implementat ion of Cl imate Risk workplan and progress in meeting regulatory requirements, monitor the Climate Risk profile of the Group and review Climate Risk- related disclosures and stress tests. We have also strengthened country and regional governance oversight for the Climate Risk profile across our key markets in 2022. Tools and methodologies Applying exist ing r isk management tools to quantify Climate Risk is challenging given inherent data and methodology challenges, includ ing the need to be forward-look ing over long time horizons. To quantify climate physical and transit ion risk we leverage and have invested in a number of areas, includ ing tools and partnersh ips: • 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 ion r isk and temperature alignment. • Standard & Poor – we are leveraging S&P and Trucost’s wealth of climate data covering asset locations, energy mixes and emiss ions. • 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. • Deloitte – we are working with Deloitte to build internal IFRS9 and stress testing models. Decis ion-mak ing authorit ies and delegat ion The Global Head, Enterprise Risk Management is supported by a centralised Climate Risk team with in the ERM funct ion. The Global Head, Climate Risk and Net Zero Oversight is responsible for ensuring and executing the delivery of the Climate Risk workplan which will define decis ion-mak ing authorit ies and delegat ions across the Group. ![]() 317 Standard Chartered – Annual Report 2022 Risk review and Capital review Monitor ing The Climate Risk Appetite Statement is approved and reviewed annually by the Board, following the recommendation of the Board Risk Committee. The PLC Group has developed its first-generation Climate Risk reporting and Board/Management Team Level Risk Appetite metrics and this will continue to be enhanced in 2023. Management informat ion and R isk Appetite metrics are also being progressively rolled out at the regional and country level. Stress testing As Climate Risk intens ifies over t ime, the future global temperature rise will depend on today’s transit ion pathway. Consider ing d ifferent transit ion scenar ios is crucial to assessing Climate Risk over the next 10, 20 and 50 years. Stress testing and scenario analysis are used to assess capital requirements for Climate Risk and since 2020 physical and transit ion r isks have been included in the PLC Group Internal Capital Adequacy Assessment Process (ICAAP). In 2022, the PLC Group undertook a number of Climate Risk stress tests, includ ing by the Monetary Author ity of Singapore and internal management scenario analysis. We will rely on these stress tests to understand the Group level vulnerabil it ies given the sign ificant overlap between SC Bank and PLC Group’s activ it ies. In 2023, the PLC Group intends to extend its management scenario capabil it ies, which will strengthen business strategy and financial plann ing and support the PLC Group’s net zero journey. ![]() 318 Standard Chartered – Annual Report 2022 Risk review Risk management approach The Group recognises Digital Assets Risk as an Integrated Risk Type. Digital Assets Risk is defined as #### the potential for regulatory penalties, financial loss and/or reputational damage to the Group resulting from dig #### ital assets exposure or digital assets related activities arising from the Group’s Clients, Products and Projects. Risk Appetite Statement As Dig ital Assets R isk manifests through the various PRTs, the specif ic R isk Appetite statements for the PRTs apply. #### Digital Assets Risk Dig ital Assets (DA) R isk has been managed under the Dig ital Assets Risk Management Approach since 2020 and was formalised as an Integrated Risk Type (previously known as material cross cutting risk) with in the Enterpr ise Risk Management Framework (ERMF). Dig ital Assets R isk follows the prescribed robust risk management practices across the PRTs, with specif ic expert ise applied from Dig ital Assets experts. Risk management practices take guidance from the “Dear CEO” letters published by the Prudential Regulatory Authority and the Financ ial Conduct Author ity in June 2018, with updated notices in June 2022. This is a developing risk area which will mature and stabil ise over t ime as the technology and associated research becomes more established. Roles and responsib il it ies The three lines of defence model defined in the ERMF applies to Dig ital Assets R isk. The GCRO has the second-line and senior management responsib il ity for Dig ital Assets R isk with respect to the framework. The respective Business Segments Senior Managers are responsible for the overall management of Dig ital Assets in it iat ives w ith in the ir segments. The GCRO is supported by the Global Head, Enterprise Risk Management and the Global Head, Dig ital Assets R isk Management who have day-to-day oversight and central responsib il ity for second line Dig ital Assets R isk activ it ies. As Dig ital Assets R isk is integrated into the relevant PRTs, Risk Framework Owners (RFOs) and dedicated Subject Matter Experts (SMEs) across the PRTs also have second line responsib il it ies for D ig ital Assets R isk. Mit igat ion The Group deploys a DA specif ic pol icy to outline incremental risk management requirements for DA related activ it ies. The Group’s polic ies for other PRTs also include DA requirements where relevant Risk mit igat ion activ it ies are also specif ic to ind iv idual PRTs and the Group has undertaken development and integrat ion of D ig ital Assets R isk into the PRT processes. Dig ital Assets R isk Assessments are conducted on certain higher-risk DA related Projects and Products. These specif ic risk assessments detail the specif ic inherent risks, residual risks, controls and mit igants across the PRTs and are rev iewed and supported by the respective RFOs and DA SMEs. Governance committee oversight Board-level oversight is exercised through the Board Risk Committee (BRC), and DA Risk updates are provided to the Board and BRC, as requested. At the executive level, the Group Risk Committee (GRC) oversees the risk management of DA. The GCRO has also appointed a dedicated Dig ital Assets R isk Committee (DRC) consist ing of sen ior representatives, RFOs and SMEs across the Group includ ing the bus iness, risk, and other functions such as legal. The DRC meets at the pre- defined frequency, a min imum of four t imes per year, to review and assess the detailed risk assessments related to DA Projects and Products, discuss development and implementat ion of the DA r isk management, and to provide structured governance around DA. Decis ion-mak ing authorit ies and delegat ion The Global Head, Enterprise Risk Management is supported by a centralised DA team with in the ERM funct ion and is responsible for the DA framework. The respective PRT RFOs and SMEs util ise dec is ion mak ing authorit ies granted to them with in the ir respective PRTs or in ind iv idual capacit ies. Monitor ing Dig ital Assets are mon itored through the exist ing Group R isk Appetite metrics across the PRTs. In addit ion, spec if ic D ig ital Assets Risk Appetite metrics are approved and reviewed annually by GRC. DA decis ions relat ing to other PRTs are taken with in the author it ies for the respect ive PRT. Stress testing Stress testing and scenario analysis are used to help assess capital requirements for Dig ital Assets R isk and form part of the overall scenario analysis portfolio managed under the Operational and Technology Risk Type Framework. Specif ic scenarios are developed annually with collaboration between the business, which owns and manages the risk, and the DA Risk function, to consider relevant DA scenarios. This approach considers the impact of extreme but plausible scenarios on the PLC Group’s capital profile with respect to DA. ![]() 319 Standard Chartered – Annual Report 2022 Risk review and Capital review #### The Group recognises Third Party Risk as an Integrated Risk Type. Third Party Risk is defined as the potential for loss or adverse impact from failure to manage multiple #### risks arising from the use of Third Parties, and is the aggregate of these risks. Risk Appetite Statement This IRT is supported by Risk Appetite metrics embedded with in relevant PRTs. The engagement of Third Parties is essential for the Group to operate efficiently and effect ively. This may introduce incremental risks which, if not managed correctly, could result in regulatory non-compliance, financ ial loss and/or adverse impact to clients. We continue to enhance our polic ies, standards, processes and controls to ensure we safely manage any incremental risks introduced by the use of Third Parties. #### Third Party Risk Roles and Responsib il it ies The Global Head of Risk, Functions and Operational Risk has second line oversight responsib il ity for Third Party Risk as defined in the Enterprise Risk Management Framework. The three lines of defence model applies to Third Party Risk, and roles and responsib il it ies are further defined in the Third Party Risk Management Policy and Standard. It is important to note that as an Integrated Risk Type, the risks associated with the management of Third Parties material ise across mult iple PRTs. The Risk Framework Owners for the PRTs are therefore responsible for embedding requirements to manage Third Party Risk with in the ir Risk Type Frameworks, Polic ies and Standards as appropriate, and ensuring compliance to the min imum requ irements defined by the Global Head of Risk, Functions and Operational Risk. Mit igat ion To ensure we continue to prior it ise the engagement of Third Parties, while safely managing any risks, the Third Party Risk Management Policy and Standard, in conjunct ion w ith the PRT Polic ies and Standards, hol ist ically set out the Group’s min imum controls requ irements for the ident ification, mit igat ion and management of risks aris ing from the use of Third Parties. These min imum control requ irements have been enhanced in 2022 to ensure compliance with new requirements issued by our regulators. The Group aims to manage its risk profile with in R isk Appetite, and in order to do so, Risk Appetite metrics for Third Party Risk are embedded with in the respect ive PRTs includ ing ICS, Compliance, Financ ial Cr ime and Operational and Technology Risk. To further supplement this, addit ional work is underway to enhance the Group’s approach to concentration risk. Where appropriate, Risk Appetite metrics are cascaded to countries. Governance Committee Oversight At the Board level, the Board Risk Committee oversees the effective management of Third Party Risk. At the executive level, the Group Risk Committee is responsible for the governance and oversight of Third Party Risk for the Group. The Group Third Party Risk Management Committee (GTPRMC), established under the Group Non-Financ ial R isk Committee, is responsible for overseeing all Third Party Risk types and associated risks across the Group, as well as the effective embedding of Third Party Risk across the respective PRTs. The management of Third Party Risk is overseen at a Country or entity level by the Country Third Party Risk Management Committee (CTPRMC). In smaller markets the responsib il it ies are exercised directly by the Executive Risk Committee (for subsid iar ies) or Country Risk Committee (for branches). Decis ion Mak ing Authorit ies and Delegat ion The Group Chief Risk Officer has second line responsib il ity for Third Party Risk under the Senior Managers Regime. The Group Chief Risk Officer has delegated the Integrated Risk Framework Owner responsib il it ies assoc iated with Third Party Risk to the Global Head of Risk, Functions and Operational Risk, through the Enterprise Risk Management Framework. Second line oversight and challenge responsib il it ies for Th ird Party Risk at a Country or entity level are delegated to the Country Chief Risk Officers. Monitor ing The monitor ing of Th ird Party Risk with in the Group’s Process Universe is managed in accordance with the Operational and Technology Risk Type Framework. The Third Party Risk management profile is reported to the GTPRMC, and includes the monitor ing and overs ight on Risk Appetite, assessment of new Third Party arrangements, on-going performance monitor ing of Th ird Party arrangements, internal and external events and elevated risks with appropriate treatment plans. Stress Testing Stress testing and scenario analysis are used to assess capital requirements, and for Third Party Risk, form part of the overall scenario analysis portfolio managed under the Operational and Technology Risk Type Framework. Specif ic scenar ios are developed annually with collaboration between the business, which owns and manages the risk, and the second line of defence. This approach considers the impact of extreme but plausible scenarios on the Group’s Risk profile. ![]() 320 Standard Chartered – Annual Report 2022 Capital review #### Capital review Capital summary The Group’s capital, leverage and min imum requ irements for own funds and elig ible l iab il it ies (MREL) pos it ion is managed with in the Board-approved r isk appetite. The Group is well capital ised w ith low leverage and high levels of loss-absorbing capacity. 2022 2021 CET1 capital 14.0% 14.1% Tier 1 capital 16.6% 16.6% Total capital 21.7% 21.3% Leverage ratio 4.8% 4.9% MREL ratio 32.1% 31.7% Risk-weighted assets (RWA) $mill ion 244,711 271,233 The Group‘s capital, leverage and MREL posit ions were all above current requirements and Board-approved Risk Appetite. The Group’s CET1 capital decreased 19 basis points to 14.0 per cent of RWA since FY2021. Profits and RWA optim isat ions were more than offset by distr ibut ions (includ ing ord inary share buy-backs of $1.3 bill ion dur ing the year), regulatory headwinds, movements in FVOCI and FX translation reserves and an increase in regulatory deductions. The PRA updated the Group’s Pillar 2A requirement during Q4 2022. As at 31 December 2022 the Group’s Pillar 2A was 3.7 per cent of RWA, of which at least 2.1 per cent must be held in CET1 capital. The Group’s min imum CET1 cap ital requirement was 10.4 per cent at 31 December 2022. The UK countercyclical buffer increased to 1.0 per cent which impacts Group CET1 min imum requ irement by approximately 8 basis points from December 2022. From 1 January 2022 RWA increased due to (a) post model adjustments following new PRA rules on IRB models resulted in approximately $5.7 bill ion of add it ional RWA and (b) the introduct ion of standard ised rules for Counterparty Credit Risk on derivat ives and other instruments resulted in approximately $1.9 bill ion of add it ional RWA. These regulatory changes includ ing removal of software benefit and others reduced the CET1 ratio by approximately 80 basis points. The Group CET1 capital ratio at 31 December 2022 reflects the share buy-backs of $754 mill ion completed in the first half of 2022 and $504 mill ion completed in the third and fourth quarter of 2022. The CET1 capital ratio also includes an accrual for the FY 2022 div idend. The Board has recommended a final div idend for FY 2022 of $405 m ill ion or 14 cents per share resulting in a full year 2022 div idend of 18 cents per share, a 50 per cent increase on the 2021 div idend. In addit ion, the Board has announced a further share buy- back of $1 bill ion, the impact of this will reduce the Group’s CET1 capital by around 40 basis points in the first quarter of 2023. The Group expects to manage CET1 capital dynamically with in our 13-14 per cent target range, in support of our aim of deliver ing future susta inable shareholder distr ibut ions. The Group’s MREL leverage requirement as at 31 December 2022 was 27.3 per cent of RWA. This is composed of a min imum requ irement of 23.6 per cent of RWA and the Group’s combined buffer (compris ing the cap ital conservation buffer, the G-SII buffer and the countercyclical buffer). The Group’s MREL ratio was 32.1 per cent of RWA and 9.2 per cent of leverage exposure at 31 December 2022. During 2022, the Group successfully raised $7.2 bill ion of MREL elig ible secur it ies from its holding company, Standard Chartered PLC. Issuance was across the capital structure includ ing $1.3 b ill ion of Add it ional T ier 1, $0.8 bill ion of T ier 2 and $5.2 bill ion of callable sen ior debt. 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 ial-results. #### The Capital review provides an analysis of the Group’s capital and leverage position, and requirements. ![]() 321 Standard Chartered – Annual Report 2022 Risk review and Capital review Capital base 1 (audited) 2022 $mill ion 2021 $mill ion CET1 capital instruments and reserves Capital instruments and the related share premium accounts 5,436 5,528 Of which: share premium accounts 3,989 3,989 Retained earnings 2 25,154 24,968 Accumulated other comprehensive income (and other reserves) 8,165 11,805 Non-controlling interests (amount allowed in consolidated CET1) 189 201 Independently audited year-end profits 2,988 2,346 Foreseeable div idends (648) (493) CET1 capital before regulatory adjustments 41,284 44,355 CET1 regulatory adjustments Addit ional value adjustments (prudent ial valuation adjustments) (854) (665) Intangible assets (net of related tax liab il ity) (5,802) (4,392) Deferred tax assets that rely on future profitabil ity (excludes those aris ing from temporary d ifferences) (76) (150) Fair value reserves related to net losses on cash flow hedges 564 34 Deduction of amounts resulting from the calculation of excess expected loss (684) (580) Net gains on liab il it ies at fa ir value resulting from changes in own credit risk 63 15 Defined-benefit pension fund assets (116) (159) Fair value gains aris ing from the inst itut ion’s own credit risk related to derivat ive l iab il it ies (90) (60) Exposure amounts which could qualify for risk weight ing of 1,250% (103) (36) Other regulatory adjustments to CET1 capital 3 (29) – Total regulatory adjustments to CET1 (7,127) (5,993) CET1 capital 34,157 38,362 Addit ional T ier 1 capital (AT1) instruments 6,504 6,811 AT1 regulatory adjustments (20) (20) Tier 1 capital 40,641 45,153 Tier 2 capital instruments 12,540 12,521 Tier 2 regulatory adjustments (30) (30) Tier 2 capital 12,510 12,491 Total capital 53,151 57,644 Total risk-weighted assets (unaudited) 244,711 271,233 1 Capital base is prepared on the regulatory scope of consolidat ion 2 Retained earnings includes IFRS 9 capital relief (transit ional) of $106 m ill ion 3 Other regulatory adjustments to CET1 capital includes Insuffic ient coverage for non-perform ing exposures of $(29) mill ion ![]() 322 Standard Chartered – Annual Report 2022 Capital review Movement in total capital (audited) 2022 $mill ion 2021 $mill ion CET1 at 1 January 38,362 38,779 Ordinary shares issued in the period and share premium – – Share buy-back (1,258) (506) Profit for the period 2,988 2,346 Foreseeable div idends deducted from CET1 (648) (493) Difference between div idends pa id and foreseeable div idends (301) (303) Movement in goodwill and other intang ible assets (1,410) (118) Foreign currency translation differences (1,892) (652) Non-controlling interests (12) 21 Movement in elig ible other comprehens ive income (1,224) (306) Deferred tax assets that rely on future profitabil ity 74 (12) (Increase)/decrease in excess expected loss (104) 121 Addit ional value adjustments (prudent ial valuation adjustment) (189) (175) IFRS 9 transit ional impact on regulatory reserves includ ing day one (146) (142) Exposure amounts which could qualify for risk weight ing (67) (10) Fair value gains aris ing from the inst itut ion’s own credit risk related to derivat ive l iab il it ies (30) (12) Others 14 (176) CET1 at 31 December 34,157 38,362 AT1 at 1 January 6,791 5,612 Net issuances (redemptions) 241 1,736 Foreign currency translation difference 9 (2) Excess on AT1 grandfathered lim it ( inel ig ible) (557) (555) AT1 at 31 December 6,484 6,791 Tier 2 capital at 1 January 12,491 12,657 Regulatory amortisat ion 778 (1,035) Net issuances (redemptions) (1,098) 573 Foreign currency translation difference (337) (181) Tier 2 inel ig ible minor ity interest 102 (81) Recognit ion of inel ig ible AT1 557 555 Others 17 3 Tier 2 capital at 31 December 12,510 12,491 Total capital at 31 December 53,151 57,644 The main movements in capital in the period were: • CET1 capital decreased by $4.2 bill ion as reta ined profits of $3.0 bill ion were more than offset by share buy-backs of $1.3 bill ion, d istr ibut ions paid and foreseeable of $0.9 bill ion, fore ign currency translation impact of $1.9 bill ion, movement in FVOCI of $1.3 bill ion, regulatory changes includ ing removal of software benefits of $1.2 b ill ion and an increase in regulatory deductions and other movements of $0.7 bill ion • AT1 capital decreased by $0.3 bill ion follow ing the redemption of $1.0 bill ion of 7.5 per cent secur it ies and the final $0.6 b ill ion derecognit ion of legacy T ier 1 securit ies, partly offset by the issuance of $1.3 bill ion of 7.75 per cent secur it ies • Tier 2 capital remains largely unchanged as issuance of $0.8 bill ion of new T ier 2 instruments and recognit ion of inel ig ible AT1 were offset by regulatory amortisat ion and the redempt ion of $1.8 bill ion of T ier 2 during the year ![]() 323 Standard Chartered – Annual Report 2022 Risk review and Capital review Risk-weighted assets by business 2022 Credit risk $mill ion Operational risk $mill ion Market risk $mill ion Total risk $mill ion Corporate, Commercial & Institut ional Bank ing 110,103 17,039 16,440 143,582 Consumer, Private & Business Banking 42,092 8,639 – 50,731 Ventures 1,350 6 2 1,358 Central & Other items 43,310 1,493 4,237 49,040 Total risk-weighted assets 196,855 27,177 20,679 244,711 2021 Credit risk $mill ion Operational risk $mill ion Market risk $mill ion Total risk $mill ion Corporate, Commercial & Institut ional Bank ing 125,813 16,595 20,789 163,197 Consumer, Private & Business Banking 42,731 8,501 – 51,232 Ventures 1 756 5 – 761 Central & Other items 50,288 2,015 3,740 56,043 Total risk-weighted assets 219,588 27,116 24,529 271,233 1 Following the increased strategic importance and reporting of Ventures to management, this has been established as a separate operating segment from 1 January 2022. Prior period has been restated Risk-weighted assets by geographic region 2022 $mill ion 2021 $mill ion Asia 150,816 170,381 Africa & Middle East 40,716 48,852 Europe & Americas 50,174 50,283 Central & Other items 3,005 1,717 Total risk-weighted assets 244,711 271,233 Movement in risk-weighted assets Credit risk Operational risk $mill ion Market risk $mill ion Total risk $mill ion Corporate, Commercial & Institut ional Banking $mill ion Consumer, Private & Business Banking $mill ion Ventures 1 $mill ion Central & Other items $mill ion Total $mill ion At 31 December 2020 127,581 44,755 289 47,816 220,441 26,800 21,593 268,834 At 1 January 2021 127,581 44,755 289 47,816 220,441 26,800 21,593 268,834 Asset growth & mix 2,269 3,612 467 3,894 10,242 – – 10,242 Asset quality (1,537) (662) – 13 (2,186) – – (2,186) Risk-weighted assets effic ienc ies (415) (30) – (657) (1,102) – – (1,102) Model Updates – (3,701) – – (3,701) – – (3,701) Methodology and policy changes – – – – – – 2,065 2,065 Acquis it ions and disposals – – – – – – – – Foreign currency translation (2,085) (1,243) – (1,106) (4,434) – – (4,434) Other, Including non-credit risk movements – – – 328 328 316 871 1,515 At 31 December 2021 125,813 42,731 756 50,288 219,588 27,116 24,529 271,233 Asset growth & mix 2 (13,213) (984) 594 (10,034) (23,637) – – (23,637) Asset quality (4,258) 431 – 7,344 3,517 – – 3,517 Risk-weighted assets effic ienc ies – – – – – – – – Model Updates 4,329 1,420 – – 5,749 – (1,000) 4,749 Methodology and policy changes 2,024 85 – 93 2,202 – 1,500 3,702 Acquis it ions and disposals – – – – – – – – Foreign currency translation (4,883) (1,591) – (3,376) (9,850) – – (9,850) Other, Including non-credit risk movements 291 – – (1,005) (714) 61 (4,350) (5,003) At 31 December 2022 110,103 42,092 1,350 43,310 196,855 27,177 20,679 244,711 1 Following the increased strategic importance and reporting of Ventures to management, this has been established as a separate operating segment from 1 January 2022. Prior period has been restated 2 Corporate, Commercial & Institut ional Bank ing asset growth & mix includes optim isat ion in it iat ives of $(13.9) b ill ion and other efficiency act ions of $(7.2) bill ion. Central & Other items asset growth & mix includes other effic iency act ions, mainly relating to credit insurance of $(3.9) bill ion ![]() 324 Standard Chartered – Annual Report 2022 Capital review Movements in risk-weighted assets RWA decreased by $26.5 bill ion, or 9.8 per cent from 31 December 2021 to $244.7 bill ion. Th is was mainly due to decrease in Credit Risk RWA of $22.7 bill ion and Market R isk RWA of $3.9 bill ion, part ially offset by marginal increase in Operational Risk RWA of $0.1 bill ion. Corporate, Commercial & Institut ional Bank ing Credit Risk RWA decreased by $15.7 bill ion, or 12.5 per cent from 31 December 2021 to $110.1 bill ion ma inly due to: • $13.2 bill ion decrease from changes in asset growth & mix of which: – $13.9 bill ion decrease from opt im isat ion actions includ ing reduction in lower returning portfolios – $7.2 bill ion decrease from other bus iness effic iency act ions – $7.9 bill ion increase from asset balance growth • $4.9 bill ion decrease from fore ign currency translation • $4.3 bill ion decrease ma inly due to improvement in asset quality reflecting client upgrades partially offset by sovereign downgrades in Africa & Middle East • $4.3 bill ion increase from revised rules on capital requirements • $2.1 bill ion increase from revised rules on capital requirements • $0.3 bill ion increase from a process enhancement relating to certain Transaction Banking facil it ies Consumer, Private & Business Banking Credit Risk RWA decreased by $0.6 bill ion, or 1.5 per cent from 31 December 2021 to $42.1 bill ion ma inly due to: • $1.6 bill ion decrease from fore ign currency translation • $0.9 bill ion decrease from changes in asset growth & mix mainly from Asia • $1.4 bill ion increase from industry-wide regulatory changes to align IRB model performance • $0.4 bill ion increase mainly due to deteriorat ion in asset quality mainly in Asia • $0.1 bill ion increase from revised rules on capital requirements Ventures Ventures is comprised of Mox Bank Lim ited, Trust Bank and SC Ventures. Credit Risk RWA increased by $0.6 bill ion, or 78.6 per cent from 31 December 2021 to $1.4 bill ion from asset balance growth, mainly from Mox Central & Other items Central & Other items RWA mainly relate to the Treasury Markets liqu id ity portfolio, equity investments and current & deferred tax assets. Credit Risk RWA decreased by $7.0 bill ion, or 13.9 per cent from 31 December 2021 to $43.3 bill ion ma inly due to: • $10.0 bill ion decrease from changes in asset growth & mix of which: – $6.1 bill ion decrease from reduct ion in asset balances mainly from Asia – $3.9 bill ion decrease from cred it protection on certain products • $3.4 bill ion decrease from fore ign currency translation • $1.0 bill ion decrease due to cessat ion of software relief • $7.3bn bill ion increase due to deteriorat ion in asset quality mainly from sovereign downgrades in Africa & Middle East Market Risk Total Market Risk RWA decreased by $3.9 bill ion, or 15.7 per cent from 31 December 2021 to $20.7 bill ion due to: • $3.8 bill ion decrease in Standardised Approach (SA) Specif ic Interest Rate Risk RWA due to reductions in the traded credit portfolio • $1.2 bill ion decrease in Internal Models Approach (IMA) stressed VaR RWA due to reduced IMA posit ions • $1.0 bill ion decrease w ith enhanced methodology for IMA VaR and stressed VaR • $1.5 bill ion increase due to higher IMA (IMA) RWA multipl ier from elevated back-testing exceptions • $0.5 bill ion increase in SA Structural FX risk with increased net SFX posit ions after hedg ing • $0.1 bill ion net increase due to other ind iv idually smaller movements Operational Risk Operational Risk RWA increased by $0.1 bill ion, or 0.2 per cent from 31 December 2021 to $27.2 bill ion ma inly due to marginal increase in average income as measured over a rolling three-year time horizon for certain products. ![]() 325 Standard Chartered – Annual Report 2022 Risk review and Capital review Leverage ratio The Group’s leverage ratio, which excludes qualify ing cla ims on central banks, was 4.8 per cent at FY2022, which was above the current min imum requ irement of 3.7 per cent. The leverage ratio was 14 basis points lower than FY21. Leverage exposure decreased by $56.8 bill ion from a decrease in on-balance sheet items of $7.9 bill ion, decrease in off-balance sheet items and others of $50.8 bill ion and a secur it ies financing transact ions add-on increase of $1.8 bill ion. The decrease in exposures was largely driven by optim isat ion in it iat ives. End po int Tier 1 decreased by $4.0 bill ion as CET1 cap ital reduced by $4.2 bill ion and the issuance of $1.25 bill ion 7.75 per cent AT1 secur it ies was partly offset by the redempt ion of $1 bill ion 7.5 per cent AT1 secur it ies. Leverage ratio 2022 $mill ion 2021 $mill ion Tier 1 capital (transit ional) 40,641 45,153 Addit ional T ier 1 capital subject to phase out – (557) Tier 1 capital (end point) 40,641 44,596 Derivat ive financial instruments 63,717 52,445 Derivat ive cash collateral 12,515 9,217 Securit ies financing transact ions (SFTs) 89,967 88,418 Loans and advances and other assets 653,723 677,738 Total on-balance sheet assets 819,922 827,818 Regulatory consolidat ion adjustments¹ (71,728) (63,704) Derivat ives adjustments Derivat ives nett ing (47,118) (34,819) Adjustments to cash collateral (10,640) (17,867) Net written credit protection 548 1,534 Potential future exposure on derivat ives 35,824 50,857 Total derivat ives adjustments (21,386) (295) Counterparty Risk leverage exposure measure for SFTs 15,553 13,724 Off-balance sheet items 119,049 139,505 Regulatory deductions from Tier 1 capital (7,099) (5,908) Total exposure measure excluding claims on central banks 854,311 911,140 Leverage ratio excluding claims on central banks (%) 4.8% 4.9% Average leverage exposure measure excluding claims on central banks 864,605 897,992 Average leverage ratio excluding claims on central banks (%) 4.7% 5.0% Countercyclical leverage ratio buffer 0.1% 0.1% G-SII addit ional leverage rat io buffer 0.4% 0.4% 1 Includes adjustment for qualify ing central bank cla ims and unsettled regular way trades ![]() #### Financial statements 328 Independent Auditor’s report 340 Consolidated income statement 341 Consolidated statement of comprehensive income 342 Consolidated balance sheet 343 Consolidated statement of changes in equity 345 Company balance sheet 346 Company statement of changes in equity 347 Notes to the financial statements #### Supporting the rollout of electric vehicles in Sweden #### In 2022, we were part of a group of banks which created a EUR350 million green trade facility for Polestar, an #### electric performance car maker. #### The facility will finance the import of electric vehicles into Europe and North #### America and will support the switch to EVs, resulting in significant CO 2 savings per kilometre. One of Polestar’s main goals is producing a truly carbon- neutral car by 2030. Read more online at www.sc.com/SFimpactreport 326 Standard Chartered – Annual Report 2022 Financ ial statements ![]() 327 Standard Chartered – Annual Report 2022 Financ ial statements ![]() 328 Standard Chartered – Annual Report 2022 Financ ial statements Independent auditor’s report Opin ion In our opin ion: • the financial statements of Standard Chartered PLC (the ‘Company’ or the ‘Parent Company’), its subsid iar ies, interests in associates and jo intly controlled ent it ies (together with the Company, the ‘Group’) give a true and fair view of the state of the Group’s and of the Company’s affairs as at 31 December 2022 and of the Group’s profit for the year then ended; • the Group financial statements have been properly prepared in accordance with UK adopted International Accounting Standards (IAS) and International Financ ial Reporting Standards (IFRS) as adopted by the European Union (EU IFRS); • the Company financial statements have been properly prepared in accordance with UK adopted IAS as applied in accordance with section 408 of the Companies Act 2006; and • the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. We have audited the financ ial statements of the Group and the Company for the year ended 31 December 2022 which comprise: Group Company Consolidated income statement for the year ended 31 December 2022; Company cash flow statement for the year ended 31 December 2022; Consolidated statement of comprehensive income for the year then ended; Company balance sheet as at 31 December 2022; Consolidated balance sheet as at 31 December 2022; Company statement of changes in equity for the year then ended; and Consolidated statement of changes in equity for the year then ended; Related notes 1 to 40, where relevant to the financial statements, includ ing a summary of sign ificant accounting polic ies. Consolidated cash flow statement for the year then ended; Related notes 1 to 40 to the financial statements, includ ing a summary of sign ificant accounting polic ies; Information marked as ‘audited’ with in the D irectors’ remuneration report from page 184 to 217; and Risk Review and Capital Review disclosures marked as ‘audited’ from page 234 to 325. The financial report ing framework that has been applied in their preparation is applicable law and UK adopted IAS and EU IFRS; and as regards the Parent Company financial statements, UK adopted IAS as applied in accordance with section 408 of the Companies Act 2006. Basis for opin ion We conducted our audit in accordance with International Standards on Audit ing (UK) (ISAs (UK)) and appl icable law. Our responsib il it ies under those standards are further described in the Auditor’s responsib il it ies for the aud it of the financial statements sect ion of our report. We believe that the audit evidence we have obtained is suffic ient and appropr iate to provide a basis for our opin ion. Independence We are independent of the Group and the Company in accordance with the ethical requirements that are relevant to our audit of the financ ial statements in the UK, includ ing the FRC’s Ethical Standard as applied to listed public interest entit ies, and we have fulfilled our other eth ical responsib il it ies in accordance with these requirements. The non-audit services prohib ited by the FRC’s Eth ical Standard were not provided to the Group or the Company and we remain independent of the Group and the Company in conducting the audit. Conclusions relating to going concern In audit ing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financ ial statements is appropriate. Our evaluation of the directors’ assessment of the Group and Parent Company’s abil ity to cont inue to adopt the going concern basis of accounting included: • Performing a risk assessment to ident ify factors that could impact the going concern basis of accounting, includ ing the impact of external risks such as geopolit ical r isk. • Assessing the Group’s forecast capital, liqu id ity, and leverage ratios over the period of twelve months from 16 February 2023 to evaluate the headroom against the min imum regulatory requ irements and the risk appetite set by the directors. • Engaging internal valuation and economic special ists to assess the reasonableness of assumptions used to develop the forecasts in the Corporate Plan and evaluating the accuracy of histor ical forecast ing. • Inspecting the Group’s funding plan and repayment plan for funding instruments maturing over the period of twelve months from 16 February 2023. • Understanding and evaluating credit rating agency ratings and actions. • Assessing the results of management’s stress testing, includ ing cons iderat ion of pr inc ipal and emerg ing risks, on funding, liqu id ity, and regulatory capital. • Review ing correspondence w ith prudential regulators and authorit ies for matters that may impact the going concern assessment; and • Evaluating the appropriateness of the going concern disclosure included in note 1 to the financ ial statements. Based on the work we have performed, we have not ident ified any material uncertaint ies relat ing to events or condit ions that, ind iv idually or collectively, may cast sign ificant doubt on the Group and the Company’s abil ity to cont inue as a going concern for a period of twelve months from 16 February 2023. #### Independent Auditor’s Report to the members of Standard Chartered PLC ![]() 329 Standard Chartered – Annual Report 2022 Financ ial statements 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 ial statements about whether the directors considered it appropriate to adopt the going concern basis of accounting. Our responsib il it ies and the respons ib il it ies of the d irectors with respect to going concern are described in the relevant sections of this report. However, because not all future events or condit ions can be pred icted, this statement is not a guarantee as to the Group’s abil ity to cont inue as a going concern. Overview of our audit approach Audit scope • We performed an audit of the complete financ ial informat ion of 15 components in 12 countries and audit procedures on specif ic balances for a further 11 components in 9 countries. • The components where we performed full or specif ic aud it procedures accounted for 82% of the absolute adjusted profit before tax (PBT) measure used to calculate material ity, 89% of absolute operating income and 95% of Total assets. Key audit matters • Credit impa irment • Basis of accounting and impa irment assessment of China Bohai Bank (Interest in Associate) • User Access Management – Priv ileged Access Management • Impairment of Goodwill and Investments in subsid iary undertak ings • Valuation of financ ial instruments held at fair value with higher risk characterist ics Material ity • Overall group material ity of $234m wh ich represents 5% of adjusted PBT An overview of the scope of the Parent Company and Group audits Tailor ing the scope Our assessment of audit risk, our evaluation of material ity and our allocation of performance material ity determ ine our audit scope for each component with in the Group. Taken together, this enables us to form an opin ion on the consol idated financial statements. We took into account the size, risk profile, the organisat ion of the Group and effect iveness of control environment, changes in the business environment and other factors such as the level of issues and misstatements noted in prior period when assessing the level of work to be performed at each component. In assessing the risk of material misstatement to the consolidated financ ial statements, and to ensure we had adequate quantitat ive coverage of s ign ificant accounts in the financial statements, of the 367 report ing units of the Group, we selected 64 reporting units which represent 26 components in 21 countries: Bangladesh, Cameroon, Hong Kong, India, Indonesia, Japan, Kenya, Mainland China, Malaysia, Niger ia, Pak istan, Republic of Ireland, Republic of South Africa, Singapore, South Korea, Sri Lanka, Taiwan, United Arab Emirates, United Kingdom, United States of America and Zambia. The defin it ion of a component is aligned with the structure of the Group’s consolidat ion system, typically these are either a branch, group of branches, group of subsid iar ies, a subsid iary, or an assoc iate. We took a centralised approach to audit ing certa in processes and controls, as well as the substantive testing of specif ic balances. This included audit work over Group’s Global Business Services shared services centre, Commercial, Corporate and Institut ional Bank ing, Credit Impairment and Technology. Of the 26 components selected in 21 countries, we performed an audit of the complete financ ial informat ion of 15 components in 12 countries (‘full scope components’) which were selected based on their size or risk characterist ics. For the remain ing 11 components in 9 countries (‘specif ic scope components’), we performed audit procedures on specif ic accounts with in that component that we cons idered had the potential for the greatest impact on the Group financ ial statements either because of the size of these accounts or their risk profile. The reporting components where we performed audit procedures accounted for 82% (2021: 81%) of the Group’s absolute adjusted PBT, 89% (2021: 89%) of the Group’s absolute operating income and 95% (2021: 96%) of the Group’s total assets. For the current year, the full scope components contributed 72% (2021: 74%) of the Group’s absolute adjusted PBT, 79% (2021: 81%) of the Group’s absolute operating income and 87% (2021: 88%) of the Group’s total assets. The specif ic scope components contr ibuted 10% (2021: 7%) of the Group’s absolute adjusted PBT, 10% (2021: 8%) of the Group’s absolute operating income and 8% (2021: 8%) of the Group’s total assets. The audit scope of these components may not have included testing of all sign ificant accounts of the component but will have contributed to the coverage of sign ificant accounts tested for the Group, overall. Of the remain ing 303 report ing units that together represent 18% of the Group’s absolute adjusted PBT, none ind iv idually contributed more than 2% of the Group’s absolute adjusted PBT. For the components represented by these reporting units, we performed other procedures at the Group level which included: performing analytical reviews at the Group financ ial statement line item level, testing entity level controls, performing audit procedures on the centralised shared service centres, testing of consolidat ion journals and intercompany elim inat ions, inqu ir ing with overseas EY teams on the outcome of prior year local statutory audits (where audited by EY) to ident ify any potent ial risks of material misstatement to the Group financial statements. The charts below illustrate the coverage obtained from the work performed by our audit teams. Absolute adjusted profit before tax 72% Full scope components 10% Specif ic scope components 18% Other procedures Absolute operating income 79% Full scope components 10% Specif ic scope components 11% Other procedures Total assets 87% Full scope components 8% Specif ic scope components 5% Other procedures ![]() 330 Standard Chartered – Annual Report 2022 Financ ial statements Independent auditor’s report Changes from the prior year We assessed our 2022 audit scope with considerat ion of history or expectation of unusual or complex transactions and potential for material misstatements. We also kept our audit scope under review throughout the year. One component (Germany) which was included in our prior year audit scope and assigned full scope, which represents 0.03% (2021:0.4%) of the current year absolute adjusted PBT, 1.3% of the Group’s total assets (2021:1%) and 0.6% of the Group’s absolute operating income (2021:0.8%), was excluded from the Group audit scope in the current year based on our updated risk assessment. For this component as well as Phil ipp ines, Uganda and Jordan, the Primary Audit Team performed certain procedures centrally over the cash balances as at 31 December 2022. Niger ia and Bangladesh were full scope components in the prior year but were designated as specif ic scope components in the current year based on our updated risk assessment. In 2022 we assigned a specif ic scope to Cameroon, South Africa, Sri Lanka and Zambia components that are sign ificant based on risk. These components were not in-scope in the prior year. Involvement with component teams In establish ing our overall approach to the Group aud it, 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 ions. Of the 15 full scope components, audit procedures were performed on 2 of these (includ ing the aud it of the Company) directly by the Primary Audit Team (EY London) in the United Kingdom. For 2 specif ic scope components, the aud it procedures were performed by the Primary Audit Team. Where components were audited by the Primary Team, this was under the direct ion and superv is ion of the Sen ior Statutory Auditor. For the remain ing 22 components, where the work was performed by component auditors, we determined the appropriate level of involvement to enable us to determine that sufficient aud it evidence had been obtained as a basis for our audit opin ion on the Group as a whole. In add it ion, the Group has centralised processes and controls over key areas in its shared service centres. Members of the Primary Audit Team undertook direct oversight, review and coordinat ion of our shared service centre audits. The Primary Audit Team undertook vis its to component teams and shared services centres. During the current year’s audit cycle, vis its were undertaken by the Pr imary Audit Team to the component teams in the following locations: • Bangladesh • India (includ ing the shared serv ices centre) • Hong Kong • Singapore (includ ing the shared serv ices centre) • Malaysia (includ ing the shared serv ices centre) • Indonesia • Republic of Korea • United Arab Emirates • United States of America These vis its involved oversight of work undertaken at those locations, discuss ion of the aud it approach and any issues aris ing from the ir work, meeting with local management, and review ing relevant aud it working papers on key risk areas. In addit ion to the s ite vis its, the Pr imary Audit Team interacted regularly with the component and shared services centre audit teams where appropriate during the audit, reviewed relevant working papers remotely and were responsible for the overall scoping and direct ion of the aud it process. The programme of our vis its to component team and shared service centres located in China was impacted by the travel restrict ions and other imposed government measures which are still in place from the prior year as a result of the ongoing COVID-19 pandemic (albeit less so when compared to the prior year). For this location, oversight of the work was performed remotely through established EY software collaboration platforms for the secure and timely delivery of requested audit evidence. We also undertook video conference meetings with local audit teams and management. These virtual meetings involved discuss ing the aud it approach with the component and shared service centres team and any issues aris ing from their work and performing remote reviews of key audit workpapers. This, together with the addit ional procedures performed at Group level, gave us appropriate evidence for our opin ion on the Group and Company financial statements. Climate change Stakeholders are increas ingly interested in how climate change will impact the economy, includ ing the bank ing sector, and further how this may consequently impact the valuation of assets and liab il it ies held on bank balance sheets. The Group has determined climate risk to be a Primary Integrated Risk Type and the assessment of that risk is explained on pages 316 and 317 in the “Risk review: Climate Risk” section and on pages 64 to 123 in the “Sustainab il ity” section of the Annual Report, where they have also explained their climate commitments. All of these disclosures form part of the “Other informat ion,” rather than the audited financ ial statements. Our procedures on these unaudited disclosures therefore consisted solely of consider ing whether they are mater ially incons istent w ith the financial statements or our knowledge obta ined in the course of the audit or otherwise appear to be materially misstated, in line with our responsib il it ies on “Other informat ion”. In planning and performing our audit we assessed the potential impacts of climate change on the Group’s business and any consequential material impact on its financ ial statements. The Group has explained in the “Sustainab il ity” section of the Annual Report how they have reflected the impact of climate change in their financ ial statements, includ ing how th is aligns with their commitment to the aspirat ions of the Par is Agreement to achieve net zero emiss ions by 2050. S ign ificant judgements and estimates relating to climate change are included in the section “Sign ificant account ing estimates and crit ical judgements” of note 1 to the financial statements, which also provides the narrative explanation of the impact of climate risk on credit risk and lending portfolios under the requirements of UK adopted IAS and EU IFRS. As stated in these disclosures, the Group, having acknowledged the lim itat ions of current data available, increas ing soph ist icat ion of models, and the evolving and nascent nature of climate impacts on internal and client assets, has concluded climate risk to have lim ited quant itat ive impact in the immed iate term. ![]() 331 Standard Chartered – Annual Report 2022 Financ ial statements Our audit effort in consider ing the impact of climate change on the financial statements was focused on evaluat ing whether management’s assessment of the impact of climate risk, physical and transit ion, the ir climate commitments, and the sign ificant judgements and est imates disclosed in note 1 have been appropriately reflected in the valuation of assets and liab il it ies, where these can be rel iably measured, following the requirements of UK adopted IAS and EU IFRS. This was in the context of the Group’s process being lim ited, g iven that this is an emerging area, as a result of lim itat ions in the data available and the availab il ity of sophist icated models, and as the Group considers how it further embeds its climate ambit ions into the planning process. As part of this evaluation, we performed our own risk assessment, supported by our climate change internal special ists, to determ ine the risks of material misstatement in the financial statements from cl imate change which needed to be considered in our audit. We also challenged the Directors’ considerat ions of cl imate change risks in their assessment of going concern and viab il ity, and the associated disclosures. Where considerat ions of climate change were relevant to our assessment of going concern, these are described above. Based on our work, we have considered the impact of climate change on the financial statements to impact the key audit matter of Credit Impairment. Details of our procedures and findings are included in our explanation of key audit matters below. Key audit matters Key audit matters are those matters that, in our professional judgment, were of most sign ificance in our audit of the financ ial statements of the current period and include the most sign ificant assessed r isks of material misstatement (whether or not due to fraud) that we ident ified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and direct ing the efforts of the engagement team. These matters were addressed in the context of our audit of the financ ial statements as a whole, and in our opin ion thereon, and we do not prov ide a separate opin ion on these matters. Risk Our response to the risk Key observations communicated to the Audit Committee 1. Credit Impairment Refer to the Audit Committee Report (page 164); Accounting polic ies (page 361); Note 8 of the financial statements; and relevant cred it risk disclosures (includ ing pages 239 and 270) At 31 December 2022, the Group reported total credit impa irment balance sheet prov is ion of $6,075 mill ion (2021: $6,209 m ill ion). Management’s judgements and estimates are especially subject ive due to s ign ificant uncertainty associated with the estimat ion of expected future losses. Assumptions with increased complexity in respect of the tim ing and measurement of expected credit losses (ECL) include: • Staging – the determinat ion of s ign ificant increase in credit risk and resultant timely allocation of assets to the appropriate stage in accordance with IFRS 9; • Model output and adjustments – Accounting interpretat ions, modell ing assumptions and data used to build and run the models that calculate the ECL, includ ing the appropriateness, completeness and valuation of post-model adjustments applied to model output to address risks not fully captured by the models; • Economic scenarios – Sign ificant judgements involved with the determinat ion of parameters used in the Monte Carlo Simulat ion and the evaluat ion of the appropriateness of the output from the model in terms of the extent to which it adequately generated non-linear ity, includ ing the assessment of any Post Model adjustments; • Management overlays – Appropriateness, completeness and valuation of risk event overlays to capture risks not ident ified by the credit impa irment models, includ ing the considerat ion of the r isk of management override; and • Indiv idually assessed ECL allowances – Measurement of ind iv idual provis ions includ ing the assessment of probab il ity weighted recovery scenarios, exit strategies, collateral valuations and time to collect. We evaluated the design of controls relevant to the Group’s processes over material ECL balances, includ ing the judgements and estimates noted, involv ing EY spec ial ists to assist us in performing our procedures to the extent it was appropriate. Based on our evaluation we selected the controls upon which we intended to rely and tested those for operating effectiveness. We performed an overall stand-back assessment of the ECL allowance levels by stage to determine if they were reasonable by consider ing the overall cred it quality of the Group’s portfolios, risk profile, the impact of sovereign downgrades and the id iosyncrat ic risk of the China CRE sector. Our assessment also included the evaluation of the macroeconomic environment by consider ing trends in the economies and countries to which the Group is exposed, and the consequences of the easing of global restrict ions from the pandem ic. We performed peer benchmarking where available to assess overall staging and provis ion coverage levels. Staging – We evaluated the criter ia used to determine sign ificant increase in credit risk includ ing quant itat ive backstops w ith the resultant allocation of financ ial assets to stage 1, 2 or 3 in accordance with IFRS 9. We reperformed the staging distr ibut ion for a sample of financial assets and assessed the reasonableness of staging downgrades applied by management. To test credit monitor ing wh ich largely drives the probabil ity of default est imates used in the staging calculation, we challenged the risk ratings (includ ing appropr iate operation of quantitat ive backstops) for a sample of performing accounts and other accounts exhib it ing risk characterist ics such as financial diff icult ies, deferment of payment, late payment and watchlist. We also considered the vulnerable and cyclical sectors (as defined on page 264 in the annual report). We highl ighted the follow ing matters to the Audit Committee: • the pathway to achieve a controls reliance audit for the Group’s models; • our evaluation of management’s high-level assessment of the potential impact on ECL from climate change; • our assessment of the assumptions used to determine the Stage 3 ECL of ind iv idual China Commercial Real Estate developers and the management overlay applied to the sector’s modelled ECL; • our assessment of the Group’s enhanced Monte Carlo approach includ ing benchmarking the impact of non-linear ity from the basel ine ECL against UK peers and the non-linear ity overlay for reta il exposures; and • our assessment of the appropriateness of the Group’s methodology used to determine the ECL in relation to sovereign downgrades includ ing the completeness and rationale for country downgrades and the resultant overlays and ECL impact. We concluded that management’s methodology, judgements, and assumptions used in calculating credit impa irment are mater ially in accordance with the accounting standard. ![]() 332 Standard Chartered – Annual Report 2022 Financ ial statements Independent auditor’s report Risk Our response to the risk Key observations communicated to the Audit Committee 1. Credit Impairment continued In 2022, the most material factors impact ing the ECL were in relation to the China Commercial Real Estate (CRE) portfolio, sovereign downgrades, the enhanced Monte Carlo model and the impact of the global economic environment includ ing the impact of relaxing pandemic restrict ions. In add it ion, where relevant we considered the impact of climate on the impa irment prov is ions. We cons ider that the combinat ion of these factors has increased the risk of a material misstatement to the ECL. Indiv idually assessed ECL allowances – Our procedures included challenging management’s forward-looking economic assumptions of the recovery outcomes ident ified and ass igned ind iv idual probabil ity we ight ings, and recalculating a sample of ind iv idually assessed provis ions. Modelled output and adjustments – We performed a risk assessment on models involved in the ECL calculation using EY independently determined criter ia to select a sample of models to test. We engaged our modelling special ists to evaluate a sample of ECL models by assessing the reasonableness of underpinn ing assumpt ions, inputs and formulae used. This included a combinat ion of assess ing the appropriateness of model design, formulae and algorithms, alternative modelling techniques and recalculating the Probabil ity of Default, Loss Given Default and Exposure at Default parameters. Together with our modelling special ists, we also assessed mater ial post-model adjustments which were applied as a response to risks not fully captured by the models, includ ing the completeness and appropriateness of these adjustments, for which we considered the applied judgments and methodology, and governance thereon. In response to the new or enhanced models implemented this year to address known weaknesses in previous models, we performed substantive testing procedures, includ ing code review and implementat ion test ing. We reperformed model monitor ing procedures for models classif ied as h igher risk in accordance with our EY independent risk assessment. To evaluate data quality, we agreed a sample of ECL calculation data points to source systems, includ ing, among other data po ints, balance sheet data used to run the models. We also tested a sample of the ECL data points from the calculation engine through to the general ledger and disclosures. Economic scenarios – For new material models implemented in 2022, in collaboration with our economists and modelling special ists, we challenged the completeness and appropriateness of the macroeconomic variables used as inputs to these models. For exist ing mater ial models we evaluated the output from our independent model monitor ing procedures to assess whether the findings ind icated that the macroeconom ic variables were outside of accepted tolerances. Addit ionally, we involved our economic special ists to ass ist us in evaluating the reasonableness of the base forecast for sample of macroeconomic variables most relevant for the Group’s ECL calculation influenced by the above assessment. Procedures performed included benchmarking the forecast for a sample of macroeconomic variables to a variety of global external sources. We assessed the reasonableness of the non-linear ity impact on ECL allowances. By engaging our economists and modelling special ists, we assessed the Group’s cho ice of scenarios to determine sensit iv ity analysis of the ECL on page 278 in the annual report. We also performed a stand-back assessment by benchmarking the uplift and overall ECL charge and provis ion coverage to peers. We evaluated the appropriateness of the non-linear ity overlay for retail exposures. ![]() 333 Standard Chartered – Annual Report 2022 Financ ial statements Risk Our response to the risk Key observations communicated to the Audit Committee 1. Credit Impairment continued Management overlays – We challenged the completeness and appropriateness of overlays used for risks not captured by the models, particularly regarding the worsening economic environment impact ing sovere ign/country level credit grades with a focus on Sri Lanka and Ghana which defaulted during the year, and other countries that suffered sign ificant cred it downgrades and the China Commercial Real Estate sector. Our procedures included evaluating the underpinn ing assumpt ions and judgments as to whether they are appropriate in prevail ing market cond it ions, and for Ch ina CRE validat ing LGD assumpt ions by engaging local EY Real Estate special ist to val idate the collateral values of material Stage 2 exposures. Indiv idually assessed ECL allowances - Our procedures included challenging management’s forward-looking economic assumptions of the recovery outcomes ident ified and ass igned ind iv idual probabil ity weight ings, and recalculat ing a sample of ind iv idually assessed provis ions. We also engaged our valuation special ists to test the value of the collateral used in management’s calculations. Our sample was based on quantitat ive thresholds and qualitat ive factors, includ ing exposure to vulnerable sectors. We have independently assessed all material China CRE developers in Stage 3 includ ing challeng ing the plausib il ity of the applied scenarios, the corresponding weights assigned to work out scenarios and engaging local EY Real Estate special ist to validate the collateral values. We also considered whether planned exit strategies were viable. Where relevant, with input from our climate special ists, we cons idered the potential impact of climate change in the determinat ion of each element of the ECL provis ions. 2. Basis of accounting and impa irment assessment of Ch ina Bohai Bank (Interest in Associate) Refer to the Audit Committee Report (page 165); Accounting polic ies (page 437); and Note 32 of the financial statements Interest in Associate – China Bohai Bank $1,421 mill ion (2021: $1,917 m ill ion) Other impa irment – Ch ina Bohai Bank – $308 mill ion (2021: $300 m ill ion). We focused on judgements and estimates, includ ing the appropr iateness of the equity accounting treatment under IAS 28 and the assessment of whether the investment was impa ired. Basis of accounting The Group holds a 16.26% stake in China Bohai Bank and equity accounts for the investment as an associate, on the grounds that the Group is able to exercise sign ificant influence over China Bohai Bank. IAS 28 states that if the entity holds, directly or ind irectly, less than 20% of the vot ing power of the investee, it is presumed that the entity does not have sign ificant 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 ificant influence over China Bohai Bank. Basis of accounting We evaluated the facts and circumstances that the Group presented to demonstrate that it exercises sign ificant influence over China Bohai Bank, through Board representation, membership of Board Committees and the sharing of industry and technical advice. Impairment testing The Group impa ired the value of the investment in China Bohai Bank by $308 mill ion (2021: $300 mill ion). We assessed the appropriateness of the Group’s VIU methodology for testing the impa irment 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 ists to support the aud it team in calculating an independent range for the assumptions underlying the VIU calculations, which are 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, by evaluating management’s assessment, benchmarking the forecasts to broker reports published for comparable companies and challenging management with regard to the relevance and reliab il ity of histor ical data when prepar ing their assessment. We concluded that the Group continues to mainta in s ign ificant influence over China Bohai Bank as at 31 December 2022. We concluded that the Interest in Associate –China Bohai Bank balance was not materially misstated as at 31 December 2022. We concluded that the disclosures in the annual report appropriately reflect the sensit iv ity of the carrying value to reasonably possible changes in key assumptions in the valuation of the investment in China Bohai Bank. ![]() 334 Standard Chartered – Annual Report 2022 Financ ial statements Independent auditor’s report Risk Our response to the risk Key observations communicated to the Audit Committee 2. Basis of accounting and impa irment assessment of Ch ina Bohai Bank (Interest in Associate) continued Impairment testing At 31 December 2022, China Bohai Bank’s market capital isat ion was sign ificantly lower than the carrying value of the investment. In addit ion, the financial performance of Ch ina Bohai Bank deteriorated during 2022. These matters are ind icators of impa irment. Impairment of the investment in China Bohai Bank is determined by comparing the carrying value to the value-in-use (VIU). The VIU is modelled by reference to future cashflow forecasts (forecast profit, includ ing a ha ircut for regulatory capital), discount rate and macroeconomic assumptions such as long-term growth rates. Consequently, there is a risk that if the judgements and assumptions underpinn ing the impa irment assessments are inappropr iate, then the investment in China Bohai Bank may be misstated. The risk of impa irment has increased in current year in the context of economic developments in China as well as Bohai’s financ ial performance in 2022. The risk in respect of sign ificant influence has not changed compared to the prior year. We assessed the appropriateness of disclosures in the annual report in relation to the impact of reasonably possible changes in key assumptions on the carrying value of the investment in China Bohai Bank. 3. User Access Management – Priv ileged Access Management Refer to the Audit Committee Report (page 165) IT General Controls (ITGCs) support the continuous operation of the automated and other IT dependent controls with in the bus iness processes related to financial report ing. Effective IT general controls are needed to ensure that IT applicat ions process bus iness data as expected and that changes are made in an appropriate manner. During the 2020 and 2021 audits, a number of sign ificant pr iv ileged ident ity management (PIM) control deficienc ies were ident ified by us. Sim ilar deficienc ies were ident ified by Group Internal Audit (GIA) and the predecessor auditor in 2018 and 2019. The possib il ity of IT applicat ion users ga in ing access priv ileges beyond those necessary to perform their assigned duties may result in breaches in segregation of duties, includ ing inappropr iate manual intervent ion, unauthorised changes to systems or programmes. These deficienc ies are still in the process of being fully remediated. During the current year audit, we made further observations relating to the effectiveness of remediat ion act iv it ies. The risk has decreased in the current year due to management’s remediat ion program, wh ich is still in progress as at the year-end date. We evaluated the results of management’s remediat ion program and r isk assessment for applicat ions in our audit scope. We also tested IT controls (includ ing IT compensating controls) where possible, and also performed addit ional IT substant ive procedures to assess the impact of risks associated with the reported defic ienc ies, on the financial statements. We assessed the impact of the results of the above on our audit procedures over the financial statements for the year ended 31 December 2022. • We communicated a weakness in internal control to the Audit Committee throughout the audit, in respect of the effectiveness of priv ileged ident ity management controls. • We explained the results of the addit ional aud it procedures performed. As a result of the procedures performed, we have reduced the risk that our audit has not ident ified a mater ial error in the Group and Company financial statements, related to priv ileged access management, to an appropriate level. ![]() 335 Standard Chartered – Annual Report 2022 Financ ial statements Risk Our response to the risk Key observations communicated to the Audit Committee 4. Impairment assessment of goodwill and investments in subsid iary undertak ings Refer to the Audit Committee Report (page 165); a) Impairment of Goodwill: Accounting polic ies (page 409); and Note 17 of the financial statements b) Impairment of investments in subsid iary undertakings: Accounting polic ies (page 437); and Note 32 of the financial statements. At 31 December 2022 the Group reported Goodwill balance of $2,472 mill ion (2021: $2,595 mill ion). In the Parent Company financial statements, investment in subsid iary undertakings balance comprised $60,975 mill ion (2021: $60,429 mill ion). Dur ing the year the Group impa ired goodw ill by $14mill ion (2021: NIL). On an annual basis, management is required to perform an impa irment assessment for goodw ill, and to assess for ind icators of impa irment in respect of investments in subsid iary undertakings; where ind icators of impa irment are ident ified, the recoverable amount of the investment should be estimated. Impairment assessment of goodwill is performed by calculating a value in use (‘VIU’) as the recoverable amount of the related cash generating unit (‘CGU’). The Group ident ified ind icators of impa irment of investments in subsid iary undertak ings, includ ing macroeconomic and geopolit ical factors wh ich have an impact on the financ ial pos it ion and performance of the subsid iar ies. In assessing for ind icators of impa irment, among other procedures, management compares the Net Asset Value (‘NAV’) of the subsid iary to the carrying value of each direct subsid iary of the Parent Company. Where the net assets did not support the carrying value, the recoverable amount is estimated by determin ing the h igher of the VIU or fair value less cost to sell. Where the recoverable amount is based on the VIU, this is modelled by reference to future cashflow forecasts (profit forecast includ ing a regulatory capital haircut adjustment), discount rates and macroeconomic assumptions such as long-term growth rates. There is a risk that if the judgements and assumptions underpinn ing the impa irment assessments are inappropr iate, then the goodwill and investments in subsid iar ies balances may be misstated. The level of risk remains consistent with the prior year. We obtained an understanding of management’s process and evaluated the design of controls. Our audit strategy was fully substantive. We assessed the appropriateness of the Group’s methodology for testing the impa irment of goodw ill and investments in subsid iary undertak ings for compliance with the accounting standards. For goodwill, we assessed the appropriateness of the cash-generating units ident ified by management. We agreed the inputs in the VIU model with their source and tested the mathematical accuracy of the VIU model. We engaged EY special ists to support the aud it team in assessing reasonableness of the regulatory haircut adjustment to future profitab il ity 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 il ity forecasts of each CGU to the Group’s approved Corporate Plan (‘the Plan’). We engaged our special ist team to determ ine the reasonableness of the forward macroeconomic inputs used in the Plan and to assess their implementat ion in the modelled calculations underpinn ing the Plan. In add it ion, our spec ial ist team benchmarked certain aspects of the Plan with other comparable businesses. We performed audit procedures to assess the reasonableness of the forecasts by understanding the Group Strategy, challenging key assumptions underpinn ing the Plan, assessing the feasib il ity of management actions necessary to achieve the Plan and testing the reliab il ity of the Group’s histor ical forecasting by comparing with the actual performance. We performed a stand back assessment to evaluate the appropriateness of the audit evidence obtained and our conclusion in relation to these estimates. In addit ion to th is, we also engaged our special ist team to perform a sensit iv ity analysis of the key inputs in the VIU model. We agreed the NAV of the subsid iar ies against their carrying value to confirm impa irment or reversal of impa irment recogn ised in the Parent`s Company financial results. We assessed the appropriateness of goodwill and investments in subsid iary undertak ings impa irment d isclosures in accordance with IAS 36. We concluded that the goodwill balance as at 31 December 2022 and the related disclosures, are not materially misstated. We concluded that the disclosures in the annual report appropriately reflect the sensit iv ity of the carrying value of goodwill to reasonably possible changes in key assumptions, noting that these downside sensit iv it ies could require an adjustment to the carrying amount of goodwill in future. We also concluded that the investments in subsid iary undertakings reported in the Parent Company financial statements and the associated disclosures, are not materially misstated as at 31 December 2022. ![]() 336 Standard Chartered – Annual Report 2022 Financ ial statements Independent auditor’s report Risk Our response to the risk Key observations communicated to the Audit Committee 5. Valuation of financ ial instruments held at fair value with higher risk characterist ics Refer to the Audit Committee Report (page 165); Accounting polic ies (page 371); and Note 13 of the financial statements. At 31 December 2022, the Group reported financial assets measured at fa ir value of $282,263 mill ion (2021: $303,678 m ill ion), and financial l iab il it ies at fa ir value of $149,765 mill ion (2021: $138,596 mill ion), of wh ich financ ial assets of $5,865 mill ion (2021: $4,116 m ill ion) and financial l iab il it ies of $1,878 m ill ion (2021: $1,653 mill ion) are class if ied as Level 3 in the fair value hierarchy. The fair value of financ ial instruments with higher risk characterist ics involves the use of management judgement in the selection of valuation models and techniques, pric ing inputs and assumptions and fair value adjustments. A higher level of estimat ion uncerta inty is involved for financ ial instruments valued using complex models, pric ing inputs that have lim ited observabil ity, and fa ir value adjustments, includ ing the Cred it Valuation Adjustment, Funding Valuation Adjustment, Debit Valuation Adjustment and Own Credit Adjustment. We considered the following portfolios presented a higher level of estimat ion uncertainty: • Level 3 derivat ives and debt secur it ies in issue and a portfolio of Level 2 financ ial instruments whose valuation involves the use of complex models, and • Unlisted equity investments, loans at fair value, debt and other financial instruments classif ied in Level 3 with unobservable pric ing 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 ial instruments, includ ing independent price verif icat ion, model review and approval, fair value adjustments, income statement analysis and reporting. Among other procedures, we engaged our valuation special ists to ass ist the audit team in performing the following procedures: • Test complex model-dependent valuations by independently revaluing a sample of Level 3 and complex Level 2 derivat ive financial instruments and debt securit ies in issue, in order to assess the appropriateness of models and the adequacy of assumptions and inputs used by the Group; • Test valuations of other financ ial instruments with higher estimat ion uncerta inty, such as unlisted equity investments, loans at fair value, debt and other financial instruments. We compared management’s valuation to our own independently developed range, where appropriate; • Assessed the appropriateness of pric ing inputs as part of the Independent Price Verif icat ion 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 ing ill iqu id credit spreads. Where differences between our independent valuation and management’s valuation were outside our thresholds, we performed addit ional testing to assess the impact on the valuation of financial instruments. Throughout our audit procedures we considered the continu ing uncerta inty aris ing from the current macro-economic environment includ ing market volat il ity. In add it ion, we assessed whether there were any ind icators of aggregate bias in financ ial instrument marking and methodology assumptions. We concluded that assumptions used by management to estimate the fair value of financ ial instruments with higher risk characterist ics and the recogn it ion of related income were reasonable. We highl ighted the following matters to the Audit Committee: • Complex model-dependent valuations were appropriate based on the output of our independent revaluations; • Fair values of derivat ive transactions, debt securit ies in issue, unlisted equity investments, loans, debt and other financial instruments valued using pric ing informat ion with lim ited observab il ity were not materially misstated as at 31 December 2022, based on the output of our independent calculations; and • Valuation adjustments in respect of credit, funding, own credit and other risks applied to derivat ive portfol ios and debt securit ies in issue were appropriate, based on our analysis of market data and benchmarking of pric ing informat ion. The key audit matters remain consistent from prior year, except that following the decline of the Covid-19 pandemic and the associated decrease in related uncertaint ies, the key audit matter in respect of the impa irment of non-financial assets has become lim ited to the impa irment assessment of goodwill and investments in subsid iary undertak ings. Our applicat ion of mater ial ity We apply the concept of material ity in planning and performing the audit, in evaluating the effect of ident ified misstatements on the audit and in forming our audit opin ion. Material ity The magnitude of an omiss ion or m isstatement that, ind iv idually or in the aggregate, could reasonably be expected to influence the economic decis ions of the users of the financial statements. Mater ial ity prov ides a basis for determin ing the nature and extent of our aud it procedures. We determined material ity for the Group to be $234 m ill ion (2021: $195 mill ion), wh ich is 5% (2021: 5%) of adjusted PBT. This reflects actual PBT adjusted for non-recurring items relating to restructuring costs and impa irment of Ch ina Bohai Bank. We believe that adjusted PBT provides us with the most appropriate measure for the users of the financ ial statements, given the Group is profit making, it is consistent with the wider industry, it is the standard for listed and regulated entit ies and we believe it reflects the most relevant measure for users of the financial statements. We also bel ieve that the adjustments are appropriate as they relate to material non-recurring items. ![]() 337 Standard Chartered – Annual Report 2022 Financ ial statements • Statutory profit before tax – $4,286m Starting basis • Restructuring – $95m • China Bohai bank impa irment – $308m Adjustments • Totals $4,689m Adjusted PBT • Material ity of $234m (5% of Adjusted PBT) Material ity During the course of our audit, we performed a reassessment of our in it ial material ity. Th is assessment resulted in higher final material ity calculated based on the actual financial performance of the Group for the year. There were no changes to the basis for material ity calculat ion from the planning stage. We determined material ity for the Parent Company to be $210mill ion (2021: $176 m ill ion) wh ich is 0.4% (2021: 0.33%) of the equity of the Parent Company. We believe that equity provides us with the most appropriate measure for the users of the Parent Company’s financial statements, g iven that the Parent Company is primar ily a hold ing company. Performance material ity The applicat ion of mater ial ity at the ind iv idual account or balance level. It is set at an amount to reduce to an appropriately low level the probabil ity that the aggregate of uncorrected and undetected misstatements exceeds material ity. On the basis of our risk assessments, together with our assessment of the Group’s overall control environment, our judgement was that performance material ity was 50% (2021: 50%) of our planning material ity, namely $117 m ill ion (2021: $98 mill ion). We have set performance mater ial ity at th is percentage based on a variety of risk assessment factors such as the expectation of misstatements, internal control environment considerat ions and other factors such as the global complexity of the Group. Audit work at component locations for the purpose of obtain ing aud it coverage over sign ificant financial statement accounts is undertaken based on a percentage of total performance material ity. The performance mater ial ity 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 ity allocated to components was $8.8 mill ion to $34.1 m ill ion (2021: $8 m ill ion to $29 mill ion). Reporting threshold An amount below which ident ified m isstatements are considered as being clearly triv ial. We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of $11 mill ion (2021: $10 mill ion), wh ich is set at 5% of planning material ity, as well as differences below that threshold that, in our view, warranted reporting on qualitat ive grounds. When forming our opin ion, we evaluate any uncorrected misstatements against both the quantitat ive measures of material ity d iscussed above as well as other relevant qualitat ive cr iter ia. Other informat ion The other informat ion compr ises the informat ion included in the Annual Report set out on pages 1 to 509, includ ing the Strategic report (pages 1 to 133), the Directors’ report (pages 134 to 230), the Statement of directors’ responsib il it ies (page 231) and the informat ion not marked as ‘aud ited’ in the Risk review and Capital review section (pages 232 to 325), and the Supplementary informat ion (pages 474 to 509), other than the financial statements and our aud itor’s report thereon. The directors are responsible for the other informat ion conta ined with in the annual report. Our opin ion on the financial statements does not cover the other informat ion and, except to the extent otherw ise explic itly stated in this report, we do not express any form of assurance conclusion thereon. Our responsib il ity is to read the other informat ion and, in doing so, consider whether the other informat ion is materially incons istent w ith the financ ial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we ident ify such mater ial incons istenc ies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financ ial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of the other informat ion, we are required to report that fact. We have nothing to report in this regard. Opin ions on other matters prescr ibed by the Companies Act 2006 In our opin ion, the part of the d irectors’ remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006. In our opin ion, based on the work undertaken in the course of the audit: • the informat ion g iven in the strategic report and the directors’ report for the financ ial year for wh ich the financ ial statements are prepared is consistent with the financ ial statements; and • the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements. ![]() 338 Standard Chartered – Annual Report 2022 Financ ial statements Independent auditor’s report Matters on which we are required to report by exception In the light of the knowledge and understanding of the Group and the Parent Company and its environment obtained in the course of the audit, we have not ident ified mater ial 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 ion: • adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from branches not vis ited by us; or • the Parent Company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting records and returns; or • certain disclosures of directors’ remuneration specif ied by law are not made; or • we have not received all the informat ion and explanat ions we require for our audit. Corporate Governance Statement We have reviewed the directors’ statement in relation to going concern, longer-term viab il ity and that part of the Corporate Governance Statement relating to the Group and Company’s compliance with the provis ions of the UK Corporate Governance Code specif ied for our rev iew by the List ing 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 ial statements or our knowledge obta ined during the audit: • Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material uncertaint ies ident ified set out on page 219; • Directors’ explanation as to its assessment of the Company’s prospects, the period this assessment covers and why the period is appropriate set out on pages 132 and 133; • Director’s statement on whether it has a reasonable expectation that the Group will be able to continue in operation and meets its liab il it ies set out on page 133; • Directors’ statement on fair, balanced and understandable set out on page 218; • Board’s confirmation that it has carried out a robust assessment of the emerging and princ ipal r isks set out on page 222; • The section of the annual report that describes the review of effectiveness of risk management and internal control systems set out on pages 232 to 325; and • The section describ ing the work of the aud it committee set out on pages 163 to 169. Responsib il it ies of d irectors As explained more fully in the directors’ responsib il it ies statement set out on page 231, the directors are responsible for the preparation of the financ ial statements and for be ing satisf ied that they g ive a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financ ial statements that are free from material misstatement, whether due to fraud or error. In preparing the financ ial statements, the d irectors are responsible for assessing the Group and Parent Company’s abil ity to cont inue as a going concern, disclos ing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liqu idate the Group or the Parent Company or to cease operations, or have no realist ic alternat ive but to do so. Auditor’s responsib il it ies for the aud it of the financial statements Our objectives are to obta in reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opin ion. 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 iv idually or in the aggregate, they could reasonably be expected to influence the economic decis ions of users taken on the bas is of these financ ial statements. Explanation as to what extent the audit was considered capable of detecting irregular it ies, includ ing fraud Irregularit ies, includ ing fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsib il it ies, outl ined above, to detect irregular it ies, includ ing fraud. The r isk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intent ional misrepresentat ions, or through collus ion. The extent to which our procedures are capable of detecting irregular it ies, includ ing fraud is detailed below. However, the primary responsib il ity for the prevention and detection of fraud rests with both those charged with governance of the Company and management. • We obtained an understanding of the legal and regulatory frameworks that are applicable to the Group and determined that the most sign ificant are those that relate to the reporting framework (UK-adopted IAS and EU IFRS, the Companies Act 2006 and the UK Corporate Governance Code, the Financ ial Conduct Author ity (FCA) List ing Rules, the Ma in Board List ing Rules of the Hong Kong Stock Exchange), regulations and supervisory requirements of the Prudential Regulation Authority (PRA), FRC, FCA and other overseas regulatory requirements, includ ing but not lim ited to regulat ions in its major markets such as Hong Kong, India, Singapore, the United States of America, and the relevant tax compliance regulations in the jur isd ict ions in which the Group operates. In addit ion, we concluded that there are certain sign ificant laws and regulat ions that may have an effect on the determinat ion of the amounts and disclosures in the financ ial statements and those laws and regulations relating to regulatory capital and liqu id ity, conduct, financial cr ime includ ing ant i-money laundering, sanctions and market abuse recognis ing the financial and regulated nature of the Group’s activ it ies. ![]() 339 Standard Chartered – Annual Report 2022 Financ ial statements • We understood how the Group is complying with those frameworks by performing a combinat ion of inqu ir ies of senior management and those charged with governance as required by audit ing standards, rev iew of board and certain committee meeting minutes, gain ing an understanding of the Group’s approach to governance, inspect ion of regulatory correspondence in the year and engaging with internal and external legal counsel. We also engaged EY financial cr ime and forensics special ists to perform procedures on areas relating to anti-money laundering, whistleblow ing, and sanct ions compliance. Through these procedures, we became aware of actual or suspected non-compliance. The ident ified actual or suspected non-compliance was not suffic iently s ign ificant to our audit that would have resulted in being ident ified as a key audit matter. • We assessed the susceptib il ity of the Group’s financ ial statements to material misstatement, includ ing how fraud might occur by consider ing the controls that the Group has established to address risks ident ified by the ent ity, or that otherwise seek to prevent, deter or detect fraud. Our procedures to address the risks ident ified also included incorporation of unpredictab il ity into the nature, tim ing and/or extent of our testing, challenging assumptions and judgements made by management in their sign ificant accounting estimates and journal entry testing. • Based on this understanding, we designed our audit procedures to ident ify non-compl iance with such laws and regulations. Our procedures involved inqu ir ies of the Group’s internal and external legal counsel, money laundering reporting officer, internal audit, certain senior management executives and focused testing on a sample basis, includ ing journal entry testing. We also performed inspect ion of key regulatory correspondence from the relevant regulatory authorit ies as well as rev iew of board and committee minutes. • For instances of actual or suspected non-compliance with laws and regulations, which have a material impact on the financial statements, these were commun icated by management to the Group audit engagement team and component teams (where applicable) who performed audit procedures such as inqu ir ies with management, sending confirmations to external legal counsel, substant ive testing and meeting with regulators. Where appropriate, we involved special ists from our firm to support the aud it team. • The Group is authorised to provide banking, insurance, mortgages and home finance, consumer credit, pensions, investments and other activ it ies. The Group operates in the banking industry which is a highly regulated environment. As such, the Senior Statutory Auditor considered the experience and expertise of the Group audit engagement team, the component teams and the shared service centre teams to ensure that the team had the appropriate competence and capabil it ies, which included the use of special ists where appropr iate. A further descript ion of our respons ib il it ies for the aud it of the financial statements is located on the Financ ial Report ing Council’s website at https://www.frc.org.uk/ auditorsrespons ib il it ies. This descript ion forms part of our auditor’s report. Other matters we are required to address • Following the recommendation from the Audit Committee, we were re-appointed by the Company at the Annual General Meeting on 4 May 2022 to audit the financ ial statements for the year ending 31 December 2022 and subsequent financial per iods. The period of total uninterrupted engagement is three years, covering the years ended 31 December 2020 to 31 December 2022. • The audit opin ion is consistent with the addit ional report to the Audit Committee. Use of our report This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsib il ity 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 ions we have formed. David Canning Jones (Senior statutory auditor) for and on behalf of Ernst & Young LLP, Statutory Auditor London 16 February 2023 ![]() 340 Standard Chartered – Annual Report 2022 Financ ial statements Financ ial statements Notes 2022 $mill ion 2021 $mill ion Interest income 15,252 10,246 Interest expense (7,659) (3,448) Net interest income 3 7,593 6,798 Fees and commiss ion income 3,972 4,458 Fees and commiss ion expense (859) (736) Net fees and commiss ion income 4 3,113 3,722 Net trading income 5 5,310 3,431 Other operating income 6 302 750 Operating income 16,318 14,701 Staff costs (7,618) (7,668) Premises costs (401) (387) General admin istrat ive expenses (1,708) (1,688) Depreciat ion and amort isat ion (1,186) (1,181) Operating expenses 7 (10,913) (10,924) Operating profit before impa irment losses and taxat ion 5,405 3,777 Credit impa irment 8 (836) (254) Goodwill, property, plant and equipment and other impa irment 9 (439) (372) Profit from associates and jo int ventures 32 156 196 Profit before taxation 4,286 3,347 Taxation 10 (1,384) (1,034) Profit for the year 2,902 2,313 Profit attributable to: Non-controlling interests 29 (46) (2) Parent company shareholders 2,948 2,315 Profit for the year 2,902 2,313 cents cents Earnings per share: Basic earnings per ordinary share 12 85.9 61.3 Diluted earnings per ordinary share 12 84.3 60.4 The notes on pages 348 to 473 form an integral part of these financ ial statements. #### Consolidated income statement For the year ended 31 December 2022 ![]() 341 Standard Chartered – Annual Report 2022 Financ ial statements Notes 2022 $mill ion 2021 $mill ion Profit for the year 2,902 2,313 Other comprehensive (loss)/income: Items that will not be reclassif ied to income statement: (75) 309 Own credit (losses)/gains on financ ial l iab il it ies des ignated at fair value through profit or loss (56) 43 Equity instruments at fair value through other comprehensive income (75) 169 Actuarial gains on retirement benefit obligat ions 30 41 179 Taxation relating to components of other comprehensive income 10 15 (82) Items that may be reclassif ied subsequently to income statement: (3,703) (1,081) Exchange differences on translation of foreign operations: Net losses taken to equity (2,466) (791) Net gains on net investment hedges 512 118 Share of other comprehensive (loss)/income from associates and jo int ventures 32 (79) 10 Debt instruments at fair value through other comprehensive income: Net valuation losses taken to equity (1,528) (386) Reclassif ied to income statement 207 (157) Net impact of expected credit losses 118 31 Cash flow hedges: Net movements in cash flow hedge reserve¹ 14 (619) 20 Taxation relating to components of other comprehensive income 10 152 74 Other comprehensive loss for the year, net of taxation (3,778) (772) Total comprehensive (loss)/income for the year (876) 1,541 Total comprehensive (loss)/income attributable to: Non-controlling interests 29 (88) (17) Parent company shareholders (788) 1,558 Total comprehensive (loss)/income for the year (876) 1,541 1 This line item has been represented in 2022 as a net balance of all movements in the cash flow hedge reserve #### Consolidated statement of comprehensive income For the year ended 31 December 2022 ![]() 342 Standard Chartered – Annual Report 2022 Financ ial statements Financ ial statements Notes 2022 $mill ion 2021 $mill ion Assets Cash and balances at central banks 13,35 58,263 72,663 Financ ial assets held at fa ir value through profit or loss 13 105,812 129,121 Derivat ive financial instruments 13,14 63,717 52,445 Loans and advances to banks 13,15 39,519 44,383 Loans and advances to customers 13,15 310,647 298,468 Investment securit ies 13 172,448 163,437 Other assets 20 50,383 49,932 Current tax assets 10 503 766 Prepayments and accrued income 3,149 2,176 Interests in associates and jo int ventures 32 1,631 2,147 Goodwill and intang ible assets 17 5,869 5,471 Property, plant and equipment 18 5,522 5,616 Deferred tax assets 10 834 859 Assets classif ied as held for sale 21 1,625 334 Total assets 819,922 827,818 Liab il it ies Deposits by banks 13 28,789 30,041 Customer accounts 13 461,677 474,570 Repurchase agreements and other sim ilar secured borrow ing 13,16 2,108 3,260 Financ ial l iab il it ies held at fa ir value through profit or loss 13 79,903 85,197 Derivat ive financial instruments 13,14 69,862 53,399 Debt securit ies in issue 13,22 61,242 61,293 Other liab il it ies 23 43,527 44,314 Current tax liab il it ies 10 583 348 Accruals and deferred income 5,895 4,651 Subordinated liab il it ies and other borrowed funds 13,27 13,715 16,646 Deferred tax liab il it ies 10 769 800 Provis ions for l iab il it ies and charges 24 383 453 Retirement benefit obligat ions 30 146 210 Liab il it ies included in disposal groups held for sale 21 1,307 – Total liab il it ies 769,906 775,182 Equity Share capital and share premium account 28 6,930 7,022 Other reserves 8,165 11,805 Retained earnings 28,067 27,184 Total parent company shareholders’ equity 43,162 46,011 Other equity instruments 28 6,504 6,254 Total equity excluding non-controlling interests 49,666 52,265 Non-controlling interests 29 350 371 Total equity 50,016 52,636 Total equity and liab il it ies 819,922 827,818 The notes on pages 348 to 473 form an integral part of these financ ial statements. These financial statements were approved by the Board of D irectors and authorised for issue on 16 February 2023 and signed on its behalf by: José Viñals Bill Winters Andy Halford Group Chairman Group Chief Executive Group Chief Financ ial Officer #### Consolidated balance sheet As at 31 December 2022 ![]() 343 Standard Chartered – Annual Report 2022 Financ ial statements #### Consolidated statement of changes in equity For the year ended 31 December 2022 Ordinary share capital and share premium account $mill ion Preference share capital and share premium account $mill ion Capital and merger reserves 1 $mill ion Own credit adjust- ment reserve $mill ion Fair value through other compre- hensive income reserve – debt $mill ion Fair value through other compre- hensive income reserve – equity $mill ion Cash- flow hedge reserve $mill ion Trans- lation reserve $mill ion Retained earnings $mill ion Parent company share- holders’ equity $mill ion Other equity instru- ments $mill ion Non- controlling interests $mill ion Total $mill ion As at 1 January 2021 5,564 1,494 17,207 (52) 529 148 (52) (5,092) 26,140 45,886 4,518 325 50,729 Profit/(loss) for the year – – – – – – – – 2,315 2,315 – (2) 2,313 Other comprehensive income/(loss) – – – 37 (426) 101 18 (662) 175² (757) – (15) (772) Distr ibut ions – – – – – – – – – – – (31) (31) Other equity instruments issued, net of expenses – – – – – – – – – – 2,728 – 2,728 Redemption of other equity instruments – – – – – – – – (51) (51) (992) – (1,043) Treasury shares net movement – – – – – – – – (235) (235) – – (235) Share option expenses – – – – – – – – 147 147 – – 147 Div idends on ord inary shares – – – – – – – – (374) (374) – – (374) Div idends on preference shares and AT1 securit ies – – – – – – – – (410) (410) – – (410) Share buy-back 3,4 (39) – 39 – – – – – (506) (506) – – (506) Other movements 3 – – – – – – 10 (17)⁵ (4) – 946 90 As at 31 December 2021 5,528 1,494 17,246 (15) 103 249 (34) (5,744) 27,184 46,011 6,254 371 52,636 Profit/(loss) for the year – – – – – – – – 2,948 2,948 – (46) 2,902 Other comprehensive (loss)/income – – – (48) (1,219) (43) (530) (1,904) 8 2 (3,736) – (42) (3,778) Distr ibut ions – – – – – – – – – – – (31) (31) Other equity instruments issued, net of expenses – – – – – – – – – – 1,240 – 1,240 Redemption of other equity instruments – – – – – – – – – – (999) – (999) Treasury shares net movement – – – – – – – – (203) (203) – – (203) Share option expenses – – – – – – – – 163 163 – – 163 Div idends on ord inary shares – – – – – – – – (393) (393) – – (393) Div idends on preference shares and AT1 securit ies – – – – – – – – (401) (401) – – (401) Share buy-back 7,8 (92) – 92 – – – – – (1,258) (1,258) – – (1,258) Other movements – – – – – – – 125 19 9 31 9 5 98 10 138 As at 31 December 2022 5,436 1,494 17,338 (63) (1,116) 206 (564) (7,636) 28,067 43,162 6,504 350 50,016 1 Includes capital reserve of $5 mill ion, cap ital redemption reserve of $222 mill ion and merger reserve of $17,111 m ill ion 2 Comprises actuarial gain, net of taxation on Group defined benefit schemes 3 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 ion, and the total cons iderat ion pa id was $255 mill ion ( includ ing $2 m ill ion 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 4 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 ion, and the total cons iderat ion pa id was $251 mill ion ( includ ing $1 m ill ion 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 5 Movement related to Translation adjustment and AT1 Securit ies charges 6 Movement related to non-controlling interest from Mox Bank Lim ited 7 On 18 February 2022, 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 $56 mill ion, and the total cons iderat ion pa id was $754 mill ion ( includ ing $4 m ill ion of fees and stamp duty), the buy-back completed on 19 May 2022. The total number of shares purchased was 111,295,408, representing 3.61 per cent of the ordinary shares in issue. The nominal value of the shares was transferred from the share capital to the capital redemption reserve account 8 On 1 August 2022, 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 $37 mill ion, and the total cons iderat ion pa id was $504 mill ion ( includ ing $2.5 m ill ion of fees). The total number of shares purchased was 73,073,837 representing 2.5 per cent of the ordinary shares in issue. The nominal value of the shares was transferred from the share capital to the capital redemption reserve account 9 Movement mainly related to $21mill ion non-controll ing interest on Power2SME Pte Lim ited, $8 m ill ion on CurrencyFa ir and $(9) mill ion related to AT1 secur it ies charges 10 Movements related to non-controlling interest from Mox Bank Lim ited ($39 m ill ion), Trust Bank S ingapore Ltd ($47 mill ion) , Zod ia Markets Holdings Ltd ($3 mill ion) and Power2SME Pte Lim ited ($9m ill ion) Note 28 includes a descript ion of each reserve. The notes on pages 348 to 473 form an integral part of these financ ial statements. ![]() 344 Standard Chartered – Annual Report 2022 Financ ial statements Financ ial statements Notes Group Company 2022 $mill ion 2021 $mill ion 2022 $mill ion 2021 $mill ion Cash flows from operating activ it ies: Profit before taxation 4,286 3,347 402 2,090 Adjustments for non-cash items and other adjustments included with in income statement 34 3,549 2,104 565 (1,201) Change in operating assets 34 (545) (37,904) (258) (5,366) Change in operating liab il it ies 34 8,786 45,954 (966) 3,123 Contribut ions to defined benefit schemes 30 (80) (122) – – UK and overseas taxes paid 10 (821) (1,161) – – Net cash from/(used in) operating activ it ies 15,175 12,218 (257) (1,354) Cash flows from invest ing act iv it ies: Internally generated capital ised software 17 (1,096) (989) – – Purchase of property, plant and equipment 18 (835) (352) – – Disposal of property, plant and equipment 18 343 816 – – Disposal of held for sale property, plant and equipment 21 79 149 – – Acquis it ion of investment associates, and jo int ventures, net of cash acquired 32 (26) (35) – – Div idends rece ived from subsid iar ies, associates and joint ventures 32 58 38 1,047 2,244 Purchase of investment securit ies (280,952) (299,468) – – Disposal and maturity of investment securit ies 259,853 290,846 960 1,650 Net cash (used in)/from invest ing act iv it ies (22,576) (8,995) 2,007 3,894 Cash flows from financing act iv it ies: Exercise of share options 12 7 12 7 Purchase of own shares (215) (242) (215) (242) Cancellation of shares includ ing share buy-back (1,258) (506) (1,258) (506) Premises and equipment lease liab il ity princ ipal payment (269) (278) – – Issue of AT1 capital, net of expenses 28 1,240 2,728 1,240 2,728 Redemption of AT1 Capital 28 (999) (1,043) (999) (1,043) Gross proceeds from issue of subordinated liab il it ies 34 750 1,137 750 1,137 Interest paid on subordinated liab il it ies 34 (667) (580) (619) (576) Repayment of subordinated liab il it ies 34 (1,848) (546) (1,800) (546) Proceeds from issue of senior debts 34 11,902 10,944 1,500 2,250 Repayment of senior debts 34 (7,838) (9,945) (2,980) (5,408) Interest paid on senior debts 34 (845) (690) (506) (504) Net cash inflow from non-controlling interest 29 88 94 – – Distr ibut ions and div idends pa id to non-controlling interests, preference shareholders and AT1 securit ies (432) (441) (401) (410) Div idends pa id to ordinary shareholders (393) (374) (393) (374) Net cash (used in)/from financ ing act iv it ies (772) 265 (5,669) (3,487) Net (decrease)/increase in cash and cash equivalents (8,173) 3,488 (3,919) (947) Cash and cash equivalents at beginn ing of the year 99,605 97,874 11,336 12,283 Effect of exchange rate movements on cash and cash equivalents (2,713) (1,757) – – Cash and cash equivalents at end of the year 1 35 88,719 99,605 7,417 11,336 1 Comprises cash and balances at central banks $58,263 mill ion (2021: $72,663 m ill ion), treasury b ills and other elig ible b ills $17,936 mill ion (2021: $9,132 m ill ion), loans and advances to banks $20,558 mill ion (2021: $24,788 m ill ion), trad ing securit ies $1,135 m ill ion (2021: $1,174 m ill ion) less restr icted balances $9,173 mill ion (2021: $8,152 mill ion) Interest received was $14,590 mill ion (2021: $10,167 m ill ion), interest paid was $6,200 mill ion (2021: $3,591 m ill ion). #### Cash flow statement For the year ended 31 December 2022 ![]() 345 Standard Chartered – Annual Report 2022 Financ ial statements #### Company balance sheet For the year ended 31 December 2022 Notes 2022 $mill ion 2021 $mill ion Non-current assets Investments in subsid iary undertak ings 32 60,975 60,429 Current assets Derivat ive financial instruments 39 61 320 Financ ial assets held at fa ir value through profit or loss 39 15,358 15,647 Investment securit ies 39 8,423 9,424 Amounts owed by subsid iary undertak ings 39 7,417 11,336 Total current assets 31,259 36,727 Current liab il it ies Derivat ive financial instruments 39 1,343 339 Amounts owed to subsid iary undertak ings 2 – Financ ial l iab il it ies held at fa ir value through profit or loss 39 12,842 11,804 Other creditors 423 462 Total current liab il it ies 14,610 12,605 Net current assets 16,649 24,122 Total assets less current liab il it ies 77,624 84,551 Non-current liab il it ies Debt securit ies in issue 39 13,891 16,809 Subordinated liab il it ies and other borrowed funds 39 11,239 13,830 Total non-current liab il it ies 25,130 30,639 Total assets less liab il it ies 52,494 53,912 Equity Share capital and share premium account 28 6,930 7,022 Other reserves 17,271 17,220 Retained earnings 21,791 23,418 Total shareholders’ equity 45,992 47,660 Other equity instruments 28 6,502 6,252 Total equity 52,494 53,912 The Company has taken advantage of the exemption in section 408 of the Companies Act 2006 not to present its ind iv idual statement of comprehensive income and related notes that form a part of these financ ial statements. The Company profit for the period after tax is $471 mill ion (2021: $2,081 m ill ion). The notes on pages 348 to 473 form an integral part of these financ ial statements. These financial statements were approved by the Board of D irectors and authorised for issue on 16 February 2023 and signed on its behalf by: José Viñals Bill Winters Andy Halford Group Chairman Group Chief Executive Group Chief Financ ial Officer ![]() 346 Standard Chartered – Annual Report 2022 Financ ial statements Financ ial statements Share capital and share premium account $mill ion Capital and merger reserve 1 $mill ion Own credit adjustment reserve $mill ion Cash flow hedge reserve $mill ion Retained earnings $mill ion Other equity instruments $mill ion Total $mill ion As at 1 January 2021 7,058 17,207 (18) (11) 22,774 4,516 51,526 Profit for the year² – – – – 2,081 – 2,081 Other comprehensive income/(loss) – – 4 (1) – – 3 Other equity instruments issued, net of expenses – – – – – 2,728 2,728 Treasury shares purchased – – – – (242) – (242) Treasury shares issued – – – – 7 – 7 Share option expenses – – – – 147 – 147 Div idends on ord inary shares – – – – (374) – (374) Div idends on preference share and AT1 secur it ies – – – – (410) – (410) Redemption of other equity instruments – – – – (51) (992) (1,043) Share buy-back 3,4 (39) 39 – – (506) (506) Other movements 5 3 – – – (8) (5) As at 31 December 2021 7,022 17,246 (14) (12) 23,418 6,252 53,912 Profit for the year 2 – – – – 471 – 471 Other comprehensive loss – – (5) (36) – – (41) Other equity instruments issued, net of expenses – – – – – 1,240 1,240 Treasury shares purchased – – – – (215) – (215) Treasury shares issued – – – – 12 – 12 Share option expenses – – – – 163 – 163 Div idends on ord inary shares – – – – (393) – (393) Div idends on preference share and AT1 secur it ies – – – – (401) – (401) Redemption of other equity instruments – – – – – (999) (999) Share buy-back 6,7 (92) 92 – – (1,258) (1,258) Other movements 5 – – – – (6) 9 3 As at 31 December 2022 6,930 17,338 (19) (48) 21,791 6,502 52,494 1 Includes capital reserve of $5 mill ion, cap ital redemption reserve of $222 mill ion and merger reserve of $17,111 m ill ion 2 Includes div idend rece ived of $550 mill ion (2021: $1,511 m ill ion) from Standard Chartered Hold ing Lim ited 3 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 ion, and the total cons iderat ion pa id was $255 mill ion ( includ ing $2 m ill ion 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 4 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 ion, and the total cons iderat ion pa id was $251 mill ion ( includ ing $1 m ill ion 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 5 Movement mainly related to AT1 securit ies charges 6 On 18 February 2022, 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 $56 mill ion, and the total cons iderat ion pa id was $754 mill ion ( includ ing $4 m ill ion of fees and stamp duty), the buy-back completed on 19 May 2022. The total number of shares purchased was 111,295,408, representing 3.61 per cent of the ordinary shares in issue. The nominal value of the shares was transferred from the share capital to the capital redemption reserve account 7 On 1 August 2022, 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 $37 mill ion, and the total cons iderat ion pa id was $504 mill ion ( includ ing $2.5 m ill ion of fees). The total number of shares purchased was 73,073,837 representing 2.5 per cent of the ordinary shares in issue. The nominal value of the shares was transferred from the share capital to the capital redemption reserve account Note 28 includes a descript ion of each reserve. The notes on pages 348 to 473 form an integral part of these financ ial statements. #### Company statement of changes in equity For the year ended 31 December 2022 ![]() 347 Standard Chartered – Annual Report 2022 Financ ial statements #### Contents – Notes to the financial statements Section Note Page Basis of preparation 1 Accounting polic ies 348 Performance/return 2 Segmental informat ion 350 3 Net interest income 356 4 Net fees and commiss ion 356 5 Net trading income 359 6 Other operating income 359 7 Operating expenses 360 8 Credit impa irment 361 9 Goodwill, property, plant and equipment and other impa irment 365 10 Taxation 365 11 Div idends 369 12 Earnings per ordinary share 370 Assets and liab il it ies held at fa ir value 13 Financ ial instruments 371 14 Derivat ive financial instruments 397 Financ ial instruments held at amortised cost 15 Loans and advances to banks and customers 407 16 Reverse repurchase and repurchase agreements includ ing other s im ilar lending and borrowing 407 Other assets and investments 17 Goodwill and intang ible assets 409 18 Property, plant and equipment 412 19 Leased assets 414 20 Other assets 415 21 Assets held for sale and associated liab il it ies 415 Funding, accruals, provis ions, cont ingent liab il it ies and legal proceed ings 22 Debt securit ies in issue 417 23 Other liab il it ies 418 24 Provis ions for l iab il it ies and charges 418 25 Contingent liab il it ies and comm itments 419 26 Legal and regulatory matters 420 Capital instruments, equity and reserves 27 Subordinated liab il it ies and other borrowed funds 421 28 Share capital, other equity instruments and reserves 422 29 Non-controlling interests 427 Employee benefits 30 Retirement benefit obligat ions 428 31 Share-based payments 433 Scope of consolidat ion 32 Investments in subsid iary undertak ings, jo int ventures and assoc iates 437 33 Structured entit ies 443 Cash flow statement 34 Cash flow statement 445 35 Cash and cash equivalents 446 Other disclosure matters 36 Related party transactions 447 37 Post balance sheet events 448 38 Auditor’s remuneration 448 39 Standard Chartered PLC (Company) 449 40 Related undertakings of the Group 452 ![]() 348 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 1. Accounting polic ies Statement of compliance The Group financial statements consol idate Standard Chartered PLC (the Company) and its subsid iar ies (together referred to as the Group) and equity account the Group’s interests in associates and jo intly controlled ent it ies. The parent company financial statements present informat ion about the Company as a separate entity. The Group financial statements have been prepared in accordance with UK-adopted internat ional account ing standards and International Financ ial Report ing Standards (IFRS) as adopted by the European Union (EU IFRS). The Company financial statements have been prepared in accordance with UK-adopted internat ional account ing standards as applied in conformity with section 408 of the Companies Act 2006. The financ ial statements have been prepared in accordance with the requirements of the Companies Act 2006. There are no sign ificant d ifferences between UK-adopted internat ional account ing standards and EU IFRS. The following parts of the Risk review and Capital review form part of these financial statements: a) Risk review: Disclosures marked as ‘audited’ from the start of the Credit Risk section (page 236) to the end of Other princ ipal r isks in the same section (page 319). 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 321 to 322). Basis of preparation The consolidated and Company financ ial statements have been prepared on a going concern basis and under the histor ical cost convent ion, as modif ied by the revaluat ion of cash-settled share-based payments, fair value through other comprehensive income, and financ ial assets and liab il it ies ( includ ing der ivat ives) at fa ir value through profit or loss. The consolidated financ ial 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 ion dollars, except when otherwise ind icated. Sign ificant and other account ing estimates and judgement In determin ing the carry ing amounts of certain assets and liab il it ies, the Group makes assumpt ions of the effects of uncertain future events on those assets and liab il it ies at the balance sheet date. The Group’s estimates and assumptions are based on histor ical exper ience and expectation of future events and are reviewed period ically. Further informat ion about key assumptions concerning the future, and other key sources of estimat ion uncerta inty and judgement, are set out in the relevant disclosure notes for the areas set out under the relevant headings below: Sign ificant account ing estimates and crit ical judgements Sign ificant account ing estimates and judgements represent those items which have a sign ificant r isk of causing a material adjustment to the carrying amounts of assets and liab il it ies w ith in the next year. S ign ificant account ing estimates and judgements are: • Credit impa irment, includ ing evaluat ion of management overlays and post-model adjustments, and determinat ion of probabil ity we ight ings for Stage 3 ind iv idually assessed provis ions (Note 8) • Financ ial instruments measured at fair value (Note 13) • Investments in subsid iary undertak ings, jo int ventures and associates – China Bohai associate accounting and impa irment analys is (Note 32) Other areas of accounting estimate and judgement Other areas of accounting estimate and judgement do not meet the definit ion under IAS 1 of sign ificant account ing estimates or crit ical account ing judgements, but the recognit ion of certa in material assets and liab il it ies are based on assumptions and/or are subject to long-term uncertaint ies. The other areas of account ing estimate and judgement are: • Taxation (Note 10) • Goodwill impa irment (Note 17) • Property, plant and equipment (Note 18) • Recoverable amounts for aircraft operating lease assets (Note 18) • Retirement benefit obligat ions (Note 30) • Provis ions for l iab il it ies and charges (Note 24) • Share-based payments (Note 31) Climate impact on the Group’s balance sheet Climate, and the impact of climate on the Group’s balance sheet is considered as an area of sign ificant account ing estimate and judgment through the uncertainty of future events and the impact of that uncertainty on the Group’s assets and liab il it ies. It is noted that although not currently quantitat ively mater ial, the Group considers climate to be qualitat ively mater ial to the Group. The Group has assessed the impact of climate risk on the financial report. Th is is set out with in the Susta inable and Responsible Business chapter on pages 64 to 66 which incorporates the Group’s Climate-related Financ ial Disclosures which align with the recommendations from the Task Force for Climate related Financ ial D isclosures (TCFD). Further risk disclosure has been provided on pages 301 and 319 of the Princ ipal R isks and Uncertaint ies sect ion of the Annual Report where the Group has described how it manages climate risk as an Integrated Risk Type. #### Notes to the financial statements ![]() 349 Standard Chartered – Annual Report 2022 Financ ial statements 1. Accounting polic ies continued The areas of impact and where judgements and the use of estimates have been applied were credit risk and the impact on lending portfolios; Environmental, Sustainab il ity or Governance (ESG) features with in 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 ity of certa in assets, includ ing of goodwill, deferred tax assets and investments in subsid iary undertakings. This assessment on the corporate loan portfolio was undertaken by consider ing the matur ity profile of the loan portfolio which is major ity shorter term. Trans it ion r isk, as our clients move to lower carbon emitt ing revenues, (e ither by virtue of legislat ion or chang ing end customer preference) is considered with reference to client transit ion pathways and manifests over a longer term than the maturity of the loan book (up to 2050). Further transit ion r isk is managed through reviews of clients with ESG risk by the Group’s Risk function, and through an ongoing process of ident ify ing clients which have transit ion pathways that are Par is 1.5 degree compliant and congruent with the Groups. Physical risk is already included with in the majority of our mortgage lending and we have applied scenario analysis against the pathways of different temperature addit ions and country policy scenarios. We also assess the impact of climate risk on the classif icat ion of financ ial instruments under IFRS 9, when ESG triggers may affect the cash flows received by the Group under the contractual terms of the instrument. The Group Climate Risk team have performed a top-down quantitat ive assessment of the impact of climate risk on the IFRS 9 ECL provis ion. Th is assessment has been performed across both the CCIB and CPBB portfolios. CCIB includes Corporates, Sovereign, Asset Backed Securit ies, Commerc ial and Special ised Lend ing. CPBB includes Mortgages, Personal Loans and Credit Cards. The climate adjusted ECL was estimated by adding climate scalars (multipl icat ive adjustments) to the business as usual ECL. The scalars, such as LGD increases, have been informed by the judgement of using three Network of Central Banks and Supervisors for Greening the Financ ial System (NGFS) pathways/scenar ios, being Early Action, Late Action and No Addit ional Act ion. These pathways have been probabil ity we ighted and generally include the addit ion of carbon charges/taxes over time to model transit ion r isk. The impact assessment which is considered a resulted in an marginal ECL increase across CCIB and CPBB which will not be recorded as an overlay for the 2022 year end (in line with our view that the quantitat ive impact of Climate Risk is currently lim ited). The Group’s corporate plan has a 5 year outlook and already includes where we have committed to transit ion ing away from certain high carbon sectors (i.e. coal), offset by transit ion finance opportun it ies. Th is is shorter term than many of the climate scenario outlooks but seeks to capture the nearer term performance as required by recoverabil ity models. We have for the first time in the 2023 corporate plan included antic ipated ECL charges l inked to climate for three sectors (Oil and Gas, Metals and Min ing and Power) over the 5 years. This addit ion of ECL has not in itself, impacted the recoverabil ity of assets supported by d iscounted cash flow models (such as Value in Use) which util ise the corporate plan. With the aim to enhance our internal scenario analysis capabil it ies in line with our Risk Appetite Statement, in 2022 we assessed the impact on our CCIB corporate client portfolio based on three International Energy Agency (IEA) scenarios and three Phase 2 scenarios from the NGFS (Which align to the CBES scenarios) and partic ipated in the Monetary Authority of Singapore Industry-Wide Stress Test. We also assessed the impact of sea level rises under various Intergovernmental Panel on Climate Change (IPCC) Representative Concentration Pathways (RCP) scenarios to explore the Physical Risk impact on the Consumer, Private and Business Banking (CPBB) resident ial mortgage portfol io over short- and long-term time horizons for internal risk management purposes. Notwithstand ing these challenges, our work to date, using certain assumptions and proxies, ind icates that our bus iness is resil ient to all Network of Central Banks and Supervisors for Greening the Financ ial System (NGFS) and IEA scenarios that were explored. The Group, although acknowledging the lim itat ions of current data available, increas ing soph ist icat ion of models evolving and nascent nature of climate impacts on internal and client assets, considers Climate Risk to have lim ited quantitat ive impact in the immed iate term and as a longer term risk will be addressed through its business strategy and financial plann ing as the Group implements its net zero journey. IFRS and Hong Kong accounting requirements As required by the Hong Kong List ing Rules, an explanat ion of the differences in accounting practices between UK- adopted IFRS and Hong Kong Financ ial Report ing Standards is required to be disclosed. There would be no sign ificant differences had these accounts been prepared in accordance with Hong Kong Financ ial Report ing 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 ion • Note 4 Net fees and commiss ion • Note 12 Earnings per ordinary share • Note 13 Financ ial instruments • Note 14 Derivat ive financial instruments • Note 33 Structured entit ies • Note 36 Related party transactions • Risk review: various credit risk tables for new segment Ventures and Operational Risk events and losses • Capital review: new segment Ventures New accounting standards in issue but not yet effective IFRS 17 Insurance Contracts IFRS 17 Insurance Contracts was issued in May 2017 (and subsequently amended in June 2020) to replace IFRS 4 Insurance Contracts and to establish a comprehensive standard for inceptors of insurance polic ies. The Group w ill apply IFRS 17 for annual reporting periods beginn ing on January 1, 2023. IFRS 17 will not have a material impact on the Group’s financial statements. ![]() 350 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 1. Accounting polic ies continued Going concern These financial statements were approved by the Board of directors on 16 February 2023. The directors have made an assessment of the Group’s abil ity to cont inue as a going concern. This assessment has been made having considered the impact of COVID-19, macroeconomic and geopolit ical headwinds, includ ing: • Review of the Group Strategy and Corporate Plan • An assessment of the actual performance to date, loan book quality, credit impa irment, legal, regulatory and compliance matters, and the updated annual budget • Considerat ion of stress test ing performed, includ ing both the Bank of England annual stress test and a Group Recovery and Resolution Plan (RRP) as submitted to the PRA. Both these submiss ions include the applicat ion of stressed scenarios includ ing; COVID add it ional waves w ith the accompanying economic shocks, credit impact and short term liqu id ity shocks. Under the tests and through the range of scenarios, the results of these exercises and the RRP demonstrate that the Group has sufficient cap ital and liqu id ity to continue as a going concern and meet min imum regulatory cap ital and liqu id ity requirements • Analysis of the capital, funding and liqu id ity posit ion of the Group, includ ing the cap ital 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 id ity was considered in the context of the risk appetite metrics, includ ing the ADR and LCR rat ios • The Group’s Internal Liqu id ity Adequacy Assessment Process (ILAAP), which considers the Group’s liqu id ity posit ion, its framework and whether suffic ient l iqu id ity resources are being mainta ined to meet l iab il it ies as they fall due, was also reviewed • The level of debt in issue, includ ing redempt ions and issuances during the year, debt falling due for repayment in the next 12 months and further planned debt issuances, includ ing the appet ite in the market for the Group’s debt • A detailed review of all princ ipal and emerg ing risks Based on the analysis performed, the directors confirm they are satisf ied that the Group has adequate resources to continue in business for a period of at least 12 months from 16 February 2023. For this reason, the Group continues to adopt the going concern basis of accounting for preparing the financial statements. 2. Segmental informat ion 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 ipally the location from which a client relationsh ip is managed, which may differ from where it is financ ially booked and may be shared between businesses and/or regions. In certain instances this approach is not appropriate and a Financ ial View is disclosed, that is, the location in which the transaction or balance was booked. Typically, the Financ ial V iew is used in areas such as the Market and Liqu id ity Risk reviews where actual booking location is more important for an assessment. Segmental informat ion is therefore on a Management View unless otherwise stated. Segments and regions The Group’s segmental reporting is in accordance with IFRS 8 Operating Segments and is reported consistently with the internal performance framework and as presented to the Group’s Management Team. As part of the ongoing execution of its refreshed strategy, the Group has expanded and reorganised its reporting structure with the creation of a third client segment, Ventures, effective on 1st January 2022. Ventures is a consolidat ion of SC Ventures and its related entit ies as well as the Group’s two majority- owned dig ital banks Mox in Hong Kong and Trust Bank in Singapore. • SC Ventures is the platform and catalyst for the Group to promote innovat ion, invest in disrupt ive financial technology and explore alternative business models • Mox, a cloud-native, mobile only dig ital bank, was launched in Hong Kong as a jo int venture w ith HKT, PCCW and Ctrip in September 2020 • Trust Bank was launched in Singapore in partnership with FairPr ice Group, the nat ion’s leading grocery retailer, in September 2022 The changes above require comparative periods to be restated. ![]() 351 Standard Chartered – Annual Report 2022 Financ ial statements 2. Segmental informat ion continued Restructuring items excluded from underlying results The Group’s statutory IFRS performance is adjusted for certain items to arrive at alternative performance measures. These items include profits or losses of a capital nature, amounts consequent to investment transactions driven by strategic intent, other infrequent and/or exceptional transactions that are sign ificant or mater ial in the context of the Group’s normal business earnings for the period and items which management and investors would ordinar ily ident ify separately when assess ing consistent performance period by period. The alternative performance measures are not with in the scope of IFRS and not a substitute for IFRS measures. These adjustments are set out below. Restructuring charges of $174 mill ion pr imar ily relate to redundanc ies partly offset by income from the Princ ipal F inance and Ship Leasing portfolios. Reconcil iat ions between underlying and statutory results are set out in the tables below: 2022 Underlying $mill ion Regulatory fine $mill ion Restructuring $mill ion Net gain on businesses disposed of/ held for sale $mill ion Goodwill and other impa irment 1 $mill ion Statutory $mill ion Operating income 16,255 – 43 20 – 16,318 Operating expenses (10,743) – (170) – – (10,913) Operating profit/(loss) before impa irment losses and taxat ion 5,512 – (127) 20 – 5,405 Credit impa irment (838) – 2 – – (836) Other impa irment (79) – (38) – (322) (439) Profit from associates and jo int ventures 167 – (11) – – 156 Profit/(loss) before taxation 4,762 – (174) 20 (322) 4,286 2021 Underlying $mill ion Regulatory fine $mill ion Restructuring $mill ion Net gain on businesses disposed of/ held for sale $mill ion Goodwill and other impa irment 1 $mill ion Statutory $mill ion Operating income 14,713 – (32) 20 – 14,701 Operating expenses (10,375) (62) (487) – – (10,924) Operating profit/(loss) before impa irment losses and taxat ion 4,338 (62) (519) 20 – 3,777 Credit impa irment (263) – 9 – – (254) Other impa irment (55) – (17) – (300) (372) Profit from associates and jo int ventures 176 – 20 – – 196 Profit/(loss) before taxation 4,196 (62) (507) 20 (300) 3,347 1 Goodwill and other impa irment include $308 mill ion impa irment charge relat ing to the Group’s investment in its associate China Bohai Bank (Bohai). The 2021 comparative has been restated for consistency to reclassify the $300 mill ion impa irment from Other impa irment w ith in Underly ing profit to Goodwill and other impa irment ![]() 352 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 2. Segmental informat ion continued Underlying performance by client segment 2022 Corporate, Commercial Institut ional Banking $mill ion Consumer, Private & Business Banking $mill ion Ventures $mill ion Central & other items (segment) $mill ion Total $mill ion Operating income 10,045 6,016 29 165 16,255 External 8,899 4,989 29 2,338 16,255 Inter-segment 1,146 1,027 – (2,173) – Operating expenses (5,480) (4,148) (336) (779) (10,743) Operating profit/(loss) before impa irment losses and taxation 4,565 1,868 (307) (614) 5,512 Credit impa irment (425) (262) (16) (135) (838) Other impa irment (40) (10) (24) (5) (79) Profit from associates and jo int ventures – – (16) 183 167 Underlying profit/(loss) before taxation 4,100 1,596 (363) (571) 4,762 Restructuring (50) (63) (1) (60) (174) Goodwill and other impa irment⁴ – – – (322) (322) Other items – – – 20 20 Statutory profit/(loss) before taxation 4,050 1,533 (364) (933) 4,286 Total assets 401,567 133,956 2,451 281,948 819,922 Of which: loans and advances to customers 184,254 130,985 702 41,789 357,730 loans and advances to customers 139,756 130,957 702 39,232 310,647 loans held at fair value through profit or loss (FVTPL) 2 44,498 28 – 2,557 47,083 Total liab il it ies 479,981 185,396 1,658 102,871 769,906 Of which: customer accounts 3 332,176 180,659 1,548 5,846 520,229 2021 (Restated)¹ Corporate, Commercial & Institut ional Banking $mill ion Consumer, Private & Business Banking $mill ion Ventures $mill ion Central & other items (segment) $mill ion Total $mill ion Operating income 8,407 5,735 1 570 14,713 External 7,952 5,375 1 1,385 14,713 Inter-segment 455 360 – (815) – Operating expenses (5,278) (4,227) (253) (617) (10,375) Operating profit/(loss) before impa irment losses and taxation 3,129 1,508 (252) (47) 4,338 Credit impa irment 44 (282) (3) (22) (263) Other impa irment (49) – – (6) (55) Profit from associates and jo int ventures – – (6) 182 176 Underlying profit/(loss) before taxation 3,124 1,226 (261) 107 4,196 Restructuring (114) (235) (3) (155) (507) Goodwill and other impa irment⁴ – – – (300) (300) Other items – – 20 (62) (42) Statutory profit/(loss) before taxation 3,010 991 (244) (410) 3,347 Total assets 405,778 139,364 1,098 281,578 827,818 Of which: loans and advances to customers 208,729 136,477 88 24,409 369,703 loans and advances to customers 139,335 136,410 88 22,635 298,468 loans held at fair value through profit or loss (FVTPL) 2 69,394 67 – 1,774 71,235 Total liab il it ies 481,397 182,210 766 110,809 775,182 Of which: customer accounts 3 351,696 178,088 689 11,982 542,455 1 Following the increased strategic importance and reporting of Ventures to management, this has been established as a separate operating segment in 2022 Prior periods have been restated. Ventures is comprised of Mox, Trust Bank & SC Ventures; a large part of Ventures income is from Dig ital banks in current year 2 Loans held at FVTPL includes $40,537 mill ion (2021: $61,282 m ill ion) of repurchase agreements 3 Customer accounts includes $11,706 mill ion (2021: $9,291 m ill ion) of FVTPL and $46,846 m ill ion (2021: $58,594 m ill ion) of repurchase agreements 4 Goodwill and other impa irment include $308 mill ion impa irment charge relat ing to the Group’s investment in its associate China Bohai Bank (Bohai). The 2021 comparative has been restated for consistency to reclassify the $300 mill ion impa irment from Other impa irment w ith in Underly ing profit to Goodwill and Other impa irment ![]() 353 Standard Chartered – Annual Report 2022 Financ ial statements 2. Segmental informat ion continued Operating income by client segment 2022 Corporate, Commercial & Institut ional Banking $mill ion Consumer, Private & Business Banking $mill ion Ventures $mill ion Central & other items (segment) $mill ion Total $mill ion Underlying operating income 10,045 6,016 29 165 16,255 Restructuring 41 – – 2 43 Other items – – – 20 20 Statutory operating income 10,086 6,016 29 187 16,318 2021 (Restated)¹ Corporate, Commercial & Institut ional Banking $mill ion Consumer, Private & Business Banking $mill ion Ventures $mill ion Central & other items (segment) $mill ion Total $mill ion Underlying operating income 8,407 5,735 1 570 14,713 Restructuring 9 – – (41) (32) Other items – – 20 – 20 Statutory operating income 8,416 5,735 21 529 14,701 1 Following the increased strategic importance and reporting of Ventures to management, this has been established as a separate operating segment in 2022 Prior periods have been restated Underlying performance by region 2022 Asia $mill ion Africa & Middle East $mill ion Europe & Americas $mill ion Central & other items $mill ion Total $mill ion Operating income 11,213 2,606 2,353 83 16,255 Operating expenses (6,867) (1,669) (1,564) (643) (10,743) Operating profit/(loss) before impa irment losses and taxation 4,346 937 789 (560) 5,512 Credit impa irment (790) (120) 77 (5) (838) Other impa irment (47) 2 (3) (31) (79) Profit from associates and jo int ventures 179 – – (12) 167 Underlying profit/(loss) before taxation 3,688 819 863 (608) 4,762 Restructuring (75) (29) (23) (47) (174) Goodwill and other impa irment 1 (308) – – (14) (322) Other items 20 – – – 20 Statutory profit/(loss) before taxation 3,325 790 840 (669) 4,286 Total assets 488,399 53,086 268,960 9,477 819,922 Of which: loans and advances to customers 270,892 23,857 62,981 – 357,730 loans and advances to customers 257,171 21,570 31,906 – 310,647 loans held at fair value through profit or loss (FVTPL) 2 13,721 2,287 31,075 – 47,083 Total liab il it ies 441,349 40,902 219,701 67,954 769,906 Of which: customer accounts 3 346,832 31,860 141,537 – 520,229 ![]() 354 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 2. Segmental informat ion continued 2021 Asia $mill ion Africa & Middle East $mill ion Europe & Americas $mill ion Central & other items $mill ion Total $mill ion 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 irment losses and taxation 3,675 823 518 (678) 4,338 Credit impa irment (434) 34 144 (7) (263) Other impa irment – (1) (18) (36) (55) Profit from associates and jo int ventures 175 – – 1 176 Underlying profit/(loss) before taxation 3,416 856 644 (720) 4,196 Restructuring (286) (25) (69) (127) (507) Goodwill and other impa irment 1 (300) – – – (300) Other items – – – (42) (42) Statutory profit/(loss) before taxation 2,830 831 575 (889) 3,347 Total assets 483,950 57,405 277,008 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 il it ies 434,200 41,260 233,915 65,807 775,182 Of which: customer accounts 3 355,792 34,701 151,962 – 542,455 1 Goodwill and other impa irment include $308 mill ion impa irment charge relat ing to the Group’s investment in its associate China Bohai Bank (Bohai). The 2021 comparative has been restated for consistency to reclassify the $300 mill ion impa irment from Other impa irment w ith in Underly ing profit to Goodwill and Other impa irment. 2 Loans held at FVTPL includes $40,537 mill ion (FY’21 $61,282 m ill ion) of repurchase agreements 3 Customer accounts includes $11,706 mill ion (FY’21 $9,291 m ill ion) of FVTPL and $46,846 m ill ion (FY’21 $58,594 m ill ion) of repurchase agreements Operating income by region 2022 Asia $mill ion Africa & Middle East $mill ion Europe & Americas $mill ion Central & other items $mill ion Total $mill ion Underlying operating income 11,213 2,606 2,353 83 16,255 Restructuring 23 2 (1) 19 43 Other items 20 – – – 20 Statutory operating income 11,256 2,608 2,352 102 16,318 2021 Asia $mill ion Africa & Middle East $mill ion Europe & Americas $mill ion Central & other items $mill ion Total $mill ion Underlying operating income 10,448 2,446 2,003 (184) 14,713 Restructuring 30 3 (30) (35) (32) Other items – – – 20 20 Statutory operating income 10,478 2,449 1,973 (199) 14,701 ![]() 355 Standard Chartered – Annual Report 2022 Financ ial statements 2. Segmental informat ion continued Addit ional segmental informat ion (statutory) 2022 Corporate, Commercial & Institut ional Banking $mill ion Consumer, Private & Business Banking $mill ion Ventures $mill ion Central & other items (segment) $mill ion Total $mill ion Net interest income 3,616 3,969 18 (10) 7,593 Net fees and commiss ion income 1,706 1,524 8 (125) 3,113 Net trading and other income 4,764 523 3 322 5,612 Operating income 10,086 6,016 29 187 16,318 2021 (Restated)¹ Corporate, Commercial & Institut ional Banking $mill ion Consumer, Private & Business Banking $mill ion Ventures $mill ion Central & other items (segment) $mill ion Total $mill ion Net interest income 3,267 3,216 (2) 317 6,798 Net fees and commiss ion income 1,784 2,003 1 (66) 3,722 Net trading and other income 3,365 516 22 278 4,181 Operating income 8,416 5,735 21 529 14,701 1 Following the increased strategic importance and reporting of Ventures to management, this has been established as a separate operating segment in 2022 Prior periods have been restated Addit ional segmental informat ion (statutory) continued 2022 Asia $mill ion Africa & Middle East $mill ion Europe & Americas $mill ion Central & other items $mill ion Total $mill ion Net interest income 5,747 1,299 260 287 7,593 Net fees and commiss ion income 2,224 526 526 (163) 3,113 Net trading and other income 3,285 783 1,566 (22) 5,612 Operating income 11,256 2,608 2,352 102 16,318 2021 Asia $mill ion Africa & Middle East $mill ion Europe & Americas $mill ion Central & other items $mill ion Total $mill ion Net interest income 5,069 1,190 490 49 6,798 Net fees and commiss ion income 2,764 614 547 (203) 3,722 Net trading and other income 2,645 645 936 (45) 4,181 Operating income 10,478 2,449 1,973 (199) 14,701 2022 Hong Kong $mill ion Korea $mill ion China $mill ion Taiwan $mill ion Singapore $mill ion India $mill ion Indonesia $mill ion UAE $mill ion UK $mill ion US $mill ion Net interest income 1,843 751 561 171 982 611 89 281 (189) 330 Net fees and commiss ion income 658 157 143 162 553 239 52 81 44 393 Net trading and other income 1,235 237 450 141 380 377 73 268 1,167 306 Operating income 3,736 1,145 1,154 474 1,915 1,227 214 630 1,022 1,029 2021 Hong Kong $mill ion Korea $mill ion China $mill ion Taiwan $mill ion Singapore $mill ion India $mill ion Indonesia $mill ion UAE $mill ion UK $mill ion US $mill ion Net interest income 1,422 724 589 178 742 706 90 229 220 198 Net fees and commiss ion income 902 213 192 218 664 240 54 101 21 414 Net trading and other income 1,148 174 306 98 192 336 69 216 624 206 Operating income 3,472 1,111 1,087 494 1,598 1,282 213 546 865 818 ![]() 356 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 3. Net interest income Accounting policy Interest income for financ ial assets held at e ither fair value through other comprehensive income or amortised cost, and interest expense on all financ ial l iab il it ies held at amort ised 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 ial asset or a financial l iab il ity 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 ial instrument or, when appropriate, a shorter period, to the net carrying amount of the financ ial asset or financial l iab il ity. When calculating the effective interest rate, the Group estimates cash flows consider ing all contractual terms of the financial instrument (for example prepayment options) but does not consider future credit losses. The calculation includes all fees paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts. For floating-rate financ ial instruments, period ic re-est imat ion of cash flows that reflect the movements in the market rates of interest alters the effective interest rate. Where the estimates of cash flows have been revised, the carrying amount of the financ ial asset or l iab il ity is adjusted to reflect the actual and revised cash flows, discounted at the instruments orig inal effect ive interest rate. The adjustment is recognised as interest income or expense in the period in which the revis ion is made as long as the change in estimates is not due to credit issues. Interest income for financ ial assets that are e ither held at fair value through other comprehensive income or amortised cost that have become credit-impa ired subsequent to in it ial recognit ion (stage 3) and have had amounts wr itten off, is recognised using the credit adjusted effective interest rate. This rate is calculated in the same manner as the effective interest rate except that expected credit losses are included in the expected cash flows. Interest income is therefore recognised on the amortised cost of the financ ial asset includ ing expected cred it losses. Should the credit risk on a stage 3 financial asset improve such that the financ ial asset is no longer considered credit-impa ired, interest income recognit ion reverts to a computation based on the rehabil itated gross carry ing value of the financ ial asset. 2022 $mill ion 2021 $mill ion Balances at central banks 765 92 Loans and advances to banks 853 490 Loans and advances to customers 10,032 7,347 Debt securit ies 2,836 1,787 Other elig ible b ills 630 303 Accrued on impa ired assets (d iscount unwind) 1 136 227 Interest income 15,252 10,246 Of which: financ ial instruments held at fair value through other comprehensive income 2,167 1,541 Deposits by banks 433 136 Customer accounts 5,443 2,196 Debt securit ies in issue 1,169 566 Subordinated liab il it ies and other borrowed funds 570 497 Interest expense on IFRS 16 lease liab il it ies 44 53 Interest expense 7,659 3,448 Net interest income 7,593 6,798 1. Includes a $117 mill ion (2021: $171 m ill ion) adjustment in relation to interest earned on impa ired assets as requ ired by IFRS9 Financ ial Instruments Recogn it ion and Measurement 4. Net fees and commiss ion Accounting policy Fees and commiss ions charged for serv ices provided by the Group are recognised as revenue when the Group satisf ies the performance obligat ions to the customer. Serv ices provided by the Group are either satisf ied at po int in time or over time. Fees and commiss ion income are measured based on the considerat ion spec if ied in the contract with the customer. The Group can act as trustee or in other fiduc iary capac it ies that result in the holding or placing of assets on behalf of ind iv iduals, trusts, retirement benefit plans and other inst itut ions. The assets and income aris ing thereon are excluded from these financial statements, as they are not assets and income of the Group. ![]() 357 Standard Chartered – Annual Report 2022 Financ ial statements 4. Net fees and commiss ion continued The Group applies the following practical expedients: • informat ion on amounts of transact ion price allocated to unsatisf ied (or part ially unsatisf ied) performance obl igat ions 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 ion is not adjusted for the effects of a sign ificant financing component as the per iod between the Group provid ing a serv ice and the customer paying for it is expected to be less than one year • incremental costs of obtain ing a fee-earn ing contract are recognised upfront in ‘Fees and commiss ion expense’ rather than amortised, if the expected term of the contract is less than one year The determinat ion of the serv ices 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 ions on income recognit ion 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 ial Markets The Group recognises fee income at the point in time the service is provided. Fee income is recognised for a sign ificant non- lending service when the transaction has been completed and the terms of the contract with the customer entitle the Group to the fee. This includes fees such as structuring and advisory fees. Fees are usually received shortly after the service is provided. Syndicat ion fees are recogn ised when the syndicat ion is complete, defined as achiev ing the final approved hold pos it ion. Fees are generally received before completion of the syndicat ion, or w ith in 12 months of the transact ion date. Securit ies serv ices include custody services, fund accounting and admin istrat ion, 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 ion on bancassurance agreements is amortised straight-line over the contractual term. Commiss ions for bancassurance activ it ies are recorded as they are earned through sales of third-party insurance products to customers. These commiss ions are rece ived with in a short t ime frame of the commiss ion be ing 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 ied date after ach ievement of a target has been confirmed. Upfront and trail ing comm iss ions for managed investment placements are recorded as they are confirmed. Income from these activ it ies is relatively even throughout the period, and cash is usually received with in a short t ime frame after the commiss ion is earned. Retail Products The Group recognises most income at the point in time the Group is entitled to the fee, since most services are provided at the time of the customer’s request. Credit card annual fees are recognised over the service period. In most of our retail markets there are circumstances under which fees are waived, income recognit ion is adjusted to reflect customer’s intent to pay the annual fee. The Group defers the fair value of reward points on its credit card reward programmes, and recognises income and costs associated with fulfill ing the reward at the time of redemption. ![]() 358 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 4. Net fees and commiss ion continued 2022 $mill ion 2021 $mill ion Fees and commiss ions income 3,972 4,458 Of which: Financ ial instruments that are not fair valued through profit or loss 1,306 1,282 Trust and other fiduciary act iv it ies 520 703 Fees and commiss ions expense (859) (736) Of which: Financ ial instruments that are not fair valued through profit or loss (303) (234) Trust and other fiduciary act iv it ies (49) (49) Net fees and commiss ion 3,113 3,722 2022 Corporate, Commercial & Institut ional Banking $mill ion Consumer, Private & Business Banking $mill ion Ventures $mill ion Central & other Items (Segment) $mill ion Total $mill ion Transaction Banking 1,143 32 – – 1,175 Trade 594 25 – – 619 Cash Management 549 7 – – 556 Financ ial Markets 958 – – – 958 Lending & Portfolio Management 124 5 – – 129 Princ ipal F inance – – – – – Wealth Management – 1,127 – – 1,127 Retail Products – 582 12 – 594 Treasury – – – (5) (5) Others – (2) 8 (11) (5) Fees and commiss ion income 2,225 1,744 20 (16) 3,972 Fees and commiss ion expense (519) (220) (12) (109) (859) Net fees and commiss ion 1,706 1,524 8 (125) 3,113 2021 (Restated)¹ ,3 Corporate, Commercial & Institut ional Banking 1 $mill ion Consumer, Private & Business Banking 1 $mill ion Ventures $mill ion Central & other Items (Segment) $mill ion Total $mill ion Transaction Banking 1,003 39 – – 1,042 Trade 572 27 – – 599 Cash Management 431 12 – – 443 Financ ial Markets 956 – – – 956 Lending & Portfolio Management 146 1 – – 147 Princ ipal F inance (5) – – – (5) Wealth Management 1 1,585 – – 1,586 Retail Products – 614 3 – 617 Treasury – – – 2 2 Others – 33 34 46 113 Fees and commiss ion income 2 2,101 2,272 37 48 4,458 Fees and commiss ion expense 2 (317) (269) (36) (114) (736) Net fees and commiss ion 2 1,784 2,003 1 (66) 3,722 1 Following the increased strategic importance and reporting of Ventures to management, this has been established as a separate operating segment in 2022 Prior periods have been restated 2 Fees & commiss ion by segments was presented on a net bas is in 2021. The presentation has been changed to gross basis for Fees & commiss ion income and expense. Prior period has been restated 3 Following a reorganisat ion of certa in clients, there has been a reclassif icat ion of balances across products $59 mill ion of amort isat ion of cap ital ised acqu is it ion costs on credit cards have been recorded as fee and commiss ion expense in 2022 as against interest income until last year. The corresponding impact for 2021 was $60 mill ion, but the comparat ives have not been restated based on material ity. ![]() 359 Standard Chartered – Annual Report 2022 Financ ial statements 4. Net fees and commiss ion continued Upfront bancassurance considerat ion amounts are amort ised on a straight-line basis over the contractual period to which the considerat ion relates. Deferred income on the balance sheet in respect of these activ it ies is $549 mill ion (2021: $634 m ill ion). The income will be earned evenly over the next 6.5 years (2021: 7.5 years). For the twelve months ended 31 December 2022, $84 mill ion of fee income was released from deferred income (2021: $84 mill ion). The Group has recognised revenue of $160 mill ion from one of its bancassurance contracts based on confirmat ion from the counterparty that the annual performance bonus will be paid to the Group for the year ended 31 December 2022. 5. Net trading income Accounting policy Gains and losses aris ing from changes in the fair value of financ ial 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 ions, marg ins on market making and customer business and fair value changes. When the in it ial fair value of a financ ial instrument held at fair value through profit or loss relies on unobservable inputs, the difference between the in it ial 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. 2022 $mill ion 2021 $mill ion Net trading income 5,310 3,431 Sign ificant items with in net trad ing income include: Gains on instruments held for trading 1 4,942 3,381 Gains on financ ial assets mandator ily at fair value through profit or loss 1,087 181 Losses on financial assets des ignated at fair value through profit or loss (6) (8) Losses on financial l iab il it ies des ignated at fair value through profit or loss (677) (133) 1 Includes $365 mill ion ga in (2021: $339 mill ion ga in) from the translation of foreign currency monetary assets and liab il it ies 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 idends on equ ity 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. When the Group loses control of the subsid iary or d isposal group, the difference between the considerat ion rece ived and the carrying amount of the subsid iary or d isposal group is recognised as a gain or loss on sale of the business. 2022 $mill ion 2021 $mill ion Other operating income includes: Rental income from operating lease assets 421 463 Net (loss)/gain on disposal of fair value through other comprehensive income debt instruments (207) 157 Net gain on amortised cost financ ial assets 17 22 Net (loss)/gain on sale of businesses (1) 20 Div idend income 14 14 Gain on sale of aircrafts 21 23 Other 37 51 Other operating income 302 750 ![]() 360 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 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 in share-based payments costs and wages and salar ies. Further details are disclosed in the Directors’ remuneration report (pages 184 to 205). Pension costs: contribut ions to defined contr ibut ion pens ion 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-based compensation: the Group operates equity-settled and cash-settled share-based payment compensation 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. 2022 $mill ion 2021 $mill ion Staff costs: Wages and salaries 6,014 5,834 Social security costs 210 209 Other pension costs (Note 30) 390 377 Share-based payment costs (Note 31) 199 167 Other staff costs 805 1,081 7,618 7,668 Other staff costs include redundancy expenses of $79 mill ion (2021: $328 m ill ion). Further costs in this category include train ing, travel costs and other staff-related costs. The following table summarises the number of employees with in the Group: 2022 2021 Business Support services Total Business Support services Total At 31 December 30,619 52,647 83,266 30,614 51,343 81,957 Average for the year 31,133 51,854 82,987 31,468 51,268 82,736 The Company employed Nil staff at 31 December 2022 (2021: Nil) and it incurred costs of Nil (2021: $1 mill ion). Details of directors’ pay, benefits, pensions and benefits and interests in shares are disclosed in the Directors’ remuneration report (pages 184 to 205). Transactions with directors, officers and other related parties are disclosed in Note 36. 2022 $mill ion 2021 $mill ion Premises and equipment expenses 401 387 General admin istrat ive expenses: UK bank levy 102 100 Provis ion for regulatory matters 14 62 Other general admin istrat ive expenses 1,592 1,526 1,708 1,688 Depreciat ion and amort izat ion: Property, plant and equipment: Premises 326 370 Equipment 123 129 Operating lease assets 202 213 651 712 Intangibles: Software 531 461 Acquired on business combinat ions 4 8 1,186 1,181 Total operating expenses 10,913 10,924 Operating expenses include research expenditure of $946 mill ion (2021: $945 m ill ion), wh ich was recognised as an expense in the year. The UK bank levy is applied on the chargeable equity and liab il it ies on the balance sheet of UK operat ions. Key exclusions from chargeable equity and liab il it ies include Tier 1 capital, insured or guaranteed retail deposits, repos secured on certain sovereign debt and liab il it ies subject to nett ing. The rates are 0.10 per cent for short-term liab il it ies and 0.05 per cent for long-term liab il it ies. ![]() 361 Standard Chartered – Annual Report 2022 Financ ial statements 8. Credit impa irment Accounting policy Sign ificant account ing estimates and judgements The Group’s expected credit loss (ECL) calculations are outputs of complex models with a number of underlying assumptions. The sign ificant judgements in determin ing ECL include: • The Group’s criter ia for assess ing if there has been a sign ificant increase in credit risk; • Development of expected credit loss models, includ ing the cho ice of inputs relating to macroeconomic variables; • Evaluation of management overlays and post-model adjustments; • Determinat ion of probab il ity we ight ings for Stage 3 ind iv idually assessed provis ions The calculation of credit impa irment prov is ions also involves expert credit judgement to be applied by the credit risk management team based upon counterparty informat ion they rece ive from various sources includ ing relat ionsh ip managers and on external market informat ion. Deta ils on the approach for determin ing ECL can be found in the credit risk section, under IFRS 9 Methodology (page 236). Estimates of forecasts of key macroeconomic variables underlying the ECL calculation can be found with in the R isk review, Key assumptions and judgements in determin ing expected cred it loss (page 271). Expected credit losses ECL are determined for all financ ial debt instruments that are classif ied at amort ised cost or fair value through other comprehensive income, undrawn commitments and financ ial guarantees. An ECL represents the present value of expected cash shortfalls over the residual term of a financ ial asset, undrawn commitment or financ ial guarantee. A cash shortfall is the difference between the cash flows that are due in accordance with the contractual terms of the instrument and the cash flows that the Group expects to receive over the contractual life of the instrument. Measurement ECL are computed as unbiased, probabil ity-we ighted amounts which are determined by evaluating a range of reasonably possible outcomes, the time value of money, and consider ing all reasonable and supportable informat ion includ ing that which is forward-looking. For material portfolios, the estimate of expected cash shortfalls is determined by multiply ing the probab il ity 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 ime 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 icated approaches based on histor ical 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 ices and commod ity 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 ion, wh ich includes both internally developed forecasts and those available externally, and are consistent with those used for budgeting, forecasting and capital planning. To account for the potential non-linear ity in credit losses, multiple forward-looking scenarios are incorporated into the range of reasonably possible outcomes for all material portfolios. For example, where there is a greater risk of downside credit losses than upside gains, multiple forward-looking economic scenarios are incorporated into the range of reasonably possible outcomes, both in respect of determin ing the PD (and where relevant, the LGD and EAD) and in determin ing the overall ECL amounts. These scenarios are determined using a Monte Carlo approach centred around the Group’s most likely forecast of macroeconomic assumptions. The period over which cash shortfalls are determined is generally lim ited to the max imum contractual period for which the Group is exposed to credit risk. However, for certain revolving credit facil it ies, which include credit cards or overdrafts, the Group’s exposure to credit risk is not lim ited to the contractual per iod. 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 it ies. For credit-impa ired financial instruments, the estimate of cash shortfalls may require the use of expert credit judgement. ![]() 362 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 8. Credit impa irment continued The estimate of expected cash shortfalls on a collateralised financ ial instrument reflects the amount and tim ing of cash flows that are expected from foreclosure on the collateral less the costs of obtain ing and sell ing the collateral, regardless of whether foreclosure is deemed probable. Cash flows from unfunded credit enhancements held are included with in the measurement of expected cred it losses if they are part of, or integral to, the contractual terms of the instrument (this includes financ ial guarantees, unfunded r isk partic ipat ions and other non-derivat ive cred it insurance). Although non-integral credit enhancements do not impact the measurement of expected credit losses, a reimbursement asset is recognised to the extent of the ECL recorded. Cash shortfalls are discounted using the effective interest rate (or credit-adjusted effective interest rate for purchased or orig inated cred it-impa ired instruments (POCI)) on the financ ial instrument as calculated at in it ial recognit ion or if the instrument has a variable interest rate, the current effective interest rate determined under the contract. Instruments Location of expected credit loss provis ions Financ ial assets held at amort ised cost Loss provis ions: netted aga inst gross carrying value¹ Financ ial assets held FVOCI – Debt instruments Other comprehensive income (FVOCI expected credit loss reserve) 2 Loan commitments Provis ions for l iab il it ies and charges 3 Financ ial guarantees Provis ions for l iab il it ies and charges 3 1 Purchased or orig inated cred it-impa ired assets do not attract an expected cred it loss provis ion on in it ial recognit ion. An expected cred it loss provis ion w ill be recognised only if there is an increase in expected credit losses from that considered at in it ial recognit ion 2 Debt and treasury securit ies class if ied as fa ir 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 in other comprehens ive income (OCI) and is recycled to the profit and loss account along with any fair value measurement gains or losses held with in FVOCI when the appl icable instruments are derecognised 3 Expected credit loss on loan commitments and financ ial guarantees is recognised as a liab il ity provis ion. Where a financial instrument includes both a loan (i.e. financ ial asset component) and an undrawn comm itment (i.e. loan commitment component), and it is not possible to separately ident ify the expected credit loss on these components, expected credit loss amounts on the loan commitment are recognised together with expected credit loss amounts on the financial asset. To the extent the comb ined expected credit loss exceeds the gross carrying amount of the financ ial asset, the expected cred it loss is recognised as a liab il ity provis ion Recognit ion 12 months expected credit losses (stage 1) Expected credit losses are recognised at the time of in it ial recognit ion of a financial instrument and represent the lifet ime cash shortfalls ar is ing from poss ible 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 ificant increase in the credit risk of an instrument or the instrument becomes credit-impa ired. If an instrument is no longer considered to exhib it a s ign ificant increase in credit risk, expected credit losses will revert to being determined on a 12-month basis. Sign ificant increase in credit risk (Stage 2) If a financial asset exper iences a sign ificant increase in credit risk (SICR) since in it ial recognit ion, an expected cred it loss provis ion is recognised for default events that may occur over the lifet ime of the asset. Sign ificant 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 inat ion (after taking into account the passage of time). Sign ificant does not mean stat ist ically s ign ificant nor is it assessed in the context of changes in expected credit loss. Whether a change in the risk of default is sign ificant or not is assessed using a number of quantitat ive and qual itat ive factors, the we ight of which depends on the type of product and counterparty. Financ ial assets that are 30 or more days past due and not cred it-impa ired w ill always be considered to have experienced a sign ificant increase in credit risk. For less material portfolios where a loss rate or roll rate approach is applied to compute expected credit loss, sign ificant increase in credit risk is primar ily based on 30 days past due. Quantitat ive factors include an assessment of whether there has been sign ificant increase in the forward-looking probabil ity of default (PD) since orig inat ion. A forward-looking PD is one that is adjusted for future economic condit ions to the extent these are correlated to changes in credit risk. We compare the residual lifet ime PD at the balance sheet date to the res idual lifet ime PD that was expected at the t ime of orig inat ion 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 ificant increase in credit risk. Qualitat ive factors assessed include those linked to current credit risk management processes, such as lending placed on non-purely precautionary early alert (and subject to closer monitor ing). A non-purely precautionary early alert account is one which exhib its r isk or potential weaknesses of a material nature requir ing closer mon itor ing, superv is ion, or attent ion by management. Weaknesses in such a borrower’s account, if left uncorrected, could result in deteriorat ion of repayment prospects and the l ikel ihood of be ing downgraded. Indicators could include a rapid erosion of posit ion w ith in the industry, concerns over management’s abil ity to manage operat ions, weak/ deteriorat ing operat ing results, liqu id ity strain and overdue balances among other factors. ![]() 363 Standard Chartered – Annual Report 2022 Financ ial statements 8. Credit impa irment continued Credit-impa ired (or defaulted) exposures (Stage 3) Financ ial assets that are cred it-impa ired (or in default) represent those that are at least 90 days past due in respect of princ ipal and/or interest. Financ ial assets are also cons idered to be credit-impa ired 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 ial asset. It may not be poss ible to ident ify a s ingle discrete event but instead the combined effect of several events may cause financ ial assets to become cred it-impa ired. • Evidence that a financ ial asset is credit-impa ired includes observable data about the following events: • Sign ificant financial d iff iculty 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 ial d iff iculty, the lenders of the borrower have granted the borrower concession/s that lenders would not otherwise consider. This would include forbearance actions (page 256); • Pending or actual bankruptcy or other financ ial reorgan isat ion to avo id or delay discharge of the borrower’s obligat ion/s; • The disappearance of an active market for the applicable financ ial asset due to financial d iff icult ies of the borrower; • Purchase or orig inat ion of a financ ial asset at a deep d iscount that reflects incurred credit losses Lending commitments to a credit-impa ired obl igor that have not yet been drawn down are included to the extent that the commitment cannot be withdrawn. Loss provis ions aga inst credit-impa ired financial assets are determ ined based on an assessment of the recoverable cash flows under a range of scenarios, includ ing the real isat ion of any collateral held where appropriate. The loss provis ions held represent the d ifference between the present value of the expected cash flows, discounted at the instrument’s orig inal effect ive interest rate, and the gross carrying value (includ ing contractual interest due but not paid) of the instrument prior to any credit impa irment. The Group’s definit ion of default is aligned with the regulatory definit ion of default as set out in the UK’s onshored capital requirements regulations (Art 178). Expert credit judgement For Corporate & Institut ional, Commerc ial 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 it cred it deteriorat ion, it will move along the credit grading scale in the performing book and when it is classif ied as CG12 the cred it assessment and oversight of the loan will continue to be managed by the business with support from the Stressed Assets Group for certain accounts. Borrowers graded CG12 exhib it well-defined weaknesses in areas such as management and/or performance but there is no current expectation of a loss of princ ipal or interest. Where the impa irment assessment ind icates that there w ill be a loss of princ ipal on a loan, the borrower is graded a CG14 while borrowers of other credit-impa ired loans are graded CG13. Instruments graded CG13 or CG14 are regarded as stage 3. For ind iv idually sign ificant financial assets w ith in stage 3, Stressed Asset R isk (SAR) will consider all judgements that have an impact on the expected future cash flows of the asset. These include: the business prospects, industry and geo polit ical climate of the customer, quality of realisable value of collateral, the Group’s legal posit ion relat ive to other claimants and any renegotiat ion/ forbearance/ mod if icat ion options. The future cash flow calculation involves sign ificant judgements and estimates. As new informat ion becomes ava ilable and further negotiat ions/ forbearance measures are taken the est imates of the future cash flows will be revised, and will have an impact on the future cash flow analysis. For financial assets wh ich are not ind iv idually sign ificant, such as the Consumer Bank ing portfolio or small business loans, which comprise a large number of homogeneous loans that share sim ilar character ist ics, stat ist ical est imates and techniques are used, as well as credit scoring analysis. Consumer and Business Banking clients are considered credit-impa ired where they are more 90 days past due, or if the borrower files for bankruptcy or other forbearance programme, the borrower is deceased or the business is closed in the case of a small business, or if the borrower surrenders the collateral, or there is an ident ified fraud on the account. Add it ionally, if the account is unsecured and the borrower has other credit accounts with the Group that are considered credit-impa ired, the account may be also be credit-impa ired. Techniques used to compute impa irment amounts use models wh ich analyse histor ical repayment and default rates over a time horizon. Where various models are used, judgement is required to analyse the available informat ion prov ided and select the appropriate model or combinat ion 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 ied financial instruments Where the orig inal contractual terms of a financial asset have been mod if ied for cred it reasons and the instrument has not been derecognised (an instrument is derecognised when a modif icat ion results in a change in cash flows that the Group would consider substantial), the resulting modif icat ion loss is recognised with in cred it impa irment in the income statement with a corresponding decrease in the gross carrying value of the asset. If the modif icat ion involved a concession that the bank would not otherwise consider, the instrument is considered to be credit-impa ired and is considered forborne. ![]() 364 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 8. Credit impa irment continued Expected credit loss for modif ied financial assets that have not been derecogn ised and are not considered to be credit- impa ired w ill be recognised on a 12-month basis, or a lifet ime bas is, if there is a sign ificant increase in credit risk. These assets are assessed (by comparison to the orig inat ion date) to determine whether there has been a sign ificant increase in credit risk subsequent to the modif icat ion. Although loans may be modif ied for non-cred it reasons, a sign ificant increase in credit risk may occur. In addit ion to the recogn it ion of mod if icat ion gains and losses, the revised carrying value of modif ied financial assets will impact the calculation of expected credit losses, with any increase or decrease in expected credit loss recognised with in impa irment. Forborne loans Forborne loans are those loans that have been modif ied in response to a customer’s financ ial d iff icult ies. Forbearance strategies assist clients who are temporarily in financ ial d istress and are unable to meet their orig inal contractual repayment terms. Forbearance can be in it iated by the client, the Group or a third-party includ ing government sponsored programmes or a conglomerate of credit inst itut ions. Forbearance may include debt restructuring such as new repayment schedules, payment deferrals, tenor extensions, interest only payments, lower interest rates, forgiveness of princ ipal, interest or fees, or relaxation of loan covenants. Forborne loans that have been modif ied (and not derecogn ised) 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 inal terms of the loans are considered credit-impa ired if there is a detrimental impact on cash flows. The modif icat ion loss (see Classif icat ion and measurement – Modif icat ions) is recognised in the profit or loss with in cred it impa irment and the gross carry ing value of the loan reduced by the same amount. The modif ied loan is disclosed as ‘Loans subject to forbearance – credit-impa ired’. Loans that have been subject to a forbearance modif icat ion, but which are not considered credit-impa ired (not class if ied as CG13 or CG14), are disclosed as ‘Forborne – not credit-impa ired’. Th is may include amendments to covenants with in the contractual terms. Write-offs of credit-impa ired instruments and reversal of impa irment To the extent a financial debt instrument is considered irrecoverable, the applicable portion of the gross carrying value is written off against the related loan provis ion. Such loans are wr itten off after all the necessary procedures have been completed, it is decided that there is no realist ic probab il ity of recovery and the amount of the loss has been determ ined. Subsequent recoveries of amounts previously written off decrease the amount of the provis ion for cred it impa irment in the income statement. Loss provis ions on purchased or or ig inated cred it-impa ired instruments (POCI) The Group measures expected credit loss on a lifet ime bas is for POCI instruments throughout the life of the instrument. However, expected credit loss is not recognised in a separate loss provis ion on in it ial recognit ion for POCI instruments as the lifet ime expected cred it loss is inherent with in the gross carry ing amount of the instruments. The Group recognises the change in lifet ime expected cred it losses aris ing subsequent to in it ial recognit ion in the income statement and the cumulative change as a loss provis ion. Where l ifet ime expected cred it losses on POCI instruments are less than those at in it ial recognit ion, then the favourable d ifferences are recognised as impa irment ga ins in the income statement (and as impa irment loss where the expected cred it losses are greater). Improvement in credit risk/curing A period may elapse from the point at which instruments enter lifet ime expected cred it losses (stage 2 or stage 3) and are reclassif ied back to 12-month expected cred it losses (stage 1). For financ ial assets that are cred it-impa ired (stage 3), a transfer to stage 2 or stage 1 is only permitted where the instrument is no longer considered to be credit-impa ired. An instrument will no longer be considered credit-impa ired when there is no shortfall of cash flows compared to the orig inal contractual terms. For financial assets w ith in stage 2, these can only be transferred to stage 1 when they are no longer cons idered to have experienced a sign ificant increase in credit risk. Where sign ificant increase in credit risk was determined using quantitat ive measures, the instruments will automatically transfer back to stage 1 when the orig inal PD based transfer cr iter ia are no longer met. Where instruments were transferred to stage 2 due to an assessment of qualitat ive factors, the issues that led to the reclassif icat ion must be cured before the instruments can be reclassif ied to stage 1. Th is includes instances where management actions led to instruments being classif ied as stage 2, requ ir ing that act ion to be resolved before loans are reclassif ied 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 ia have to be sat isf ied: • At least a year has passed with no default based upon the forborne contract terms • The customer is likely to repay its obligat ions in full without realis ing secur ity • The customer has no accumulated impa irment aga inst amount outstanding (except for ECL) Subsequent to the criter ia above, a further two-year probat ion 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. ![]() 365 Standard Chartered – Annual Report 2022 Financ ial statements 8. Credit impa irment continued 2022 $mill ion 2021 $mill ion Net credit impa irment on loans and advances to banks and customers 743 258 Net credit impa irment on debt secur it ies¹ 122 26 Net credit impa irment relat ing to financ ial guarantees and loan comm itments (27) (30) Net credit impa irment relat ing to other financ ial assets (2) – Credit impa irment 1 836 254 1 Includes impa irment of $13 m ill ion (2021: N il) on orig inated cred it-impa ired debt secur it ies 9. Goodwill, fixed asset, and other impa irment Accounting policy Refer to the below referenced notes for the relevant accounting policy. 2022 $mill ion 2021 $mill ion Impairment of goodwill (Note 17) 14 – Impairment of property, plant and equipment (Note 18) 50 106 Impairment of other intang ible assets (Note 17) 12 4 Other 1 363 262 Property, plant and equipment and other impa irment 425 372 Goodwill, property, plant and equipment and other impa irment 439 372 1 Other includes a $308 mill ion impa irment charge relat ing to the Group’s investment in its associate China Bohai Bank (Bohai) to reflect the challenges and uncertainty in the outlook for the banking industry and property markets in China ($300 mill ion in 2021) 10. Taxation Accounting policy Income tax payable on profits is based on the applicable tax law in each jur isd ict ion and is recognised as an expense in the period in which profits arise. Deferred tax is provided on temporary differences aris ing between the tax bases of assets and l iab il it ies and the ir carrying amounts in the consolidated financ ial 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 il ity 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 ised. Where perm itted, deferred tax assets and liab il it ies are offset on an ent ity basis and not by component of deferred taxation. Current and deferred tax relating to items which are charged or credited directly to equity, is credited or charged directly to equity and is subsequently recognised in the income statement together with the current or deferred gain or loss. Other accounting estimates and judgements • Determin ing the Group’s tax charge for the year involves estimat ion and judgement, wh ich includes an interpretat ion of local tax laws and an assessment of whether the tax authorit ies w ill accept the posit ion taken. These judgements take account of external advice where appropriate, and the Group’s view on settling with the relevant tax authorit ies • The Group provides for current tax liab il it ies at the best est imate of the amount that is expected to be paid to the tax authorit ies where an outflow is probable. In making its estimates the Group assumes that the tax authorit ies w ill examine all the amounts reported to them and have full knowledge of all relevant informat ion • The recoverabil ity of the Group’s deferred tax assets is based on management’s judgement of the availab il ity of future taxable profits against which the deferred tax assets will be util ised. In prepar ing management forecasts the effect of applicable laws and regulations relevant to the util isat ion of future taxable profits have been considered. ![]() 366 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 10. Taxation continued The following table provides analysis of taxation charge in the year: 2022 $mill ion 2021 $mill ion The charge for taxation based upon the profit for the year comprises: Current tax: United Kingdom corporation tax at 19 per cent (2021: 19 per cent): Current tax charge on income for the year 48 – Adjustments in respect of prior years (includ ing double tax rel ief) – 9 Foreign tax: Current tax charge on income for the year 1,216 896 Adjustments in respect of prior years 5 (26) 1,269 879 Deferred tax: Orig inat ion/reversal of temporary differences 144 218 Adjustments in respect of prior years (29) (63) 115 155 Tax on profits on ordinary activ it ies 1,384 1,034 Effective tax rate 32.3% 30.9% The tax charge for the year $1,384 mill ion (31 December 2021: $1,034 m ill ion) on a profit before tax of $4,286 m ill ion (31 December 2021: $3,347 mill ion) reflects the impact of countries with tax rates higher or lower than the UK, the most sign ificant of wh ich is India, non-deductible expenses and non-creditable withhold ing taxes. Foreign tax includes current tax of $35 mill ion (31 December 2021: $78 m ill ion) on the profits assessable in Hong Kong. Deferred tax includes orig inat ion or reversal of temporary differences of $51 mill ion (31 December 2021: $39 m ill ion) prov ided at a rate of 16.5 per cent (31 December 2021: 16.5 per cent) on the profits assessable in Hong Kong. The Organisat ion for Econom ic Co-operation and Development/G20 Inclusive Framework on Base Erosion and Profit Shift ing seeks to address the tax challenges aris ing from the d ig ital isat ion of the global economy. P illar Two of the Global anti-Base Erosion rules represents the first substantial overhaul of internat ional tax rules in almost a century. It proposes four new taxing mechanisms under which multi-national enterprises would pay a min imum level of tax. An income inclus ion rule, an under-taxed payment rule and a qualif ied domest ic min imum top up tax together generally propose a m in imum tax of 15% on income aris ing in each jur isd ict ion in which the multi-national enterprise operates. A subject to tax rule that is treaty-based generally proposes a min imum tax on certa in cross-border intercompany transactions. Enactment is currently expected to occur with effect from 1 January 2024. The Group is closely monitor ing developments to assess potent ial future impl icat ions and implementat ion efforts. 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: 2022 2021 $mill ion % $mill ion % Profit on ordinary activ it ies before tax 4,286 3,347 Tax at 19 per cent (2021: 19 per cent) 814 19.0 636 19.0 Lower tax rates on overseas earnings (122) (2.8) (93) (2.8) Higher tax rates on overseas earnings 435 10.1 366 10.9 Tax at domestic rates applicable where profits earned 1,127 26.3 909 27.1 Non-creditable withhold ing taxes 90 2.1 120 3.6 Tax exempt income (69) (1.6) (85) (2.5) Share of associates and jo int ventures (27) (0.6) (33) (1.0) Non-deductible expenses 1 115 2.7 167 5.0 Regulatory fine – – 12 0.4 Bank levy 19 0.4 19 0.6 Non-taxable losses on investments 1 51 1.2 50 1.5 Payments on financial instruments in reserves (56) (1.3) (62) (1.9) Goodwill impa irment 3 0.1 – – Deferred tax not recognised 77 1.8 54 1.6 Deferred tax assets written-off – – 1 – Deferred tax rate changes (9) (0.2) – – Adjustments to tax charge in respect of prior years (24) (0.6) (80) (2.4) Other items 87 2.0 (38) (1.1) Tax on profit on ordinary activ it ies 1,384 32.3 1,034 30.9 1 The 2021 comparatives have been reclassif ied as follows to al ign with presentation in the current period: Non-taxable losses on investments from $nil to $50m, Non-deductible expenses from $217m to $167m ![]() 367 Standard Chartered – Annual Report 2022 Financ ial statements 10. Taxation continued 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 ing acqu is it ions, disposals and restructuring of our businesses, the mix of profits across jur isd ict ions w ith different statutory tax rates, changes in tax legislat ion and tax rates and resolut ion of uncertain tax posit ions. The evaluation of uncertain tax posit ions involves an interpretat ion of local tax laws wh ich could be subject to challenge by a tax authority, and an assessment of whether the tax authorit ies w ill accept the posit ion taken. The Group does not currently consider that assumptions or judgements made in assessing tax liab il it ies have a s ign ificant r isk of resulting in a material adjustment with in the next financial year. Tax recognised in other comprehensive income 2022 2021 Current tax $mill ion Deferred tax $mill ion Total $mill ion Current tax $mill ion Deferred tax $mill ion Total $mill ion Items that will not be reclassif ied to income statement – 15 15 – (82) (82) Own credit adjustment – 8 8 – (6) (6) Equity instruments at fair value through other comprehensive income – 27 27 – (59) (59) Retirement benefit obligat ions – (20) (20) – (17) (17) Items that may be reclassed subsequently to income statement – 152 152 – 74 74 Debt instruments at fair value through other comprehensive income – 63 63 – 76 76 Cash flow hedges – 89 89 – (2) (2) Total tax credit/(charge) recognised in equity – 167 167 – (8) (8) Current tax: The following are the movements in current tax during the year: Current tax comprises: 2022 $mill ion 2021 $mill ion Current tax assets 766 808 Current tax liab il it ies (348) (660) Net current tax opening balance 418 148 Movements in income statement (1,269) (879) Movements in other comprehensive income – – Taxes paid 821 1,161 Other movements (50) (12) Net current tax balance as at 31 December (80) 418 Current tax assets 503 766 Current tax liab il it ies (583) (348) Total (80) 418 Deferred tax: The following are the major deferred tax liab il it ies and assets recogn ised by the Group and movements thereon during the year: At 1 January 2022 $mill ion Exchange & other adjustments $mill ion (Charge)/credit to profit $mill ion (Charge)/credit to equity $mill ion At 31 December 2022 $mill ion Deferred tax comprises: Accelerated tax depreciat ion (515) (8) (66) – (589) Impairment provis ions on loans and advances 351 (41) 24 – 334 Tax losses carried forward 263 16 (67) – 212 Fair value through other comprehensive income (126) (1) 24 90 (13) Cash flow hedges – – – 89 89 Own credit adjustment (3) – – 8 5 Retirement benefit obligat ions 27 (5) – (20) 2 Share-based payments 32 – 4 – 36 Other temporary differences 30 (7) (34) – (11) Net deferred tax assets 59 (46) (115) 167 65 ![]() 368 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 10. Taxation continued At 1 January 2021 $mill ion Exchange & other adjustments $mill ion (Charge)/credit to profit $mill ion (Charge)/credit to equity $mill ion At 31 December 2021 $mill ion Deferred tax comprises: Accelerated tax depreciat ion (493) 4 (26) – (515) Impairment provis ions on loans and advances 419 12 (80) – 351 Tax losses carried forward 282 (3) (16) – 263 Fair value through other comprehensive income (146) 5 (2) 17 (126) Cash flow hedges 2 – – (2) – Own credit adjustment 3 – – (6) (3) Retirement benefit obligat ions 36 13 (5) (17) 27 Share-based payments 23 – 9 – 32 Other temporary differences 98 (33) (35) – 30 Net deferred tax assets 224 (2) (155) (8) 59 Deferred tax comprises assets and liab il it ies as follows: 2022 2021 Total $mill ion Asset $mill ion Liab il ity $mill ion Total $mill ion Asset $mill ion Liab il ity $mill ion Deferred tax comprises: Accelerated tax depreciat ion (589) 1 (590) (515) 18 (533) Impairment provis ions on loans and advances 334 339 (5) 351 389 (38) Tax losses carried forward 212 90 122 263 172 91 Fair value through other comprehensive income (13) 45 (58) (126) (22) (104) Cash flow hedges 89 85 4 – (3) 3 Own credit adjustment 5 (1) 6 (3) (1) (2) Retirement benefit obligat ions 2 15 (13) 27 16 11 Share-based payments 36 5 31 32 – 32 Other temporary differences (11) 255 (266) 30 290 (260) 65 834 (769) 59 859 (800) At 31 December 2022, the Group has net deferred tax assets of $65 mill ion (31 December 2021: $59 m ill ion). The recoverab il ity of the Group’s deferred tax assets is based on management’s judgement of the availab il ity of future taxable profits against which the deferred tax assets will be util ised. Of the Group’s total deferred tax assets, $212 mill ion relates to tax losses carr ied forward. These tax losses have arisen in ind iv idual legal entit ies and w ill be offset as future taxable profits arise in those entit ies. • $113 mill ion of the deferred tax assets relat ing 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 ised over the useful econom ical life of the assets being up to 18 years. • $51 mill ion of the deferred tax assets relat ing to losses has arisen in the US. Management forecasts show that the losses are expected to be fully util ised over a per iod of two years. The remain ing deferred tax assets of $48 m ill ion relat ing to losses have arisen in other jur isd ict ions and are expected to be recovered in less than 10 years. Unrecognised deferred tax Net 2022 $mill ion Gross 2022 $mill ion Net 2021 $mill ion Gross 2021 $mill ion No account has been taken of the following potential deferred tax assets/(liab il it ies): Withhold ing tax on unrem itted earnings from overseas subsid iar ies and associates (507) (6,434) (426) (5,544) Tax losses 1,980 8,231 2,104 8,292 Held over gains on incorporation of overseas branches (346) (1,313) (422) (1,476) Other temporary differences 544 1,991 208 790 ![]() 369 Standard Chartered – Annual Report 2022 Financ ial statements 11. Div idends Accounting policy Div idends on ord inary shares and preference shares classif ied as equ ity are recognised in equity in the year in which they are declared. Div idends on ord inary equity shares are recorded in the year in which they are declared and, in respect of the final div idend, have been approved by the shareholders. The Board considers a number of factors prior to div idend declarat ion which includes the rate of recovery in the Group’s financial performance, the macroeconom ic environment, and opportunit ies to further invest in our business and grow profitably in our markets. Ordinary equity shares 2022 2021 Cents per share $mill ion Cents per share $mill ion 2021/2020 final div idend declared and pa id during the year 9 274 9 282 2022/2021 inter im d iv idend declared and pa id during the year 4 119 3 92 Div idends on ord inary equity shares are recorded in the period in which they are declared and, in respect of the final div idend, have been approved by the shareholders. Accordingly, the final ordinary equity share div idends set out above relate to the respective prior years. 2022 recommended final ordinary equity share div idend The 2022 ordinary equity share div idend recommended by the Board is 14 cents per share. The financ ial statements for the year ended 31 December 2022 do not reflect this div idend as th is will be accounted for in shareholders’ equity as an appropriat ion of retained profits in the year ending 31 December 2023. The div idend w ill be paid in either pounds sterling, Hong Kong dollars or US dollars on 11 May 2023 to shareholders on the UK register of members at the close of business in the UK on 24 February 2023. Preference shares and Addit ional T ier 1 securit ies Div idends on these preference shares and secur it ies class if ied as equ ity are recorded in the period in which they are declared. 2022 $mill ion 2021 $mill ion 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 20 13 73 66 Addit ional T ier 1 securit ies: fixed rate resett ing perpetual subordinated contingent convertible securit ies 328 344 401 410 ![]() 370 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 12. Earnings per ordinary share Accounting policy Basic earnings per ordinary share is calculated by div id ing 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 id ing the basic earnings, which require no adjustment for the effects of dilut ive potent ial ordinary shares, by the weighted average number of ordinary shares that would have been outstanding assuming the conversion of all dilut ive potential ordinary shares, excluding own shares held. The Group also measures earnings per share on an underlying basis. This differs from earnings defined in IAS 33 Earnings per share. Underlying earnings is profit/(loss) attributable to ordinary shareholders adjusted for profits or losses of a capital nature; amounts consequent to investment transactions driven by strategic intent; and other infrequent and/or exceptional transactions that are sign ificant or mater ial in the context of the Group’s normal business earnings for the year. The table below provides the basis of underlying earnings. 2022 $mill ion 2021 (Restated)¹ $mill ion Profit for the period attributable to equity holders 2,902 2,313 Non-controlling interest 46 2 Div idend payable on preference shares and AT1 class if ied as equ ity (401) (410) Profit for the period attributable to ordinary shareholders 2,547 1,905 Items normalised: Provis ion for regulatory matters – 62 Restructuring 174 507 Goodwill and other impa irment (Note 9) 1 322 300 Net gain on sale of businesses (Note 6) (20) (20) Tax on normalised items² (24) (87) Underlying profit 2,999 2,667 Basic – Weighted average number of shares (mill ions) 2,966 3,108 Diluted – Weighted average number of shares (mill ions) 3,023 3,154 Basic earnings per ordinary share (cents) 85.9 61.3 Diluted earnings per ordinary share (cents) 84.3 60.4 Underlying basic earnings per ordinary share (cents) 101.1 85.8 Underlying diluted earnings per ordinary share (cents) 99.2 84.6 1 Other Impairment includes $308 mill ion impa irment charge relat ing to the Group’s investment in its associate China Bohai Bank (Bohai). The 2021 comparative has been restated for consistency to reclassify the $300 mill ion impa irment from Other impa irment w ith in Underly ing profit which has resulted in the restatement of Underlying basic earnings per ordinary share (cents) and Underlying diluted earnings per ordinary share (cents) 2 No tax is included in respect of Goodwill and other impa irment as no tax rel ief is available ![]() 371 Standard Chartered – Annual Report 2022 Financ ial statements 13. Financ ial instruments Classif icat ion and measurement Accounting policy The Group classif ies its financ ial assets into the following measurement categories: amortised cost; fair value through other comprehensive income (FVOCI); and fair value through profit or loss. Financ ial l iab il it ies are class if ied as e ither amortised cost, or held at fair value through profit or loss. Management determines the classif icat ion of its financ ial assets and l iab il it ies at in it ial recognit ion of the instrument or, where applicable, at the time of reclassif icat ion. Financ ial assets held at amort ised cost and fair value through other comprehensive income Debt instruments held at amortised cost or held at FVOCI have contractual terms that give rise to cash flows that are solely payments of princ ipal and interest (SPPI) characterist ics. Pr inc ipal is the fair value of the financ ial asset at in it ial recognit ion but this may change over the life of the instrument as amounts are repaid. Interest consists of considerat ion for the t ime value of money, for the credit risk associated with the princ ipal amount outstand ing during a particular period and for other basic lending risks and costs, as well as a profit margin. In assessing whether the contractual cash flows have SPPI characterist ics, the Group cons iders the contractual terms of the instrument. This includes assessing whether the financ ial asset conta ins a contractual term that could change the tim ing or amount of contractual cash flows such that it would not meet this condit ion. In mak ing the assessment, the Group considers: • Contingent events that would change the amount and tim ing of cash flows • Leverage features • Prepayment and extension terms • Terms that lim it the Group’s cla im to cash flows from specif ied assets (e.g. non-recourse asset arrangements); • Features that modify considerat ion of the t ime value of money – e.g. period ical reset of interest rates Whether financial assets are held at amort ised cost or at FVOCI depends on the object ives of the bus iness models under which the assets are held. A business model refers to how the Group manages financ ial assets to generate cash flows. The Group makes an assessment of the objective of a bus iness model in which an asset is held at the ind iv idual product business line, and where applicable with in bus iness lines depending on the way the business is managed and informat ion is provided to management. Factors considered include: • How the performance of the product business line is evaluated and reported to the Group’s management • How managers of the business model are compensated, includ ing whether management is compensated based on the fair value of assets or the contractual cash flows collected • The risks that affect the performance of the business and how those risks are managed • The frequency, volume and tim ing of sales in prior periods, the reasons for such sales and expectations about future sales activ ity The Group’s business model assessment is as follows: Business model Business object ive Characterist ics Businesses Products Hold to collect Intent is to orig inate financial assets and hold them to maturity, collecting the contractual cash flows over the term of the instrument • Provid ing financing and orig inat ing assets to earn interest income as primary income stream • Performing credit risk management activ it ies • Costs include funding costs, transaction costs and impa irment losses • Corporate Lending • Financ ial Markets • Transaction Banking • Retail Lending • Treasury Markets (Loans and Borrowings) • Loans and advances • Debt securit ies Hold to collect and sell Business object ive met through both hold to collect and by selling financial assets • Portfolios held for liqu id ity needs; or where a certain interest yield profile is mainta ined; or that are normally rebalanced to achieve matching of duration of assets and liab il it ies • Income streams come from interest income, fair value changes, and impa irment losses • Treasury Markets • Debt securit ies Fair value through profit or loss All other business objectives, includ ing trading and managing financial assets on a fa ir value basis • Assets held for trading • Assets that are orig inated, purchased, and sold for profit taking or underwrit ing act iv ity • Performance of the portfolio is evaluated on a fair value basis • Income streams are from fair value changes or trading gains or losses • Financ ial Markets • Trading portfolios • Financ ial Markets reverse repos • Financ ial Markets (FM Bond and Loan Syndicat ion) ![]() 372 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 13. Financ ial instruments continued Financ ial assets wh ich have SPPI characterist ics and that are held w ith in a bus iness model whose object ive is to hold financial assets to collect contractual cashflows (hold to collect) are recorded at amort ised cost. Conversely, financ ial assets which have SPPI characterist ics but are held w ith in a bus iness model whose object ive is achieved by both collecting contractual cashflows and selling financ ial assets (Hold to collect and sell) are class if ied as held at FVOCI. Both hold to collect and hold to collect and sell business models involve holding financ ial assets to collect the contractual cashflows. However, the business models are dist inct by reference to the frequency and s ign ificance that asset sales play in meeting the objective under wh ich a particular group of financ ial assets is managed. Hold to collect business models are characterised by asset sales that are inc idental to meet ing the object ives under wh ich 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 ial assets but sales for other reasons should be infrequent or ins ign if icant. Cashflows from the sale of financial assets under a hold to collect and sell business model by contrast are integral to achiev ing the objectives under wh ich a particular group of financ ial assets are managed. This may be the case where frequent sales of financ ial assets are requ ired to manage the Group’s daily liqu id ity requirements or to meet regulatory requirements to demonstrate liqu id ity of financ ial instruments. Sales of assets under hold to collect and sell business models are therefore both more frequent and more sign ificant 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 it ial recognit ion as held at FVOCI on an instrument-by-instrument basis. Div idends rece ived are recognised in profit or loss. Gains and losses aris ing from changes in the fair value of these instruments, includ ing fore ign exchange gains and losses, are recognised directly in equity and are never reclassif ied to profit or loss even on derecogn it ion. Financ ial assets and l iab il it ies held at fa ir value through profit or loss Financ ial assets wh ich are not held at amortised cost or that are not held at FVOCI are held at fair value through profit or loss. Financ ial assets and l iab il it ies held at fa ir value through profit or loss are either mandatorily classif ied as fa ir value through profit or loss or irrevocably designated at fair value through profit or loss at in it ial recognit ion. Mandatorily classif ied at fa ir value through profit or loss Financ ial assets and l iab il it ies wh ich are mandatorily held at fair value through profit or loss are split between two subcategories as follows: Trading, includ ing: • Financ ial assets and l iab il it ies held for trad ing, which are those acquired princ ipally for the purpose of sell ing in the short-term • Derivat ives Non-trading mandatorily at fair value through profit or loss, includ ing: • Instruments in a business which has a fair value business model (see the Group’s business model assessment) which are not trading or derivat ives • Hybrid financ ial assets that conta in one or more embedded derivat ives • Financ ial assets that would otherw ise be measured at amortised cost or FVOCI but which do not have SPPI characterist ics • Equity instruments that have not been designated as held at FVOCI • Financ ial l iab il it ies that const itute contingent considerat ion in a business combinat ion Designated at fair value through profit or loss Financ ial assets and l iab il it ies may be des ignated at fair value through profit or loss when the designat ion el im inates or sign ificantly reduces a measurement or recogn it ion incons istency that would otherw ise arise from measuring assets or liab il it ies on a d ifferent basis (‘accounting mismatch’). Financ ial l iab il it ies may also be des ignated at fair value through profit or loss where they are managed on a fair value basis or have an embedded derivat ive where the Group is not able to bifurcate and separately value the embedded derivat ive component. Financ ial l iab il it ies held at amort ised cost Financ ial l iab il it ies that are not financial guarantees or loan comm itments and that are not classif ied as financial l iab il it ies held at fair value through profit or loss are classif ied as financial l iab il it ies held at amort ised 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 ic date or at the opt ion of the shareholder are classif ied as financial l iab il it ies and are presented in other borrowed funds. The div idends on these preference shares are recogn ised in the income statement as interest expense on an amortised cost basis using the effective interest method. ![]() 373 Standard Chartered – Annual Report 2022 Financ ial statements 13. Financ ial instruments continued Financ ial guarantee contracts and loan comm itments The Group issues financ ial guarantee contracts and loan comm itments in return for fees. Financ ial guarantee contracts and any loan commitments issued at below-market interest rates are in it ially recognised at their fair value as a financ ial l iab il ity, and subsequently measured at the higher of the in it ial value less the cumulative amount of income recognised in accordance with the princ iples of IFRS 15 Revenue from Contracts w ith Customers and their expected credit loss provis ion. 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 ial assets and l iab il it ies Fair value is the price that would be received to sell an asset or paid to transfer a liab il ity in an orderly transaction between market partic ipants at the measurement date in the princ ipal market for the asset or l iab il ity, or in the absence of a princ ipal market, the most advantageous market to which the Group has access at the date. The fair value of a liab il ity includes the risk that the bank will not be able to honour its obligat ions. The fair value of financ ial instruments is generally measured on the basis of the ind iv idual financ ial instrument. However, when a group of financial assets and financial l iab il it ies is managed on the basis of its net exposure to either market risk or credit risk, the fair value of the group of financ ial instruments is measured on a net basis. The fair values of quoted financ ial assets and l iab il it ies in active markets are based on current prices. A market is regarded as active if transactions for the asset or liab il ity take place with suffic ient frequency and volume to prov ide pric ing informat ion on an ongoing basis. If the market for a financ ial instrument, and for unlisted securit ies, is not active, the Group establishes fair value by using valuation techniques. Init ial recogn it ion Regular way purchases and sales of financial assets held at fa ir value through profit or loss, and held at fair value through other comprehensive income are in it ially recognised on the trade date (the date on which the Group commits to purchase or sell the asset). Loans and advances and other financial assets held at amort ised cost are recognised on the settlement date (the date on which cash is advanced to the borrowers). All financial instruments are in it ially recognised at fair value, which is normally the transaction price, plus directly attributable transaction costs for financ ial assets and l iab il it ies wh ich are not subsequently measured at fair value through profit or loss. In certain circumstances, the in it ial fair value may be based on a valuation technique which may lead to the recognit ion of profits or losses at the time of in it ial recognit ion. However, these profits or losses can only be recogn ised when the valuation technique used is based solely on observable market data. In those cases where the in it ially 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 iately in the income statement but is amortised or released to the income statement following the passage of time, or as the inputs become observable, or the transaction matures or is terminated. Subsequent measurement Financ ial assets and financial l iab il it ies held at amort ised cost Financ ial assets and financial l iab il it ies held at amort ised cost are subsequently carried at amortised cost using the effective interest method (see Interest income and expense). Foreign exchange gains and losses are recognised in the income statement. Where a financial instrument carried at amortised cost is the hedged item in a qualify ing fa ir value hedge relationsh ip, its carrying value is adjusted by the fair value gain or loss attributable to the hedged risk. Financ ial assets held at FVOCI Debt instruments held at FVOCI are subsequently carried at fair value, with all unrealised gains and losses aris ing from changes in fair value (includ ing any related fore ign 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 ion, the cumulat ive 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 ing from changes in fair value (includ ing any related fore ign exchange gains or losses) recognised in other comprehensive income and accumulated in a separate component of equity. On derecognit ion, the cumulat ive reserve is transferred to retained earnings and is not recycled to profit or loss. Financ ial assets and l iab il it ies held at fa ir value through profit or loss Financ ial assets and l iab il it ies mandator ily held at fair value through profit or loss and financ ial assets des ignated at fair value through profit or loss are subsequently carried at fair value, with gains and losses aris ing from changes in fair value, includ ing contractual interest income or expense, recorded in the net trading income line in the profit or loss unless the instrument is part of a cash flow hedging relationsh ip. ![]() 374 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 13. Financ ial instruments continued Financ ial l iab il it ies des ignated at fair value through profit or loss Financ ial l iab il it ies des ignated at fair value through profit or loss are held at fair value, with changes in fair value recognised in the net trading income line in the profit or loss, other than that attributable to changes in credit risk. Fair value changes attributable to credit risk are recognised in other comprehensive income and recorded in a separate category of reserves unless this is expected to create or enlarge an accounting mismatch, in which case the entire change in fair value of the financial l iab il ity designated at fair value through profit or loss is recognised in profit or loss. Derecognit ion of financial instruments Financ ial assets are derecogn ised when the rights to receive cash flows from the financ ial assets have exp ired 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 ing involvement. Where financial assets have been mod if ied, the mod if ied terms are assessed on a qual itat ive and quant itat ive bas is to determine whether a fundamental change in the nature of the instrument has occurred, such as whether the derecognit ion of the pre-exist ing instrument and the recognit ion of a new instrument is appropriate. On derecognit ion of a financial asset, the d ifference 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 ion rece ived (includ ing any new asset obtained less any new liab il ity 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 il ity that are held in other comprehensive income. Financ ial l iab il it ies are derecogn ised when they are extingu ished. A financial l iab il ity is extingu ished when the obl igat ion is discharged, cancelled or expires and this is evaluated both qualitat ively and quant itat ively. However, where a financial liab il ity has been modif ied, it is derecognised if the difference between the modif ied cash flows and the or ig inal cash flows is more than 10 per cent, or if less than 10 per cent, the Group will perform a qualitat ive assessment to determ ine 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 il ity and the considerat ion pa id is included in ‘Other income’ except for the cumulative fair value adjustments attributable to the credit risk of a liab il ity that are held in other comprehensive income which are never recycled to the profit or loss. Modif ied financial instruments Financ ial assets and financial l iab il it ies whose or ig inal contractual terms have been mod if ied, includ ing those loans subject to forbearance strategies, are considered to be modif ied instruments. Modif icat ions may include changes to the tenor, cash flows and or interest rates among other factors. Where derecognit ion of financial assets is appropriate (see Derecognit ion), the newly recogn ised residual loans are assessed to determine whether the assets should be classif ied as purchased or or ig inated Cred it-Impaired assets (POCI). Where derecognit ion is not appropriate, the gross carrying amount of the applicable instruments is recalculated as the present value of the renegotiated or modif ied contractual cash flows d iscounted at the orig inal effect ive interest rate (or credit adjusted effective interest rate for POCI financ ial assets). The d ifference between the recalculated values and the pre-modif ied gross carry ing values of the instruments are recorded as a modif icat ion gain or loss in the profit or loss. Gains and losses aris ing from mod if icat ions for credit reasons are recorded as part of ‘Credit Impairment’ (see Credit Impairment policy). Modif icat ion gains and losses aris ing from non-cred it reasons are recognised either as part of “Credit Impairment” or with in income depending on whether there has been a change in the credit risk on the financ ial asset subsequent to the modif icat ion. Modif icat ion gains and losses aris ing on financial l iab il it ies are recogn ised with in income. The movements in the applicable expected credit loss loan posit ions are d isclosed in further detail in Risk Review. Under the Phase 2 Interest Rate Benchmark Reform amendments to IFRS 9, changes to the basis for determin ing contractual cash flows as a direct result of interest rate benchmark reform are treated as changes to a floating interest rate to that instrument, provided that the transit ion from the IBOR benchmark rate to the alternat ive 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 ia, the Group appl ies judgement to assess whether the changes are substantial and if they are, the financ ial instrument is derecognised and a new financ ial instrument is recognised. If the changes are not substantial, the Group adjusts the gross carrying amount of the financ ial instrument by the present value of the changes not covered by the practical expedient, discounted using the revised effective interest rate. ![]() 375 Standard Chartered – Annual Report 2022 Financ ial statements 13. Financ ial instruments continued Reclassif icat ions Financ ial l iab il it ies are not reclass if ied subsequent to in it ial recognit ion. Reclass if icat ions of financ ial 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 ificant external or internal changes such as the terminat ion of a l ine of business or the purchase of a subsid iary whose business model is to realise the value of pre-exist ing held for trad ing financ ial assets through a hold to collect model. Financ ial assets are reclass if ied at the ir fair value on the date of reclassif icat ion and previously recognised gains and losses are not restated. Moreover, reclassif icat ions of financ ial assets between financial assets held at amort ised cost and financ ial assets held at fair value through other comprehensive income do not affect effective interest rate or expected credit loss computations. Reclassif ied from amort ised cost Where financial assets held at amort ised cost are reclassif ied to financial assets held at fa ir value through profit or loss, the difference between the fair value of the assets at the date of reclassif icat ion and the previously recognised amortised cost is recognised in profit or loss. For financial assets held at amort ised cost that are reclassif ied to fa ir value through other comprehensive income, the difference between the fair value of the assets at the date of reclassif icat ion and the previously recognised gross carrying value is recognised in other comprehensive income. Addit ionally, the related cumulat ive expected credit loss amounts relating to the reclassif ied financial assets are reclass if ied from loan loss prov is ions to a separate reserve in other comprehensive income at the date of reclassif icat ion. Reclassif ied from fa ir value through other comprehensive income Where financial assets held at fa ir value through other comprehensive income are reclassif ied to financial assets held at fa ir value through profit or loss, the cumulative gain or loss previously recognised in other comprehensive income is transferred to the profit or loss. For financial assets held at fa ir value through other comprehensive income that are reclassif ied to financial assets held at amortised cost, the cumulative gain or loss previously recognised in other comprehensive income is adjusted against the fair value of the financial asset such that the financial asset is recorded at a value as if it had always been held at amortised cost. In addit ion, the related cumulat ive expected credit losses held with in other comprehens ive income are reversed against the gross carrying value of the reclassif ied assets at the date of reclass if icat ion. Reclassif ied from fa ir value through profit or loss Where financial assets held at fa ir value through profit or loss are reclassif ied to financial assets held at fa ir value through other comprehensive income or financ ial assets held at amort ised cost, the fair value at the date of reclassif icat ion is used to determine the effective interest rate on the financ ial asset go ing forward. In addit ion, the date of reclass if icat ion is used as the date of in it ial recognit ion for the calculat ion of expected credit losses. Where financ ial assets held at fa ir value through profit or loss are reclassif ied to financial assets held at amort ised cost, the fair value at the date of reclassif icat ion becomes the gross carrying value of the financ ial asset. ![]() 376 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 13. Financ ial instruments continued The Group’s classif icat ion of its financ ial assets and l iab il it ies is summarised in the following tables. Assets Notes Assets at fair value Assets held at amortised cost $mill ion Total $mill ion Trading $mill ion Derivat ives held for hedging $mill ion Non-trading mandatorily at fair value through profit or loss $mill ion Designated at fair value through profit or loss $mill ion Fair value through other comprehensive income $mill ion Total financial assets at fair value $mill ion Cash and balances at central banks – – – – – – 58,263 58,263 Financ ial assets held at fa ir value through profit or loss Loans and advances to banks¹ 976 – – – – 976 – 976 Loans and advances to customers¹ 5,765 – 781 – – 6,546 – 6,546 Reverse repurchase agreements and other sim ilar secured lend ing 16 1,175 – 63,316 – – 64,491 – 64,491 Debt securit ies, alternative tier one and other elig ible b ills 30,162 – 324 76 – 30,562 – 30,562 Equity shares 2,997 – 233 – – 3,230 – 3,230 Other assets – – 7 – – 7 – 7 41,075 – 64,661 76 – 105,812 – 105,812 Derivat ive financial instruments 14 60,858 2,859 – – – 63,717 – 63,717 Loans and advances to banks¹ 15 – – – – – – 39,519 39,519 of which – reverse repurchase agreements and other sim ilar secured lending 16 – – – – – – 978 978 Loans and advances to customers¹ 15 – – – – – – 310,647 310,647 of which – reverse repurchase agreements and other sim ilar secured lending 16 – – – – – – 24,498 24,498 Investment securit ies Debt securit ies, alternative tier one and other elig ible b ills – – – – 111,926 111,926 59,714 171,640 Equity shares – – – – 808 808 – 808 – – – – 112,734 112,734 59,714 172,448 Other assets 20 – – – – – – 39,295 39,295 Assets held for sale 21 – – – 3 – 3 1,388 1,391 Total at 31 December 2022 101,933 2,859 64,661 79 112,734 282,266 508,826 791,092 1 Further analysed in Risk review and Capital review (pages 236 to 325) ![]() 377 Standard Chartered – Annual Report 2022 Financ ial statements 13. Financ ial instruments continued Assets Notes Assets at fair value Assets held at amortised cost $mill ion Total $mill ion Trading $mill ion Derivat ives held for hedging $mill ion Non-trading mandatorily at fair value through profit or loss $mill ion Designated at fair value through profit or loss $mill ion Fair value through other comprehensive income $mill ion Total financial assets at fair value $mill ion Cash and balances at central banks – – – – – – 72,663 72,663 Financ ial assets held at fa ir 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 ilar secured lend ing 16 – – 80,009 – – 80,009 – 80,009 Debt securit ies, alternative tier one and other elig ible b ills 28,801 – 463 161 – 29,425 – 29,425 Equity shares 5,653 – 208 – – 5,861 – 5,861 Other assets – – 26 – – 26 – 26 41,758 – 87,202 161 – 129,121 – 129,121 Derivat ive financial instruments 14 51,002 1,443 – – – 52,445 – 52,445 Loans and advances to banks¹ 15 – – – – – – 44,383 44,383 of which – reverse repurchase agreements and other sim ilar secured lending 16 – – – – – – 1,079 1,079 Loans and advances to customers¹ 15 – – – – – – 298,468 298,468 of which – reverse repurchase agreements and other sim ilar secured lending 16 – – – – – – 7,331 7,331 Investment securit ies Debt securit ies, alternative tier one and other elig ible b ills – – – – 121,375 121,375 41,325 162,700 Equity shares – – – – 737 737 – 737 – – – – 122,112 122,112 41,325 163,437 Other assets 20 – – – – – – 40,068 40,068 Assets held for sale 21 – – – 43 – 43 52 95 Total at 31 December 2021 92,760 1,443 87,202 204 122,112 303,721 496,959 800,680 1 Further analysed in Risk review and Capital review (pages 236 to 325) ![]() 378 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 13. Financ ial instruments continued Liab il it ies Notes Liab il it ies at fa ir value Amortised cost $mill ion Total $mill ion Trading $mill ion Derivat ives held for hedging $mill ion Designated at fair value through profit or loss $mill ion Total financial liab il it ies at fair value $mill ion Financ ial l iab il it ies held at fa ir value through profit or loss Deposits by banks – – 1,066 1,066 – 1,066 Customer accounts 29 – 11,677 11,706 – 11,706 Repurchase agreements and other sim ilar secured borrowing 16 – – 51,706 51,706 – 51,706 Debt securit ies in issue 22 – – 8,572 8,572 – 8,572 Short posit ions 6,847 – – 6,847 – 6,847 Other liab il it ies – – 6 6 – 6 6,876 – 73,027 79,903 – 79,903 Derivat ive financial instruments 14 65,316 4,546 – 69,862 – 69,862 Deposits by banks – – – – 28,789 28,789 Customer accounts – – – – 461,677 461,677 Repurchase agreements and other sim ilar secured borrowing 16 – – – – 2,108 2,108 Debt securit ies in issue 22 – – – – 61,242 61,242 Other liab il it ies 23 – – – – 42,915 42,915 Subordinated liab il it ies and other borrowed funds 27 – – – – 13,715 13,715 Liab il it ies included in disposal groups held for sale 21 5 – – 5 1,230 1,235 Total at 31 December 2022 72,197 4,546 73,027 149,770 611,676 761,446 Liab il it ies Notes Liab il it ies at fa ir value Amortised cost $mill ion Total $mill ion Trading $mill ion Derivat ives held for hedging $mill ion Designated at fair value through profit or loss $mill ion Total financial liab il it ies at fair value $mill ion Financ ial l iab il it ies held at fa ir value through profit or loss Deposits by banks – – 1,352 1,352 – 1,352 Customer accounts 198 – 9,093 9,291 – 9,291 Repurchase agreements and other sim ilar secured borrowing 16 – – 62,388 62,388 – 62,388 Debt securit ies in issue 22 – – 5,597 5,597 – 5,597 Short posit ions 6,562 – – 6,562 – 6,562 Other liab il it ies 6 – 1 7 – 7 6,766 – 78,431 85,197 – 85,197 Derivat ive financial instruments 14 52,706 693 – 53,399 – 53,399 Deposits by banks – – – – 30,041 30,041 Customer accounts – – – – 474,570 474,570 Repurchase agreements and other sim ilar secured borrowing 16 – – – – 3,260 3,260 Debt securit ies in issue 22 – – – – 61,293 61,293 Other liab il it ies 23 – – – – 43,432 43,432 Subordinated liab il it ies and other borrowed funds 27 – – – – 16,646 16,646 Liab il it ies included in disposal groups held for sale 21 – – – – – – Total at 31 December 2021 59,472 693 78,431 138,596 629,242 767,838 Interest rate benchmark reform In 2017, the Financ ial Conduct Author ity (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 ion from LIBORs to alternat ive 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. ![]() 379 Standard Chartered – Annual Report 2022 Financ ial statements 13. Financ ial instruments continued How the Group is managing the transit ion to alternat ive benchmark rates In 2018, the Group established its IBOR Transit ion Programme to manage the trans it ion away from LIBOR. Sen ior management oversight for the Programme is provided by the Chief Executive Officers of CCIB and CPBB. The Programme’s strategic bank- wide approach aims to support clients throughout the transit ion, wh ile ensuring key risks and issues are ident ified and effectively managed. The Programme is governed by a princ ipal Programme Steer ing Committee that oversees 13 workstreams aligned to the Group’s businesses and functions. With in the Programme, separate comm ittees govern each workstream, and all of them have a dedicated Accountable Executive. Addit ional governance is supported by regular updates provided to senior risk committees, includ ing the Group R isk Committee, Board Risk Committee and the Corporate, Commercial and Institut ional Bank ing Risk Committee. From an industry and regulatory perspective, the Group actively partic ipates in and contributes to working groups, industry associat ions and bus iness forums that focus on different aspects of the transit ion. The Group mon itors the developments at these forums and includes sign ificant dec is ions into its broader transit ion plans. Progress during 2022 Supported by a number of system enhancements, the Group has successfully enabled the transit ion to RFR products, w ith end-to-end capabil it ies across a full suite of derivat ive and cash products. Act iv ity in products referencing RFRs continued to grow throughout 2022. New use of USD LIBOR has ceased, except for lim ited except ions as permitted by the regulators. The Group remediated all non-USD LIBOR exposures by early 2022 and has no reliance on synthetic GBP or JPY LIBOR in 2022. During 2022, focus shifted on the remediat ion of legacy USD LIBOR transact ions and automation of associated data and processes. Clients with legacy USD LIBOR loans have been engaged to remediate their contracts primar ily v ia active conversion to alternative rates, or other suitable transit ion mechan isms such as the inclus ion of robust fallbacks. The Group adhered to the International Swaps and Derivat ives Assoc iat ion (ISDA) 2020 IBOR Fallbacks Protocol for all its trading entit ies and cont inued to engage clients that had not adhered to negotiate remediat ion of USD LIBOR contracts by the end of June 2023. The Group w ill also partic ipate in the conversion events at the London Clearing House (LCH) during the first part of 2023. Frontline and client engagement, includ ing internal and client communicat ions, tra in ing, and cl ient webinars were a key feature of the Programme throughout 2022 to support transit ion from USD LIBOR to Secured Overn ight Financ ing Rate (SOFR) as well as the transit ion for other IBOR benchmarks that are ceas ing. Risks which the Group is exposed to due to IBOR transit ion The Group has largely mit igated all mater ial adverse outcomes associated with the cessation of IBOR benchmarks, and these have not required a change to the Group’s risk management strategy. However, the Group will continue to focus on the remediat ion requ ired for other benchmarks, and will continue to monitor and manage the inherent risks of the transit ion, w ith particular attention being paid to the following: • Legal Risk: IBOR transit ion introduces sign ificant legal r isks and the Group has taken action to mit igate them where poss ible. These include risks around contracts that reference USD LIBOR. Steps have been taken to either insert robust fallbacks or actively convert transactions from the relevant IBOR to the new RFR-based options. The Group actively monitors remediat ion progress and tracks exposures that are proving diff icult to remed iate. Based on the informat ion ava ilable as at the date of this Report, there is a reasonable probabil ity that some such exposures may not be remed iated by the first interest fix ing date following June 30 2023. The Group will apply certain legislat ive solut ions to these exposures if required, includ ing the applicat ion of synthet ic USD LIBOR, should it be made available • Conduct Risk: The Group considers Conduct Risk to be a sign ificant area of non-financial r isk management throughout the transit ion. Our r isk appetite statement on Conduct Risk strives to mainta in appropr iate outcomes by continuously demonstrating that we are ‘Doing the Right Thing’ in the way we do business. Accordingly, we recognise that the ident ification and m it igat ion of conduct risks aris ing in respect of the transit ion are fundamental to the successful trans it ion to new RFR-based rates. The Group has therefore taken actions in this regard as an integral part of its IBOR Transit ion Programme, includ ing an extens ive outreach programme • Operational Risk: The Group has recognised the importance of the ongoing ident ification and management of Operat ional Risk as a result of IBOR transit ion, includ ing those related to systems affected by the trans it ion. The Programme has adopted the Group’s exist ing Operat ional Risk Framework in its approach to ident ify ing, quantify ing, and m it igat ing the impact of operational risks resulting from the transit ion • Market Risk: As trades are transit ioned from IBOR to RFRs, the bus iness-as-usual metrics, lim it structure and controls w ill continue to apply. Lim its for value at r isk and market risk sensit iv it ies are in accordance with the Group Risk Appetite Statement. New lim its have been set follow ing engagement with the business to consider client demand and market liqu id ity in RFR-linked products, as well as the regulatory expectations • Financ ial and pr ic ing r isk: The Group continues to monitor any financ ial impact of IBOR transit ion across bus iness and functional workstreams in the Programme, and is implement ing model and pr ic ing changes to m it igate these r isks and ensure alignment with conventions and pric ing mechan isms of the alternative reference rates and ind ices • Accounting Risk: The Group has ident ified the financial instruments that may be affected by accounting issues such as accounting for contractual changes due to IBOR reform, fair value measurement and hedge accounting. We continue to monitor and contribute to industry developments on tax and accounting changes. ![]() 380 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 13. Financ ial instruments continued As at 31 December 2022 the Group had the following notional princ ipal exposures to interest rate benchmarks that are expected to be subject to interest rate benchmark reform. The Group has excluded financ ial instruments linked to USD LIBOR maturing before 30 June 2023 as it is assumed these will not require remediat ion due USD LIBOR no longer be ing published on a representative basis beyond this date. IBOR exposures by benchmark as of 31 December 2022 USD LIBOR $mill ion GBP LIBOR $mill ion SGD SOR $mill ion THB FIX $mill ion Other IBOR $mill ion Total IBOR $mill ion Assets Loans and advances to banks 145 – – – – 145 Loans and advances to customers 21,395 – 420 – – 21,815 Debt securit ies, AT1 and other el ig ible b ills 2,843 – 15 – – 2,858 24,383 – 435 – – 24,818 Liab il it ies Deposits by banks 332 – – – – 332 Customer accounts 3,066 – – 34 – 3,100 Repurchase agreements and other secured borrowing 671 – – – – 671 Debt securit ies in issue 1,211 – – – – 1,211 Subordinated liab il it ies and other borrowed funds – – – – – – 5,280 – – 34 – 5,314 Derivat ives – Fore ign exchange contracts Currency swaps and options 135,145 – 2,273 959 – 138,377 Derivat ives – Interest rate contracts Swaps 671,534 – 7,512 10,998 – 690,044 Forward rate agreements and options 22,067 – – 9 – 22,076 Exchange traded futures and options 31,922 – – – – 31,922 Equity and stock index options 49 – – – – 49 Credit derivat ive contracts 3,974 – 46 129 – 4,149 Total IBOR derivat ive exposure 864,691 – 9,831 12,095 – 886,617 Total IBOR exposure 894,354 – 10,266 12,129 – 916,749 Loan commitments off balance sheet 2,798 – 14 – – 2,812 IBOR exposures by benchmark as at 31 December 2021 USD LIBOR $mill ion GBP LIBOR $mill ion SGD SOR $mill ion THB FIX $mill ion Other IBOR $mill ion Total IBOR $mill ion Assets Loans and advances to banks 552 – – – – 552 Loans and advances to customers 27,843 123 1,479 15 58 29,518 Debt securit ies, AT1 and other el ig ible b ills 2,735 237 17 – – 2,989 31,130 360 1,496 15 58 33,059 Liab il it ies Deposits by banks 815 – – – – 815 Customer accounts 3,575 – 1 36 – 3,612 Repurchase agreements and other secured borrowing 671 – – – – 671 Debt securit ies in issue 326 – – – – 326 Subordinated liab il it ies and other borrowed funds 160 – – – – 160 5,547 – 1 36 – 5,584 Derivat ives – Fore ign exchange contracts Currency swaps and options 158,184 – 3,877 1,725 – 163,786 Derivat ives – Interest rate contracts Swaps 686,403 – 10,091 51,395 – 747,889 Forward rate agreements and options 28,406 – 74 124 – 28,604 Exchange traded futures and options 24,236 – – – – 24,236 Equity and stock index options 74 – – – – 74 Credit derivat ive contracts 5,515 – 72 277 – 5,864 Total IBOR derivat ive exposure 902,818 – 14,114 53,521 – 970,453 Total IBOR exposure 939,495 360 15,611 53,572 58 1,009,096 Loan commitments off balance sheet 4,161 285 179 – 966 5,591 ![]() 381 Standard Chartered – Annual Report 2022 Financ ial statements 13. Financ ial instruments continued Offsetting of financ ial instruments Financ ial assets and l iab il it ies 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 ion to settle on a net bas is, or to realise the asset and settle the liab il ity simultaneously. In practice, for credit mit igat ion, the Group is able to offset assets and liab il it ies wh ich do not meet the IAS 32 netting criter ia set out below. Such arrangements include master netting arrangements for derivat ives and global master repurchase agreements for repurchase and reverse repurchase transactions. These agreements generally allow that all outstanding transactions with a particular counterparty can be offset but only in the event of default or other predetermined events. In addit ion, the Group also rece ives and pledges readily realisable collateral for derivat ive transact ions to cover net exposure in the event of a default. Under repurchase and reverse repurchase agreements the Group pledges (legally sells) and obtains (legally purchases) respectively, highly liqu id assets wh ich 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 ive transact ions settled through an enforceable netting agreement where we have the intent and abil ity to settle net and wh ich are offset on the balance sheet. 2022 Gross amounts of recognised financial instruments $mill ion Impact of offset in the balance sheet $mill ion Net amounts of financial instruments presented in the balance sheet $mill ion Related amount not offset in the balance sheet Net amount $mill ion Financ ial instruments $mill ion Financ ial collateral $mill ion Assets Derivat ive financial instruments 120,799 (57,082) 63,717 (50,133) (9,206) 4,378 Reverse repurchase agreements and other sim ilar secured lend ing 105,891 (15,924) 89,967 – (89,967) – At 31 December 2022 226,690 (73,006) 153,684 (50,133) (99,173) 4,378 Liab il it ies Derivat ive financial instruments 126,944 (57,082) 69,862 (50,133) (12,515) 7,214 Repurchase agreements and other sim ilar secured borrow ing 69,738 (15,924) 53,814 – (53,814) – At 31 December 2022 196,682 (73,006) 123,676 (50,133) (66,329) 7,214 2021 Gross amounts of recognised financial instruments $mill ion Impact of offset in the balance sheet $mill ion Net amounts of financial instruments presented in the balance sheet $mill ion Related amount not offset in the balance sheet Net amount $mill ion Financ ial instruments $mill ion Financ ial collateral $mill ion Assets Derivat ive financial instruments 79,043 (26,598) 52,445 (39,502) (8,092) 4,851 Reverse repurchase agreements and other sim ilar secured lend ing 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 il it ies Derivat ive financial instruments 79,997 (26,598) 53,399 (39,502) (9,217) 4,680 Repurchase agreements and other sim ilar secured borrow ing 73,074 (7,426) 65,648 – (65,648) – At 31 December 2021 153,071 (34,024) 119,047 (39,502) (74,865) 4,680 Related amounts not offset in the balance sheet comprises: • Financ ial instruments not offset in the balance sheet but covered by an enforceable netting arrangement. This comprises master netting arrangements held against derivat ive financial instruments and excludes the effect of over-collateralisat ion • Financ ial instruments where a legal opin ion ev idenc ing enforceab il ity of the r ight of offset may not have been sought, or may have been unable to obtain • Financ ial collateral compr ises cash collateral pledged and received for derivat ive financial instruments and collateral bought and sold for reverse repurchase and repurchase agreements respectively and excludes the effect of over-collateralisat ion ![]() 382 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 13. Financ ial instruments continued Financ ial l iab il it ies des ignated at fair value through profit or loss 2022 $mill ion 2021 $mill ion Carrying balance aggregate fair value 73,027 78,431 Amount contractually obliged to repay at maturity 74,138 78,691 Difference between aggregate fair value and contractually obliged to repay at maturity (1,111) (260) Cumulative change in fair value accredited to credit risk difference (56) 3 The net fair value loss on financ ial l iab il it ies des ignated at fair value through profit or loss was $677 mill ion for the year (31 December 2021: net loss of $133 mill ion). Further details of the Group’s own credit adjustment (OCA) valuation technique is described later in this Note. Valuation of financ ial instruments The fair values of quoted financ ial assets and l iab il it ies in active markets are based on current prices. A market is regarded as active if transactions for the asset or liab il ity take place with suffic ient frequency and volume to prov ide pric ing informat ion on an ongoing basis. Wherever possible, fair values have been calculated using unadjusted quoted market prices in active markets for ident ical instruments held by the Group. Where quoted market prices are not available, or are unreliable because of poor liqu id ity, fair values have been determined using valuation techniques which, to the extent possible, use market observable inputs, but in some cases use non market observable inputs. Valuation techniques used include discounted cash flow analysis and pric ing models and, where appropr iate, comparison with instruments that have characterist ics s im ilar to those of the instruments held by the Group. The Valuation Methodology function is responsible for independent price verif icat ion, oversight of fair value and appropriate value adjustments and escalation of valuation issues. Independent price verif icat ion is the process of determin ing that the valuations incorporated into the financ ial statements are val idated independent of the business area responsible for the product. The Valuation Methodology function has oversight of the fair value adjustments to ensure the financ ial instruments are priced to exit. These are key controls in ensuring the material accuracy of the valuations incorporated in the financ ial statements. The market data used for price verif icat ion(PV) may include data sourced from recent trade data involv ing external counterparties or third parties such as Bloomberg, Reuters, brokers and consensus pric ing prov iders. The Valuation Methodology function 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 ing the su itab il ity of the market data used for price testing. Price verif icat ion uses independently sourced data that is deemed most representative of the market the instruments trade in. To determine the quality of the market data inputs, factors such as independence, relevance, reliab il ity, availab il ity of multiple data sources and methodology employed by the pric ing prov ider are taken into considerat ion. The Valuation and Benchmarks Committee (VBC) is the valuation governance forum consist ing of representat ives 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 ipal F inance, the Investment Committee meeting is held on a quarterly basis to review investments and valuations Sign ificant account ing estimates and judgements The Group evaluates the sign ificance of financial instruments and material accuracy of the valuations incorporated in the financial statements as they involve a high degree of judgement and estimat ion uncerta inty in determin ing the carry ing values of financial assets and l iab il it ies at the balance sheet date. • Fair value of financ ial 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 ity of sign ificant valuat ion inputs can materially affect the fair values of financ ial instruments • When establish ing the ex it price of a financ ial instrument using a valuation technique, the Group estimates valuation adjustments in determin ing the fa ir value (page 383]) • In determin ing the valuat ion of financ ial 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 ificant valuat ion judgements in respect of Level 3 instruments (page 390) • 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 ificant degree of non-market-based unobservable inputs ![]() 383 Standard Chartered – Annual Report 2022 Financ ial statements 13. Financ ial instruments continued Valuation techniques Refer to the fair value hierarchy explanation – Level 1, 2 and 3 (page 385) • Financ ial instruments held at fair value – Debt securit ies – asset-backed secur it ies: Asset-backed securit ies are valued based on external pr ices obtained from consensus pric ing prov iders, broker quotes, recent trades, arrangers’ quotes, etc. Where an observable price is available for a given security, it is classif ied as Level 2. In instances where third-party prices are not available or reliable, the security is classif ied as Level 3. The fa ir value of Level 3 securit ies is estimated using market standard cash flow models with input parameter assumptions which include prepayment speeds, default rates, discount margins derived from comparable securit ies w ith sim ilar v intage, collateral type, and credit ratings – Debt securit ies in issue: These debt securit ies relate to structured notes issued by the Group. Where independent market data is available through pric ing vendors and broker sources these pos it ions are class if ied as Level 2. Where such l iqu id external prices are not available, valuations of these debt securit ies are impl ied us ing input parameters such as bond spreads and credit spreads, and are classif ied as Level 3. These input parameters are determined with reference to the same issuer (if available) or proxies from comparable issuers or assets – Derivat ives: Derivat ive products are class if ied 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 ive products are class if ied as Level 3 if there are sign ificant valuat ion input parameters which are unobservable in the market, such as products where the performance is linked to more than one underlying variable. Examples are foreign exchange basket options, equity options based on the performance of two or more underlying ind ices and interest rate products with quanto payouts. In most cases these unobservable correlation parameters cannot be impl ied from the market, and methods such as h istor ical analys is and comparison with histor ical levels or other benchmark data must be employed – Equity shares – private equity: The majority of pr ivate equity unlisted investments are valued based on earning multiples – Price-to-Earnings (P/E) or enterprise value to earnings before income tax, depreciat ion and amort isat ion (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 ity between these unquoted investments and the comparable listed companies, appropriate adjustments are also applied (for example, liqu id ity and size) in the valuation. In circumstances where an investment does not have direct comparables or where the multiples for the comparable companies cannot be sourced from reliable external sources, alternative valuation techniques (for example, discounted cash flow model or net asset value (“NAV”)or option pric ing model), which use predominantly unobservable inputs or Level 3 inputs, may be applied. Even though earning multiples for the comparable listed companies can be sourced from third-party sources (for example, Bloomberg), and those inputs can be deemed Level 2 inputs, all unlisted investments (excluding those where observable inputs are available, for example, over-the-counter (OTC) prices) are classif ied as Level 3 on the bas is that the valuation methods involve judgements ranging from determin ing comparable compan ies to discount rates where the discounted cash flow method is applied – Loans and advances: These primar ily include loans in the FM Bond and Loan Syndicat ion bus iness which were not fully syndicated as of the balance sheet date and other financ ing transact ions with in F inanc ial Markets, and loans and advances includ ing reverse repurchase agreements that do not have SPPI cashflows or are managed on a fa ir value basis. These loans are generally bilateral in nature and, where available, their valuation is based on observable clean sales transactions prices or market observable spreads. If observable credit spreads are not available, proxy spreads based on comparables with sim ilar cred it grade, sector and region, are used. Where observable transaction prices, credit spreads and market standard proxy methods are available, these loans are classif ied as Level 2. Where there are no recent transactions or comparables, these loans are classif ied as Level 3 – Other debt securit ies: These debt securit ies include convertible bonds, corporate bonds, credit and structured notes. Where quoted prices are available through pric ing vendors, brokers or observable trad ing activ it ies from liqu id markets, these are classif ied as Level 2 and valued us ing such quotes. Where there are sign ificant valuat ion inputs which are unobservable in the market, due to ill iqu id trading or the complexity of the product, these are classif ied as Level 3. The valuations of these debt securit ies are impl ied us ing 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 ial instruments held at amortised cost The following sets out the Group’s basis for establish ing fa ir values of amortised cost financ ial instruments and their classif icat ion between Levels 1, 2 and 3. As certain categories of financ ial instruments are not actively traded, there is a sign ificant 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 ies in issue, subordinated liab il it ies and other borrowed funds: The aggregate fair values are calculated based on quoted market prices. For those notes where quoted market prices are not available, a discounted cash flow model is used based on a current market related yield curve appropriate for the remain ing term to matur ity – Deposits and borrowings: The estimated fair value of deposits with no stated maturity is the amount repayable on demand. The estimated fair value of fixed interest-bearing deposits and other borrowings without quoted market prices is based on discounted cash flows using the prevail ing market rates for debts w ith a sim ilar Cred it Risk and remain ing maturity ![]() 384 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 13. Financ ial instruments continued – Investment securit ies: For investment securit ies that do not have d irectly observable market values, the Group util ises a number of valuation techniques to determine fair value. Where available, securit ies are valued us ing input proxies from the same or closely related underlying (for example, bond spreads from the same or closely related issuer) or input proxies from a different underlying (for example, a sim ilar bond but us ing spreads for a particular sector and rating). Certain instruments cannot be proxies as set out above, and in such cases the posit ions are valued us ing non-market observable inputs. This includes those instruments held at amortised cost and predominantly relates to asset-backed securit ies. The fa ir value for such instruments is usually proxies from internal assessments of the underlying cash flows – Loans and advances to banks and customers: For loans and advances to banks, the fair value of floating rate placements and overnight deposits is their carrying amounts. The estimated fair value of fixed interest-bearing deposits is based on discounted cash flows using the prevail ing money market rates for debts w ith a sim ilar Cred it Risk and remain ing matur ity. The Group’s loans and advances to customers’ portfolio is well divers ified by geography and industry. Approximately a quarter of the portfolio re-prices with in one month, and approx imately half re-prices with in 12 months. Loans and advances are presented net of provis ions for impa irment. The fa ir value of loans and advances to customers with a residual maturity of less than one year generally approximates the carrying value. The estimated fair value of loans and advances with a residual maturity of more than one year represents the discounted amount of future cash flows expected to be received, includ ing assumpt ions 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 iv idual instruments with in its loans and advances portfolio and as a result provid ing quant if icat ion of the key assumptions used to value such instruments is impract ical – Other assets: Other assets comprise primar ily of cash collateral and trades pend ing settlement. The carrying amount of these financial instruments is considered to be a reasonable approximat ion of fa ir value as they are either short-term in nature or re-price to current market rates frequently Fair value adjustments When establish ing the ex it price of a financ ial instrument using a valuation technique, the Group considers adjustments to the modelled price which market partic ipants would make when pr ic ing that instrument. The main valuation adjustments (described further below) in determin ing fa ir value for financ ial assets and financial l iab il it ies are as follows: 01.01.22 $mill ion Movement during the year $mill ion 31.12.22 $mill ion 01.01.21 $mill ion Movement during the year $mill ion 31.12.21 $mill ion Bid-offer valuation adjustment 101 17 118 103 (2) 101 Credit valuation adjustment 165 6 171 189 (24) 165 Debit valuation adjustment (70) (42) (112) (55) (15) (70) Model valuation adjustment 5 (2) 3 5 – 5 Funding valuation adjustment – 46 46 5 (5) – Other fair value adjustments 20 3 23 32 (12) 20 Total 221 28 249 279 (58) 221 Income deferrals Day 1 and other deferrals 147 39 186 138 9 147 Total 147 39 186 138 9 147 Note: Bracket represents an asset and credit to the income statement • Bid-offer valuation adjustment: Generally, market parameters are marked on a mid-market basis in the revaluation systems, and a bid-offer valuation adjustment is required to quantify the expected cost of neutralis ing the bus iness’ posit ions through dealing away in the market, thereby bring ing long pos it ions to b id and short posit ions to offer. The methodology to calculate the bid-offer adjustment for a derivat ive portfol io involves netting between long and short posit ions and the group ing of risk by strike and tenor based on the hedging strategy where long posit ions are marked to b id and short posit ions marked to offer in the systems • Credit valuation adjustment (CVA): The Group accounts for CVA against the fair value of derivat ive products. CVA is an adjustment to the fair value of the transactions to reflect the possib il ity 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 ipant would include when deriv ing a purchase pr ice to acquire our exposures. CVA is calculated for each subsid iary, and with in each ent ity 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 ive exposure, market- impl ied probab il ity of default (PD) and recovery rates. Where market-impl ied 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 ies assoc iated with wrong-way risk in the Group’s Prudential Valuation Adjustments framework ![]() 385 Standard Chartered – Annual Report 2022 Financ ial statements 13. Financ ial instruments continued • Debit valuation adjustment (DVA): The Group calculates DVA adjustments on its derivat ive l iab il it ies 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 ive l iab il it ies, a DVA adjustment is determined by applying the Group’s probabil ity of default to the Group’s negative expected exposure against the counterparty. The Group’s probabil ity of default and loss expected in the event of default is derived based on bond and CDS spreads associated with the Group’s issuances and market standard recovery levels. The expected exposure is modelled based on the simulat ion of the underly ing risk factors over the expected life of the deal. This simulat ion methodology incorporates the collateral posted by the Group and the effects of master netting agreements • Model valuation adjustment: Valuation models may have pric ing deficienc ies or lim itat ions that require a valuation adjustment. These pric ing deficienc ies or lim itat ions arise due to the choice, implementat ion and cal ibrat ion of the pr ic ing model • Funding valuation adjustment (FVA): The Group makes FVA adjustments against derivat ive products, includ ing embedded derivat ives. FVA reflects an est imate of the adjustment to its fair value that a market partic ipant would make to incorporate funding costs or benefits that could arise in relation to the exposure. FVA is calculated by determin ing 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 ing part ially collateralised) derivat ives 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 ing to a set of market prices with differ ing matur ity, expiry and strike of the trades • Day one and other deferrals: In certain circumstances the in it ial fair value is based on a valuation technique which differs to the transaction price at the time of in it ial recognit ion. However, these ga ins can only be recognised when the valuation technique used is based primar ily on observable market data. In those cases where the in it ially 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 iately 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 ily represent adjustments taken to reflect the specif ic terms and cond it ions of certa in derivat ive contracts wh ich affect the terminat ion value at the measurement date In addit ion, the Group calculates own cred it adjustment (OCA) on its issued debt designated at fair value, includ ing structured notes, in order to reflect changes in its own credit standing. Issued debt is discounted util is ing the spread at which sim ilar instruments would be issued or bought back at the measurement date as this reflects the value from the perspective of a market partic ipant who holds the ident ical item as an asset. OCA measures the difference between the fair value of issued debt as of reporting date and theoretical fair values of issued debt adjusted up or down for changes in own credit spreads from incept ion date to the measurement date. Under IFRS 9 the change in the OCA component is reported under other comprehensive income. The Group’s OCA reserve will increase if its credit standing worsens in comparison to the incept ion of the trade and, conversely, decrease if its credit standing improves. The Group’s OCA reserve will reverse over time as its liab il it ies mature. In the fourth quarter of 2022, the Group implemented refinements to its methodology for the valuation of structured notes, to align with evolving market practice. Previously, the structured note spread was split into a market level of funding component (recorded in the Consolidated income statement) and an id iosyncrat ic own credit component (recorded in the Consolidated statement of other comprehensive income). The refinement is to record all prospective movements in the spreads over the benchmark rate of the host debt instrument through Other Comprehensive income, as changes to the funding component are considered to be integral to the issuer’s own credit risk. The funding valuation adjustment in relation to the embedded derivat ive component of the structured notes w ill continue to be recorded in the Consolidated income statement. The impact of this change in estimate, which took effect prospectively from 1 October 2022, was a loss of $13 mill ion recorded in the Consolidated statement of other comprehensive income, which would have been recorded in the Consolidated income statement under the previous methodology. The revised approach is expected to result in a more consistent own credit valuation with peer banks. The net life-to-date gains previously recorded in the Consolidated income statement of $219 mill ion from incept ion of the structured notes to the effect ive date of this change in estimate in relation to the market level of funding for the host debt instrument are expected to reverse in the Group’s Consolidated statement of other comprehensive income as the exist ing portfol io matures, unless the structured notes are redeemed or otherwise derecognised earlier.. This net life-to-date gain of $220 mill ion includes a gain of $244 mill ion recorded in the Consolidated income statement for 2022 (2021: $33 mill ion gain). Fair value hierarchy – financ ial instruments held at fair value Assets and liab il it ies carr ied at fair value or for which fair values are disclosed have been classif ied into three levels according to the observabil ity of the s ign ificant inputs used to determine the fair values. Changes in the observabil ity of s ign ificant valuat ion inputs during the reporting period may result in a transfer of assets and liab il it ies w ith in the fa ir value hierarchy. The Group recognises transfers between levels of the fair value hierarchy when there is a sign ificant change in either its princ ipal market or the level of observabil ity of the inputs to the valuation techniques as at the end of the reporting period. • Level 1: Fair value measurements are those derived from unadjusted quoted prices in active markets for ident ical assets or liab il it ies • Level 2: Fair value measurements are those with quoted prices for sim ilar instruments in active markets or quoted prices for ident ical or s im ilar instruments in inact ive markets and financial instruments valued using models where all sign ificant inputs are observable • Level 3: Fair value measurements are those where inputs which could have a sign ificant effect on the instrument’s valuation are not based on observable market data ![]() 386 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 13. Financ ial instruments continued The following tables show the classif icat ion of financ ial instruments held at fair value into the valuation hierarchy: Assets Level 1 $mill ion Level 2 $mill ion Level 3 $mill ion Total $mill ion Financ ial instruments held at fair value through profit or loss Loans and advances to banks – 955 21 976 Loans and advances to customers – 4,741 1,805 6,546 Reverse repurchase agreements and other sim ilar secured lend ing 3 62,490 1,998 64,491 Debt securit ies and other el ig ible b ills 14,702 14,707 1,153 30,562 Of which: Issued by Central banks & Governments 14,086 4,734 – 18,820 Issued by corporates other than financial inst itut ions¹ 91 3,452 517 4,060 Issued by financial inst itut ions¹ 525 6,521 636 7,682 Equity shares 3,024 24 182 3,230 Derivat ive financial instruments 892 62,781 44 63,717 Of which: Foreign exchange 139 54,020 13 54,172 Interest rate 33 7,351 28 7,412 Credit – 410 1 411 Equity and stock index options – 98 2 100 Commodity 720 902 – 1,622 Investment securit ies Debt securit ies and other el ig ible b ills 56,401 55,525 – 111,926 Of which: Issued by Central banks & Governments 45,151 22,171 – 67,322 Issued by corporates other than financial inst itut ions 1 1,775 4,045 – 5,820 Issued by financial inst itut ions 1 9,475 29,309 – 38,784 Equity shares 146 7 655 808 Other Assets – – 7 7 Total financial instruments at 31 December 2022² 75,168 201,230 5,865 282,263 Liab il it ies Financ ial instruments held at fair value through profit or loss Deposits by banks – 778 288 1,066 Customer accounts – 10,734 972 11,706 Repurchase agreements and other sim ilar secured borrow ing – 51,706 – 51,706 Debt securit ies in issue – 8,121 451 8,572 Short posit ions 4,085 2,722 40 6,847 Derivat ive financial instruments 642 69,099 121 69,862 Of which: Foreign exchange 101 56,710 12 56,823 Interest rate 29 10,020 12 10,061 Credit – 899 42 941 Equity and stock index options – 191 55 246 Commodity 512 1,279 – 1,791 Other liab il it ies – – 6 6 Total financial instruments at 31 December 2022² 4,727 143,160 1,878 149,765 1 Includes covered bonds of $8,455 mill ion, secur it ies issued by Multilateral Development Banks/International Organisat ions of $11,438 m ill ion and State-owned agencies and development banks of $9,211 mill ion 2 The above table does not include held for sale assets of $3 mill ion and l iab il it ies of $5 m ill ion. These are reported in Note 21 together with their fair value hierarchy The fair value of derivat ives and debt secur it ies in issue classif ied as Level 2 in the fair value hierarchy that are subject to complex modelling techniques is $781 mill ion. There were no sign ificant changes to valuat ion or levelling approaches during the year 31 December 2022. There were no sign ificant transfers of financial assets and l iab il it ies measured at fa ir value between Level 1 and Level 2 during the year 31 December 2022. ![]() 387 Standard Chartered – Annual Report 2022 Financ ial statements 13. Financ ial instruments continued Assets Level 1 $mill ion Level 2 $mill ion Level 3 $mill ion Total $mill ion Financ ial instruments held at fair value through profit or loss Loans and advances to banks – 3,838 9 3,847 Loans and advances to customers – 8,596 1,357 9,953 Reverse repurchase agreements and other sim ilar secured lend ing – 78,443 1,566 80,009 Debt securit ies and other el ig ible b ills 12,057 17,019 349 29,425 Of which: Issued by Central Banks & Governments 10,731 7,201 – 17,932 Issued by corporates other than financial inst itut ions 1 1 3,750 111 3,862 Issued by financial inst itut ions 1 1,325 6,068 238 7,631 Equity shares 5,637 38 186 5,861 Derivat ive financial instruments 1,066 51,289 90 52,445 Of which: Foreign exchange 161 41,577 10 41,748 Interest rate 9 6,314 53 6,376 Credit – 2,265 24 2,289 Equity and stock index options – 133 3 136 Commodity 896 1,000 – 1,896 Investment securit ies Debt securit ies and other el ig ible b ills 51,298 70,037 40 121,375 Of which: Issued by Central Banks & Governments 39,590 24,651 40 64,281 Issued by corporates other than financial inst itut ions 1 – 1,963 – 1,963 Issued by financial inst itut ions 1 11,708 43,423 – 55,131 Equity shares 227 17 493 737 Other Assets – – 26 26 Total financial instruments at 31 December 2021² 70,285 229,277 4,116 303,678 Liab il it ies Financ ial 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 ilar secured borrow ing – 62,388 – 62,388 Debt securit ies in issue – 4,776 821 5,597 Short posit ions 4,187 2,375 – 6,562 Derivat ive financial instruments 949 52,356 94 53,399 Of which: Foreign exchange 169 41,555 3 41,727 Interest rate 7 6,448 16 6,471 Credit – 3,084 41 3,125 Equity and stock index options – 126 34 160 Commodity 773 1,143 – 1,916 Other Liab il it ies – 6 1 7 Total financial instruments at 31 December 2021² 5,136 131,807 1,653 138,596 1 Includes covered bonds of $7,326 mill ion, secur it ies issued by Multilateral Development Banks/International Organisat ions of $12,109 m ill ion , and State-owned agencies and development banks of $19,959 mill ion 2 The above table does not include held for sale assets of $43 mill ion and l iab il it ies of $n il. These are reported in Note 21 together with their fair value hierarchy The fair value of derivat ives and debt secur it ies in issue classif ied as Level 2 in the fair value hierarchy that are subject to complex modelling techniques is $684 mill ion. ![]() 388 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 13. Financ ial instruments continued Fair value hierarchy – financ ial instruments measured at amortised cost The following table shows the carrying amounts and incorporates the Group’s estimate of fair values of those financ ial assets and liab il it ies not presented on the Group’s balance sheet at fa ir 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 ial instrument. For certain instruments, the fair value may be determined using assumptions for which no observable prices are available. Carrying value $mill ion Fair value Level 1 $mill ion Level 2 $mill ion Level 3 $mill ion Total $mill ion Assets Cash and balances at central banks¹ 58,263 – 58,263 – 58,263 Loans and advances to banks 39,519 – 39,488 – 39,488 of which – reverse repurchase agreements and other sim ilar secured lend ing 978 – 924 – 924 Loans and advances to customers 310,647 – 58,663 251,560 310,223 of which – reverse repurchase agreements and other sim ilar secured lend ing 24,498 – 15,727 8,911 24,638 Investment securit ies² 59,714 – 56,444 25 56,469 Other assets¹ 39,295 – 39,295 – 39,295 Assets held for sale 1,388 344 946 98 1,388 At 31 December 2022 508,826 344 253,099 251,683 505,126 Liab il it ies Deposits by banks 28,789 – 28,813 – 28,813 Customer accounts 461,677 – 461,665 – 461,665 Repurchase agreements and other sim ilar secured borrowing 2,108 – 2,108 – 2,108 Debt securit ies in issue 61,242 24,624 36,148 – 60,772 Subordinated liab il it ies and other borrowed funds 13,715 12,445 385 – 12,830 Other liab il it ies¹ 42,915 – 42,914 1 42,915 Liab il it ies held for sale 1,230 398 832 – 1,230 At 31 December 2022 611,676 37,467 572,865 1 610,333 Carrying value $mill ion Fair value Level 1 $mill ion Level 2 $mill ion Level 3 $mill ion Total $mill ion 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 ilar secured lend ing 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 ilar secured lend ing 7,331 – 3,764 3,567 7,331 Investment securit ies² 41,325 – 41,864 – 41,864 Other assets¹ 40,068 – 40,067 1 40,068 Assets held for sale 52 – – 52 52 At 31 December 2021 496,959 – 241,113 256,342 497,455 Liab il it ies Deposits by banks 30,041 – 30,041 – 30,041 Customer accounts 474,570 – 474,645 – 474,645 Repurchase agreements and other sim ilar secured borrowing 3,260 – 3,260 – 3,260 Debt securit ies in issue 61,293 26,073 35,503 – 61,576 Subordinated liab il it ies and other borrowed funds 16,646 16,811 519 – 17,330 Other liab il it ies¹ 43,432 – 43,431 1 43,432 Liab il it ies held for sale – – – – – At 31 December 2021 629,242 42,884 587,399 1 630,284 1 The carrying amount of these financ ial instruments is considered to be a reasonable approximat ion of fa ir value as they are short-term in nature or reprice to current market rates frequently 2 Includes Government bonds and Treasury bills of $17,943 mill ion at 31 December 2022 and $17,153 m ill ion at 31 December 2021 ![]() 389 Standard Chartered – Annual Report 2022 Financ ial statements 13. Financ ial instruments continued Loans and advances to customers by client segment 1 2022 Carrying value Fair value Stage 3 $mill ion Stage 1 and stage 2 $mill ion Total $mill ion Stage 3 $mill ion Stage 1 and stage 2 $mill ion Total $mill ion Corporate, Commercial & Institut ional Bank ing 2,481 137,150 139,631 2,525 137,187 139,712 Consumer, Private & Business Banking 677 130,278 130,955 685 131,679 132,364 Ventures – 698 698 – 696 696 Central & other items 230 39,133 39,363 230 37,221 37,451 At 31 December 2022 3,388 307,259 310,647 3,440 306,783 310,223 2021 (Restated)² Carrying value Fair value Stage 3 $mill ion Stage 1 and stage 2 $mill ion Total $mill ion Stage 3 $mill ion Stage 1 and stage 2 $mill ion Total $mill ion Corporate, Commercial & Institut ional Bank ing 2,659 136,742 139,401 2,750 136,463 139,213 Consumer, Private & Business Banking 779 135,651 136,430 780 135,782 136,562 Ventures – 88 88 – 88 88 Central & other items – 22,549 22,549 – 22,562 22,562 At 31 December 2021 3,438 295,030 298,468 3,530 294,895 298,425 1 Loans and advances includes reverse repurchase agreements and other sim ilar secured lend ing: carrying value $24,498 mill ion and fa ir value $24,638 mill ion (2021: $7,331 mill ion and $7,331 m ill ion respect ively) 2 Following the increased strategic importance and reporting of Ventures to management, this has been established as a separate operating segment from January 2022. Prior period has been restated ![]() 390 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 13. Financ ial instruments continued Fair value of financ ial instruments Level 3 Summary and sign ificant unobservable inputs The following table presents the Group’s primary Level 3 financ ial instruments which are held at fair value. The table also presents the valuation techniques used to measure the fair value of those financ ial instruments, the sign ificant unobservable inputs, the range of values for those inputs and the weighted average of those inputs: Instrument Value as at 31 December 2022 Princ ipal valuat ion technique Sign ificant unobservable inputs Range 1 Weighted average 2 Assets $mill ion Liab il it ies $mill ion Loans and advances to banks 21 – Discounted cash flows Price/yield N/A N/A Credit spreads 2.9% 2.9% Loans and advances to customers 1,805 – Discounted cash flows Price/yield 0.3% – 18.2% 5.3% Recovery rates 5.0% – 100% 90.5% Reverse repurchase agreements and other sim ilar secured lend ing 1,998 – Discounted cash flows Repo curve 2.3% – 8.0% 6.2% Price/yield 1.9%–7.2% 6.0% Debt securit ies, alternat ive tier one and other elig ible secur it ies 1,152 – Discounted cash flows Price/yield 3.1% – 48.5% 7.1% Recovery rates 0.0% – 1.0% 0.2% Government bonds and treasury bills – – Discounted cash flows Price/yield N/A N/A Asset-backed securit ies 1 – Discounted cash flows Price/yield 6.8% 6.8% Equity shares (includes private equity investments) 837 – Comparable pric ing/y ield EV/EBITDA multiples 7.0x – 13.1x 11.0x EV/Revenue multiples 8.2x – 23.2x 12.9x P/E multiples 13.4x – 29.7x 17.6x P/B multiples 0.3x – 3.3x 1.3x P/S multiples 2.1x – 2.2x 2.2x Liqu id ity discount 10.0% – 29.7% 17.5% Discounted cash flows Discount rates 7.5% – 16.4% 9.4% Option pric ing model Equity value based on EV/Revenue multiples 4.8x – 76.1x 32.9x Equity value based on EV/EBITDA multiples 2.6x 2.6x Equity value based on volatil ity 60.0% 60.0% Other Assets 7 – NAV N/A N/A N/A Derivat ive financial instruments of which: Foreign exchange 13 12 Option pric ing model Foreign exchange option impl ied volat il ity (21.0)% – 21.0% (2.7)% Discounted cash flows Foreign exchange curves (4.6)% – 81.8% 15.9% Interest rate 28 12 Discounted cash flows Interest rate curves (2.1)% – 50.2% 10.6% Option pric ing model Bond option impl ied volatil ity N/A N/A Credit 1 42 Discounted cash flows Credit spreads 0.1% – 2.3% 1.4% Price/yield 7.2% – 9.7% 7.2% Equity and stock index 2 55 Internal pric ing model Equity correlation 30.0% – 96.0% 67.0% Equity-FX correlation (70.0)% – 85.0% 37.0% Deposits by banks – 288 Discounted cash flows Credit spreads 0.9% – 3.4% 1.8% Price/yield 6.0% 6.0% Customer accounts – 972 Discounted cash flows Credit spreads 0.9% – 19.1% 10.3% Internal pric ing model Equity correlation 30.0% – 96.0% 67.0% Equity-FX correlation (70.0)% – 85.0% 37.0% Discounted cash flows Interest rate curves N/A N/A Price/yield 3.1% – 22.9% 17.8% Debt securit ies in issue – 451 Discounted cash flows Credit Spreads 0.3% – 7.0% 4.7% Price/Yield 6.8% – 12.4% 9.1% Internal pric ing model Equity-Equity Correlation 30.0% – 96.0% 67.0% Equity-FX Correlation (70.0)% – 85.0% 37.0% Short posit ions – 40 Discounted cash flows Price/yield 6.8% 6.8% Other Liab il it ies – 6 Comparable pric ing/y ield EV/EBITDA multiples 4.2x –9.0x 6.1x Total 5,865 1,878 1 The ranges of values shown in the above table represent the highest and lowest levels used in the valuation of the Group’s Level 3 financ ial instruments as at 31 December 2022. The ranges of values used are reflective of the underlying characterist ics of these Level 3 financial instruments based on the market condit ions 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 ial instruments 2 Weighted average for non-derivat ive financial instruments has been calculated by weight ing inputs by the relative fair value. Weighted average for derivat ives has been provided by weight ing inputs by the risk relevant to that variable. N/A has been entered for the cases where weighted average is not a meaningful ind icator ![]() 391 Standard Chartered – Annual Report 2022 Financ ial statements 13. Financ ial instruments continued Level 3 summary and sign ificant unobservable inputs continued Instrument Value as at 31 December 2021 Princ ipal valuat ion technique Sign ificant unobservable inputs Range 1 Weighted average 2 Assets $mill ion Liab il it ies $mill ion Loans and advances to banks 9 – Discounted cash flows Recovery rates 87.3%–100% 93.6% Loans and advances to customers 1,357 – Discounted cash flows Price/yield 0.2% – 11.8% 3.1% Recovery rates 10.6% – 100% 87.8% Reverse repurchase agreements and other sim ilar secured lending 1,566 – Discounted cash flows Repo curve 0.3%–3.0% 2.4% Debt securit ies, alternat ive tier one and other elig ible secur it ies 349 – Discounted cash flows Price/yield 5.1% – 12.4% 7.5% Recovery rates 0.01% – 1.0% 0.2% Government bonds and treasury bills 40 – Discounted cash flows Price/yield 2.7% – 5.5% 3.7% Asset-backed securit ies – – Discounted cash flows Price/yield N/A N/A Equity shares (includes private equity investments) 679 – Comparable pric ing/ yield EV/EBITDA multiples 6.1x–15.3x 8.6x EV/Revenue multiples 10.1x 10.1x 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 id ity discount 7.9%–29.2% 16.5% Discounted cash flows Discount rates 6.0%–17.4% 8.6% Option pric ing model EV/Revenue multiples 4.0x–85.5x 12.1x Volatil ity 55.0%–65.0% 60.3% Other Assets 26 – NAV N/A N/A N/A Derivat ive financial instruments of which: Foreign exchange 10 3 Option pric ing model Foreign exchange option impl ied volat il ity 3.1% – 6.1% 5.1% Discounted cash flows Foreign exchange curves (16.4)% – 57.3% 9.0% Interest rate 53 16 Discounted cash flows Interest rate curves (16.4)%–18.8% 5.0% Option pric ing model Bond option impl ied volatil ity N/A N/A Credit 24 41 Discounted cash flows Credit spreads 0.1%–11.5% 1.0% Price/yield 5.9% –7.3% 6.6% Equity and stock index 3 34 Internal pric ing model Equity correlation 8.0% – 96.0% 70.0% Equity-FX correlation (70.0)%–85.0% (33.0)% Deposits by banks – 283 Discounted cash flows Credit spreads 0.4% – 3.0% 1.4% Price/yield 6.8%–8.3% 7.5% Customer accounts – 454 Discounted cash flows Credit spreads 1.0% – 2.0% 1.2% Interest rate curves 0.9%–5.6% 4.7% Price/yield 8.9%–12.1% 10.1% Debt securit ies in issue – 821 Discounted cash flows Credit spreads 0.9%–2.2% 1.0% Interest rate curves 0.9% – 5.6% 4.9% Internal pric ing model Equity correlation 8.0% – 96.0% 70.0% Equity-FX correlation (70.0)%–85.0% (33.0)% Short posit ion – – N/A N/A N/A N/A Other Liab il it ies – 1 Comparable pric ing/ yield EV/EBITDA multiples 3.07x–9.95x 6.84x Total 4,116 1,653 1 The ranges of values shown in the above table represent the highest and lowest levels used in the valuation of the Group’s Level 3 financ ial instruments as at 31 December 2021. The ranges of values used are reflective of the underlying characterist ics of these Level 3 financial instruments based on the market condit ions 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 ial instruments 2 Weighted average for non-derivat ive financial instruments has been calculated by weight ing inputs by the relative fair value. Weighted average for derivat ives has been provided by weight ing inputs by the risk relevant to that variable. N/A has been entered for the cases where weighted average is not a meaningful ind icator ![]() 392 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 13. Financ ial instruments continued Level 3 Summary and sign ificant unobservable inputs continued The following section describes the sign ificant unobservable inputs ident ified in the valuation technique table: • Comparable price/yield is a valuation methodology in which the price of a comparable instrument is used to estimate the fair value where there are no direct observable prices. Yield is the interest rate that is used to discount the future cash flows in a discounted cash flow model. Valuation using comparable instruments can be done by calculating an impl ied y ield (or spread over a liqu id benchmark) from the pr ice of a comparable instrument, then adjust ing that y ield (or spread) to derive a value for the instrument. The adjustment should account for relevant differences in the financ ial 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 ing a fa ir value for a jun ior unsecured bond from the price of a senior secured bond). An increase in price, in isolat ion, would result in a favourable movement in the fair value of the asset. An increase in yield, in isolat ion, would result in an unfavourable movement in the fair value of the asset • Correlation is the measure of how movement in one variable influences the movement in another variable. An equity correlation is the correlation between two equity instruments while an interest rate correlation refers to the correlation between two swap rates • Credit spread represents the addit ional y ield that a market partic ipant would demand for tak ing exposure to the Credit Risk of an instrument • Discount rate refers to the rate of return used to convert expected cash flows into present value • Equity-FX correlation is the correlation between equity instrument and foreign exchange instrument • EV/EBITDA multiple is the ratio of Enterprise Value (EV) to Earnings Before Interest, Taxes, Depreciat ion and Amort isat ion (EBITDA). EV is the aggregate market capital isat ion 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 ied period • Net asset value (NAV) is the value of an entity’s assets after deducting any liab il it ies • Interest rate curves is the term structure of interest rates and measure of future interest rates at a particular point in time • Liqu id ity discounts in the valuation of unlisted investments are primar ily appl ied to the valuation of unlisted firms’ investments to reflect the fact that these stocks are not actively traded. An increase in liqu id ity discount will result in an unfavourable movement in the fair value of the unlisted firm • Price-Earnings (P/E) multiple is the ratio of the market value of the equity to the net income after tax. An increase in P/E multiple will result in a favourable movement in the fair value of the unlisted firm • Price-Book (P/B) multiple is the ratio of the market value of equity to the book value of equity. An increase in P/B multiple will result in a favourable movement in the fair value of the unlisted firm • Price-Sales (P/S) multiple is the ratio of the market value of equity to sales. An increase in P/S multiple will result in a favourable movement in the fair value of the unlisted firm • Recovery rate is the expectation of the rate of return resulting from the liqu idat ion of a particular loan. As the probabil ity of default increases for a given instrument, the valuation of that instrument will increas ingly reflect its expected recovery level assuming default. An increase in the recovery rate, in isolat ion, 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 ity represents an estimate of how much a particular instrument, parameter or index will change in value over time. Generally, the higher the volatil ity, the more expens ive the option will be ![]() 393 Standard Chartered – Annual Report 2022 Financ ial statements 13. Financ ial instruments continued Level 3 movement tables – financial assets The table below analyses movements in Level 3 financ ial assets carr ied at fair value. Assets 2022 Held at fair value through profit or loss Derivat ive financial instruments $mill ion Investment securit ies Total $mill ion Loans and advances to banks $mill ion Loans and advances to customers $mill ion Reverse repurchase agreements and other sim ilar secured lending $mill ion Debt securit ies, alternative tier one and other elig ible b ills $mill ion Equity shares $mill ion Other Assets $mill ion Debt securit ies, alternative tier one and other elig ible b ills $mill ion Equity shares $mill ion At 01 January 2022 9 1,357 1,566 349 186 26 90 40 493 4,116 Total (losses)/gains recognised in income statement (16) (132) 2 7 4 – 30 – – (105) Net interest income – – – – – – – – – – Net trading income (16) (132) 2 7 4 – 30 – – (105) Other operating income – – – – – – – – – – Total (losses)/gains recognised in other comprehensive income (OCI) – – – – – – – (1) (8) (9) Fair value through OCI reserve – – – – – – – (1) (1) (2) Cash flow hedge reserve – – – – – – – – – – Exchange difference – – – – – – – – (7) (7) Purchases 55 1,605 6,438 1,063 2 8 118 – 166 9,455 Issues Sales (30) (237) (5,484) (342) (10) (10) (99) – (6) (6,218) Settlements (19) (877) (524) (1) – – (80) (39) – (1,540) Transfers out 1 – (160) – – – (17) (29) – – (206) Transfers in 2 22 249 – 77 – – 14 – 10 372 At 31 December 2022 21 1,805 1,998 1,153 182 7 44 – 655 5,865 Total unrealised gains/ (losses) recognised in the income statement, with in net trad ing income, relating to change in fair value of assets held at 31 December 2022 – – – – 3 – (2) – – 1 1 Transfers out includes loans and advances, other assets and derivat ive financial instruments where the valuation parameters became observable during the period and were transferred to Level 1 and Level 2 2 Transfers in primar ily relate to loans and advances, debt secur it ies, alternat ive tier one and other elig ible b ills and derivat ive financial instruments where the valuation parameters become unobservable during the year ![]() 394 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 13. Financ ial instruments continued Level 3 movement tables – financial assets continued The table below analyses movements in Level 3 financ ial assets carr ied at fair value. Assets 2021 Held at fair value through profit or loss Derivat ive financial instruments $mill ion Investment securit ies Total $mill ion Loans and advances to banks $mill ion Loans and advances to customers $mill ion Reverse repurchase agreements and other sim ilar secured lending $mill ion Debt securit ies, alternative tier one and other elig ible b ills $mill ion Equity shares $mill ion Other Assets $mill ion Debt securit ies, alternative tier one and other elig ible b ills $mill ion Equity shares $mill ion At 01 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 interest income – – – – – – – – – – Net trading income 1 (97) 2 (23) (30) – 34 – – (113) Other operating income – – – (1) – – – – – (1) Total gains recognised in other comprehensive income (OCI) – – – – – – – 3 61 64 Fair value through OCI reserve – – – – – – – 6 63 69 Cash flow hedge reserve – – – – – – – – – – 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 in net trad ing income, relating to change in fair value of assets held at 31 December 2021 – – – 8 (15) – 19 – – 12 1 Transfers out include loans and advances, derivat ive financial instruments and equity shares where the valuation parameters became observable during the period and were transferred to Level 1 and Level 2 2 Transfers in primar ily relate to loans and advances, debt secur it ies, alternat ive tier one and other elig ible b ills, derivat ive financial instruments and other assets where the valuation parameters become unobservable during the year ![]() 395 Standard Chartered – Annual Report 2022 Financ ial statements 13. Financ ial instruments continued Level 3 movement tables – financial l iab il it ies 2022 Deposits by banks $mill ion Customer accounts $mill ion Debt securit ies in issue $mill ion Derivat ive financial instruments $mill ion Short posit ions $mill ion Other liab il it ies $mill ion Total $mill ion At 01 January 2022 283 454 821 94 – 1 1,653 Total (gains)/losses recognised in income statement – net trading income (37) (82) (158) 155 (3) 5 (120) Issues 447 1,818 815 179 140 – 3,399 Settlements (400) (1,266) (1,066) (291) (97) – (3,120) Transfers out 1 (5) – (38) (23) – – (66) Transfers in 2 – 48 77 7 – – 132 At 31 December 2022 288 972 451 121 40 6 1,878 Total unrealised gains recognised in the income statement, with in net trad ing income, relating to change in fair value of liab il it ies held at 31 December 2022 (1) (17) (7) (3) – – (28) 2021 Deposits by banks $mill ion Customer accounts $mill ion Debt securit ies in issue $mill ion Derivat ive financial instruments $mill ion Short posit ions $mill ion Other liab il it ies $mill ion Total $mill ion At 01 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 in net trad ing income, relating to change in fair value of liab il it ies held at 31 December 2021 – – – (14) – – (14) 1 Transfers out during the year primar ily relate to bank depos its, debt securit ies in issue and derivat ive financial instruments where the valuation parameters became observable during the year and were transferred to Level 2 financ ial l iab il it ies 2 Transfers in during the year primar ily relate to der ivat ive financial instruments, customer accounts and debt securit ies in issue where the valuation parameters become unobservable during the year ![]() 396 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 13. Financ ial instruments continued Sensit iv it ies in respect of the fair values of Level 3 assets and liab il it ies Sensit iv ity analysis is performed on products with sign ificant unobservable inputs. The Group applies a 10 per cent increase or decrease on the values of these unobservable inputs, to generate a range of reasonably possible alternative valuations. The percentage shift is determined by statist ical analys is performed on a set of reference prices based on the composit ion 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 iv ity analysis assumes a one-way market move and does not consider offsets for hedges. Held at fair value through profit or loss Fair value through other comprehensive income Net exposure $mill ion Favourable changes $mill ion Unfavourable changes $mill ion Net exposure $mill ion Favourable changes $mill ion Unfavourable changes $mill ion Financ ial instruments held at fair value Loans and advances 1,826 1,851 1,758 – – – Reverse Repurchase agreements and other sim ilar secured lend ing 1,998 2,013 1,979 – – – Asset backed securit ies 1 1 1 – – – Debt securit ies, alternat ive tier one and other elig ible b ills 1,152 1,168 1,124 – – – Equity shares 182 200 164 655 715 595 Other Assets 7 8 6 – – – Derivat ive financial instruments (77) (44) (109) – – – Customers accounts (972) (934) (1,010) – – – Deposits by banks (288) (283) (293) – – – Repurchase agreements and other sim ilar secured borrow ings – – – – – – Short posit ions (40) (39) (41) – – – Debt securit ies in issue (451) (419) (482) – – – Other Liab il it ies (6) (5) (7) – – – At 31 December 2022 3,332 3,517 3,090 655 715 595 Financ ial instruments held at fair value Loans and advances 1,366 1,398 1,328 – – – Reverse Repurchase agreements and other sim ilar secured lend ing 1,566 1,579 1,550 – – – Asset backed securit ies – – – – – – Debt securit ies, alternat ive tier one and other elig ible b ills 349 366 332 40 41 38 Equity shares 186 205 168 493 541 442 Other Assets 26 29 24 – – – Derivat ive financial instruments (4) 10 (16) – – – Customers accounts (454) (447) (461) – – – Deposits by banks (283) (278) (287) – – – Short posit ions – – – – – – Debt securit ies in issue (821) (764) (879) – – – Other Liab il it ies (1) (1) (1) – – – At 31 December 2021 1,930 2,097 1,758 533 582 480 The reasonably possible alternatives could have increased or decreased the fair values of financ ial instruments held at fair value through profit or loss and those classif ied as fa ir value through other comprehensive income by the amounts disclosed below. Financ ial instruments Fair value changes 31.12.22 $mill ion 31.12.21 $mill ion Held at fair value through profit or loss Possible increase 185 167 Possible decrease (242) (172) Fair value through other comprehensive income Possible increase 60 49 Possible decrease (60) (53) ![]() 397 Standard Chartered – Annual Report 2022 Financ ial statements 14. Derivat ive financial instruments Accounting policy Derivat ives are financial instruments that derive their value in response to changes in interest rates, financ ial instrument prices, commodity prices, foreign exchange rates, credit rating or credit index and ind ices. Der ivat ives are categor ised as trading unless they are designated as hedging instruments. Derivat ives are in it ially recognised and subsequently measured at fair value, with revaluation gains recognised in profit or loss (except where cash flow or net investment hedging has been achieved, in which case the effective portion of changes in fair value is recognised with in other comprehens ive income). Fair values may be obtained from quoted market prices in active markets, recent market transactions, and valuation techniques, includ ing d iscounted cash flow models and option pric ing models, as appropr iate. Where the in it ially recognised fair value of a derivat ive contract is based on a valuation model that uses inputs which are not observable in the market, it follows the same in it ial recognit ion account ing policy as for other financ ial assets and l iab il it ies. All der ivat ives are carr ied as assets when fair value is posit ive and as l iab il it ies when fa ir value is negative. Hedge accounting Under certain condit ions, the Group may des ignate a recognised asset or liab il ity, a firm commitment, highly probable forecast transaction or net investment of a foreign operation into a formal hedge accounting relationsh ip w ith a derivat ive 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 ial Instruments: Recogn it ion and Measurement and the ‘Phase 2’ amendments to IFRS in respect of interest rate benchmark reform. There are three categories of hedge relationsh ips: • Fair value hedge: to manage the fair value of interest rate and/or foreign currency risks of recognised assets or liab il it ies or firm commitments • Cash flow hedge: to manage interest rate or foreign exchange risk of highly probable future cash flows attributable to a recognised asset or liab il ity, 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 ion of the transact ion the relationsh ip between hedg ing instruments and hedged items, as well as its risk management object ive and strategy for undertak ing hedge transactions. This is described in more detail in the categories of hedges below. The Group assesses, both at hedge incept ion and on a quarterly bas is, whether the derivat ives des ignated in hedge relationsh ips are h ighly effective in offsetting changes in fair values or cash flows of hedged items. Hedges are considered to be highly effective if all the following criter ia are met: • At incept ion of the hedge and throughout its life, the hedge is prospectively expected to be highly effective in achiev ing offsetting changes in fair value or cash flows attributable to the hedged risk • Prospective and retrospective effectiveness should be with a range of 80-125%. This is tested using regression analysis • The regression co-effic ient (R squared), wh ich 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 ity of occurr ing and must present an exposure to variat ions in cash flows that are expected to affect reported profit or loss. The Group assumes that any interest rate benchmarks on which hedged item cash flows are based are not altered by IBOR reform The Group discont inues hedge account ing in any of the following circumstances: • The hedging instrument is not, or has ceased to be, highly effective as a hedge • The hedging instrument has expired, is sold, terminated, or exercised • The hedged item matures, is sold, or repaid • The forecast transaction is no longer deemed highly probable • The Group elects to discont inue hedge account ing 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 ip. Under the Phase 2 Interest Rate Benchmark Reform amendments to IFRS 9 and IAS 39, the Group may change hedge designat ions and correspond ing documentation without the hedge being discont inued where there is a change in interest rate benchmark of the hedged item, hedging instrument or designated hedged risk. Permitted changes include the right to: • Redefine the descript ion 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 icat ions required by IBOR reform • Elect, on a hedge-by-hedge basis, to reset the cumulative fair value changes in the assessment of retrospective hedge effectiveness to zero A hedge designat ion may be mod if ied more than once, each t ime a relationsh ip is affected as a direct result of IBOR reform. ![]() 398 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 14. Derivat ive financial instruments continued Fair value hedge Changes in the fair value of derivat ives that are des ignated 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 il ity that are attributable to the hedged risk. If the hedge no longer meets the criter ia for hedge account ing, 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 ing term to maturity of the hedged item. If the hedged item is sold or repaid, the unamortised fair value adjustment is recognised immed iately in the income statement. For financ ial assets class if ied as fa ir value through other comprehensive income, the hedge accounting adjustment attributable to the hedged risk is included in net trading income to match the hedging derivat ive. Cash flow hedge The effective portion of changes in the fair value of derivat ives that are des ignated and qualify as cash flow hedging instruments are in it ially recognised in other comprehensive income, accumulating in the cash flow hedge reserve with in equity. These amounts are subsequently recycled to the income statement in the periods when the hedged item affects profit or loss. Both the derivat ive fa ir 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 ive method, wh ich creates a derivat ive instrument to serve as a proxy for the hedged transaction. The terms of the hypothetical derivat ive match the cr it ical terms of the hedged item and it has a fair value of zero at incept ion. The hypothet ical derivat ive and the actual der ivat ive are regressed to establish the statist ical s ign ificance of the hedge relat ionsh ip. Any ineffect ive port ion of the gain or loss on the hedging instrument is recognised in the net trading income immed iately. If a cash flow hedge is discont inued, the amount accumulated in the cash flow hedge reserve is released to the income statement as and when the hedged item affects the income statement. For interest rate benchmarks deemed in scope of IBOR reform, the Group will retain the cumulative gain or loss in the cash flow hedge reserve for designated cash flow hedges even though there is uncertainty aris ing from these reforms w ith respect to the tim ing and amount of the cash flows of the hedged items. Should the Group consider the hedged future cash flows are no longer expected to occur due to reasons other than IBOR reform, the cumulative gain or loss will be immed iately reclassif ied to profit or loss. Net investment hedge Hedges of net investments are accounted for in a sim ilar manner to cash flow hedges, w ith gains and losses aris ing 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 in equ ity. These amounts remain in equity until the net investment is disposed of. The ineffect ive port ion of the hedges is recognised in the net trading income immed iately. The tables below analyse the notional princ ipal amounts and the pos it ive and negat ive fair values of derivat ive financial instruments. Notional princ ipal amounts are the amounts of pr inc ipal underly ing the contract at the reporting date. Derivat ives 2022 2021 Notional princ ipal amounts $mill ion Assets $mill ion Liab il it ies $mill ion Notional princ ipal amounts $mill ion Assets $mill ion Liab il it ies $mill ion Foreign exchange derivat ive contracts: Forward foreign exchange contracts 3,154,440 38,162 39,376 3,750,151 30,256 30,068 Currency swaps and options 1,168,026 16,010 17,447 1,412,055 11,492 11,659 4,322,466 54,172 56,823 5,162,206 41,748 41,727 Interest rate derivat ive contracts: Swaps 3,516,310 62,001 64,005 3,609,625 31,490 31,078 Forward rate agreements and options 98,465 2,214 2,880 127,287 1,328 1,859 Exchange traded futures and options 324,702 279 258 295,192 156 132 3,939,477 64,494 67,143 4,032,104 32,974 33,069 Credit derivat ive contracts 249,082 411 941 184,953 2,289 3,125 Equity and stock index options 6,788 100 246 8,714 136 160 Commodity derivat ive contracts 90,952 1,622 1,791 113,807 1,896 1,916 Gross total derivat ives 8,608,765 120,799 126,944 9,501,784 79,043 79,997 Offset – (57,082) (57,082) – (26,598) (26,598) Net Total derivat ives 8,608,765 63,717 69,862 9,501,784 52,445 53,399 The Group lim its exposure to cred it 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. ![]() 399 Standard Chartered – Annual Report 2022 Financ ial statements 14. Derivat ive financial instruments continued The Group applies balance sheet offsetting only in the instance where we are able to demonstrate legal enforceabil ity of the right to offset (e.g. via legal opin ion) and the ab il ity and intent ion to settle on a net bas is (e.g. via operational practice). The Group may enter into economic hedges that do not qualify for IAS 39 hedge accounting treatment, includ ing der ivat ive such as interest rate swaps, interest rate futures and cross currency swaps to manage interest rate and currency risks of the Group. These derivat ives are measured at fa ir value, with fair value changes recognised in net trading income: refer to Market risk (page 282). The Derivat ives and Hedg ing sections of the Risk review and Capital review (page 236 to 325) explain the Group’s risk management of derivat ive contracts and appl icat ion of hedg ing. Derivat ives held for hedg ing The Group enters into derivat ive contracts for the purpose of hedg ing interest rate, currency and structural foreign exchange risks inherent in assets, liab il it ies and forecast transact ions. The table below summarises the notional princ ipal amounts and carrying values of derivat ives des ignated in hedge accounting relationsh ips at the report ing date. Included in the table above are derivat ives held for hedg ing purposes as follows: 2022 2021 Notional princ ipal amounts $mill ion Assets $mill ion Liab il it ies $mill ion Notional princ ipal amounts $mill ion Assets $mill ion Liab il it ies $mill ion Derivat ives des ignated as fair value hedges: Interest rate swaps 80,760 2,438 2,939 78,666 957 338 Currency swaps 1,273 16 48 2,262 43 151 82,033 2,454 2,987 80,928 1,000 489 Derivat ives des ignated as cash flow hedges: Interest rate swaps 31,977 100 671 10,381 60 74 Forward foreign exchange contracts 11,987 99 385 72 2 – Currency swaps 11,787 86 362 12,214 293 51 55,751 285 1,418 22,667 355 125 Derivat ives des ignated as net investment hedges: Forward foreign exchange contracts 14,576 120 141 13,198 88 79 Total derivat ives held for hedg ing 152,360 2,859 4,546 116,793 1,443 693 Fair value hedges The Group issues various long-term fixed rate debt issuances that are measured at amortised cost, includ ing 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 ies such as government and corporate bonds, includ ing some denom inated in foreign currency (see Note 13). These assets and liab il it ies 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 iveness from fa ir value hedges is driven by cross currency basis risk. The amortisat ion of fa ir value hedge adjustments for hedged items no longer designated is recognised in net trading income. In future periods hedge relationsh ips linked to an interest rate benchmark deemed in scope of benchmark reform may experience ineffect iveness due to market partic ipants’ expectat ions for when the change from the exist ing IBOR benchmark to an alternat ive risk-free rate will occur, since the transit ion may occur at d ifferent times for the hedged item and hedging instrument. At 31 December 2022 the Group held the following interest rate and cross currency swaps as hedging instruments in fair value hedges of interest and currency risk. ![]() 400 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 14. Derivat ive financial instruments continued Fair value hedges continued Hedging instruments and ineffect iveness Interest rate 1 2022 Notional $mill ion Carrying amount Change in fair value used to calculate hedge ineffect iveness² $mill ion Ineffectiveness recognised in profit or loss $mill ion Asset $mill ion Liab il ity $mill ion Interest rate swaps – issued notes 41,772 112 2,914 (3,020) (7) Interest rate swaps – loans and advances 1,117 68 – 53 (1) Interest rate swaps – debt securit ies and other elig ible b ills 37,871 2,258 25 3,127 13 Interest and currency risk 1 Cross currency swaps – subordinated notes issued 72 – 4 (260) 12 Cross currency swaps – debt securit ies and other elig ible b ills 1,201 16 44 (9) 4 Total at 31 December 2022 82,033 2,454 2,987 (109) 21 Interest rate¹ 2021 Notional $mill ion Carrying amount Change in fair value used to calculate hedge ineffect iveness² $mill ion Ineffectiveness recognised in profit or loss $mill ion Asset $mill ion Liab il ity $mill ion Interest rate swaps – issued notes 35,310 575 212 (891) (9) Interest rate swaps – loans and advances 2,079 19 13 13 – Interest rate swaps – debt securit ies and other elig ible b ills 41,277 363 113 717 (1) Interest and currency risk 1 Cross currency swaps – subordinated notes issued 1,469 – 150 (139) 6 Cross currency swaps – debt securit ies and other elig ible b ills 793 43 1 50 – Total at 31 December 2021 80,928 1,000 489 (250) (4) 1 Interest rate swaps are designated in hedges of the fair value of interest rate risk attributable to the hedged item. Cross currency swaps are used to hedge both interest rate and currency risks. All the hedging instruments are derivat ives, w ith changes in fair value includ ing hedge ineffect iveness recorded w ith in net trad ing income 2 This represents a (loss)/ change in fair value used for calculating hedge ineffect iveness Hedged items in fair value hedges 2022 Carrying amount Accumulated amount of fair value hedge adjustments included in the carrying amount Change in the value used for calculating hedge ineffect iveness¹ $mill ion Cumulative balance of fair value adjustments from de-designated hedge relationsh ips² $mill ion Asset $mill ion Liab il ity $mill ion Asset $mill ion Liab il ity $mill ion Issued notes – 42,702 – 2,756 3,284 414 Debt securit ies and other el ig ible b ills 36,028 – (2,075) – (3,100) 441 Loans and advances to customers 1,051 – (65) – (54) 1 Total at 31 December 2022 37,079 42,702 (2,140) 2,756 130 856 2021 Carrying amount Accumulated amount of fair value hedge adjustments included in the carrying amount Change in fair value used for calculating hedge ineffect iveness¹ $mill ion Cumulative balance of fair value adjustments from de-designated hedge relationsh ips² $mill ion Asset $mill ion Liab il ity $mill ion Asset $mill ion Liab il ity $mill ion Issued notes – 35,206 – 31 1,029 862 Debt securit ies and other el ig ible b ills 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 1 This represents a gain/(loss) change in fair value used for calculating hedge ineffect iveness 2 This represents a credit/(debit) to the balance sheet value ![]() 401 Standard Chartered – Annual Report 2022 Financ ial statements 14. Derivat ive financial instruments continued Income statement impact of fair value hedges 2022 $mill ion Income/ (expense) 2021 $mill ion Income/ (expense) Change in fair value of hedging instruments (109) (250) Change in fair value of hedged risks attributable to hedged items 130 246 Net ineffect iveness ga in/(loss) to net trading income 21 (4) Amortisat ion ga in to net interest income 141 31 Cash flow hedges The Group has exposure to market movements in future interest cash flows on portfolios of customer accounts, debt securit ies and loans and advances to customers. The amounts and tim ing of future cash flows, represent ing both princ ipal and interest flows, are projected on the basis of contractual terms and other relevant factors, includ ing est imates of prepayments and defaults. The hedging strategy of the Group involves using interest rate swaps to manage the variab il ity in future cash flows on assets and liab il it ies that have float ing rates of interest by exchanging the floating rates for fixed rates. It also uses foreign exchange contracts and currency swaps to manage the variab il ity in future exchange rates on its assets and liab il it ies 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 ip w ith 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 il ity of future cash flows aris ing from changes in the designated benchmark interest rate. Hedging instruments and ineffect iveness 2022 Notional $mill ion Carrying amount Change in fair value used to calculate hedge ineffect iveness¹ $mill ion (Loss)/gain recognised in OCI $mill ion Ineffectiveness (loss) recognised in net trading income $mill ion Asset $mill ion Liab il ity $mill ion Interest rate risk Interest rate swaps 31,977 100 671 (533) (531) (2) Currency risk Forward foreign exchange contract 11,987 99 385 (141) (1 41) – Cross currency swaps 11,787 86 362 421 426 (5) Total as at 31 December 2022 55,751 285 1,418 (253) (246) (7) 2021 Notional $mill ion Carrying amount Change in fair value used to calculate hedge ineffect iveness¹ $mill ion Gain recognised in OCI $mill ion Ineffectiveness gain/(loss) recognised in net trading income $mill ion Asset $mill ion Liab il ity $mill ion Interest rate risk Interest rate swaps 10,381 60 74 77 77 – Currency risk Forward foreign exchange contract 72 2 – 2 2 – Cross currency swaps 12,214 293 51 297 297 – Total as at 31 December 2021 22,667 355 125 376 376 – 1 This represents a gain/(loss) change in fair value used for calculating hedge ineffect iveness ![]() 402 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 14. Derivat ive financial instruments continued Hedged items in cash flow hedges 2022 Change in fair value used for calculating hedge ineffect iveness¹ $mill ion Cash flow hedge reserve $mill ion Cumulative balance in the cash flow hedge reserve from de-designated hedge relationsh ips $mill ion Customer accounts 244 (444) 108 Debt securit ies and other el ig ible b ills (165) (72) (30) Loans and advances to customers 315 (191) (18) Forecast cashflow currency hedge – – – Intragroup lending currency hedge (135) (6) – Intragroup borrowing currency hedge (13) – – Total at 31 December 2022 246 (713) 60 2021 Change in fair value used for calculating hedge ineffect iveness¹ $mill ion Cash flow hedge reserve² $mill ion Cumulative balance in the cash flow hedge reserve from de-designated hedge relationsh ips² $mill ion Customer accounts (95) (9) (15) Debt securit ies and other el ig ible b ills (231) (2) – Loans and advances to customers 23 (8) 1 Forecast cashflow currency hedge – – – Intragroup lending currency hedge (73) 1 – Intragroup borrowing currency hedge – – – Total at 31 December 2021 (376) (18) (14) 1 This represents a gain/(loss) change in fair value used for calculating hedge ineffect iveness 2 Restated to reflect the correct movement in the cashflow reserve. Refer to the following table for addit ional deta ils Impact of cash flow hedges on profit and loss and other comprehensive income 2022 Income/ (expense) $mill ion 2021 Income/ (expense) $mill ion Cash flow hedge reserve balance as at 1 January (34) (52) (Loss)/gain recognised in other comprehensive income on effective portion of changes in fair value of hedging instruments¹ (246) 376 Gain reclassif ied to income statement when hedged item affected net profit¹ (373) (356) Taxation charge relating to cash flow hedges 89 (2) Cash flow hedge reserve balance as at 31 December (564) (34) 1 The 2021 comparatives have been restated to correct a presentation error in two line items in the prior period whereby for a group of cross currency swaps designated in cash flow hedging relationsh ips, the fa ir value changes presented in other comprehensive income were shown net of the effect of changes in foreign exchange rates. Following the restatement, the gain recognised in other comprehensive income for the effective portion of changes in the fair value of hedging instruments has been increased by $377 mill ion from $(1) m ill ion to $376 m ill ion and the ga in reclassif ied to the income statement when the hedged item affected net profit, has been reduced by $(377) mill ion from $21 m ill ion to $(356) m ill ion. On the statement of comprehens ive income these two line items have been combined into one line item in the current and the prior period to present the net change in other comprehensive income for cash flow hedges, with the gross movements shown in Note 14. No change is required to the income statement Net investment hedges Foreign currency exposures arise from investments in subsid iar ies 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 iar ies 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 ificant impact on the regulatory ratios of the Group and its banking subsid iar ies. The Group uses foreign exchange forwards to manage the effect of exchange rates on its net investments in foreign subsid iar ies. ![]() 403 Standard Chartered – Annual Report 2022 Financ ial statements 14. Derivat ive financial instruments continued Hedging instruments and ineffect iveness 2022 Notional $mill ion Carrying amount Change in fair value used to calculate hedge ineffect iveness 1 $mill ion Changes in the value of the hedging instrument recognised in OCI $mill ion Ineffectiveness recognised in profit or loss $mill ion Amount reclassif ied from reserves to income $mill ion Asset $mill ion Liab il ity $mill ion Derivat ive forward currency contracts² 14,576 120 141 512 512 – – 2021 Notional $mill ion Carrying amount Change in fair value used to calculate hedge ineffect iveness¹ $mill ion Changes in the value of the hedging instrument recognised in OCI $mill ion Ineffectiveness recognised in profit or loss $mill ion Amount reclassif ied from reserves to income $mill ion Asset $mill ion Liab il ity $mill ion Derivat ive forward currency contracts² 13,198 88 79 116 116 – – 1 This represents a gain/(loss) change in fair value used for calculating hedge ineffect iveness 2 These derivat ive forward currency contracts have a matur ity of less than one year. The hedges are rolled on a period ic bas is Hedged items in net investment hedges 2022 Change in the value used for calculating hedge ineffect iveness¹ $mill ion Translation reserve $mill ion Balances remain ing in the translation reserve from hedging relationsh ips for which hedge accounting is no longer applied $mill ion Net investments (512) (21) – 2021 Change in the value used for calculating hedge ineffect iveness¹ $mill ion Translation reserve $mill ion Balances remain ing in the translation reserve from hedging relationsh ips for which hedge accounting is no longer applied $mill ion Net investments (116) 9 – 1 This represents a gain/(loss) change in fair value used for calculating hedge ineffect iveness Impact of net investment hedges on other comprehensive income 2022 Income/ (expense) $mill ion 2021 Income/ (expense) $mill ion Gains recognised in other comprehensive income 512 118 ![]() 404 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 14. Derivat ive financial instruments continued Maturity of hedging instruments Fair value hedges 2022 Less than one month More than one month and less than one year One to five years More than five years Interest rate swap Notional $mill ion 2,462 8,888 53,225 16,185 Average fixed interest rate USD 1.76% 2.29% 2.16% 1.83% EUR – 2.73% 0.51% 0.56% Cross currency swap Notional $mill ion – 1,109 164 – Average fixed interest rate (to USD) JPY – (0.62)% – – EUR – – – – KRO – – – – Average exchange rate JPY/USD – 138.78 – – EUR/USD – – – – KRO/USD – – – – Cash flow hedges Interest rate swap Notional $mill ion 195 16,465 14,819 498 Average fixed interest rate HKD – 0.35% 1.34% – USD 3.80% 1.82% 1.60% 1.29% Cross currency swap Notional $mill ion 45 8,466 2,650 626 Average fixed interest rate HKD – 3.93% – 0.21% KRO – 3.26% 3.83% – USD – 4.15% – – TWD (0.61)% (1.38)% 0.32% – Average exchange rate HKD/USD – 7.84 – 7.85 KRO/USD – 1,342.85 1,278.62 1,300.90 USD/HKD – 7.84 – – TWD/USD 27.74 30.77 29.73 – Forward foreign exchange contracts Notional $mill ion 1,246 10,741 – – Average exchange rate JPY/USD 135.18 133.26 – – TWD/USD – – – – Net investment hedges Foreign exchange derivat ives Notional $mill ion 14,576 – – – Average exchange rate CNY 1 /USD 6.71 – – – KRW 1 /USD 1,296.95 – – – AED/USD 3.67 – – – TWD/USD – – – – HKD/USD 7.83 – – – 1 Offshore currency ![]() 405 Standard Chartered – Annual Report 2022 Financ ial statements 14. Derivat ive financial instruments continued Maturity of hedging instruments continued Fair value hedges 2021 Less than one month More than one month and less than one year One to five years More than five years Interest rate swap Notional $mill ion 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 ion 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 – – Cash flow hedges Interest rate swap Notional $mill ion – 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 ion 152 10,260 1,802 – 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 foreign exchange contracts Notional $mill ion – – 72 – Average exchange rate CLO/USD – – 868.10 – Net investment hedges Foreign exchange derivat ives Notional $mill ion 5,234 7,964 – – Average exchange rate CNY¹/USD 6.57 – – – KRW¹/USD 1,144.04 1,185.10 – – TWD/USD 27.55 27.34 – – HKD/USD – 7.05 – – 1 Offshore currency ![]() 406 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 14. Derivat ive financial instruments continued Interest rate benchmark reform The Group applies the Phase 1 ‘Interest Rate Benchmark Reform Amendments to IFRS 9, IAS 39 and IFRS 7’ which allow the Group to assume that the interest rate benchmark on which cash flows for the hedged item and/or hedging instrument are based is not altered as a result of IBOR reform for the following activ it ies: • Prospective hedge assessment • Determin ing whether a cash flow or forecast transact ion for a cash flow hedge is highly probable. However, the Group otherwise assesses whether the cash flows are considered highly probable • Determin ing when cumulat ive balances in the cash flow hedge reserve from de-designated hedges should be recycled to the income statement The Group will not de-designate a hedge relationsh ip 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 iveness cont inues to be recorded in net trading income. For hedges of non-contractually specif ied benchmark port ions 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 ifiable at hedge incept ion. The cho ice of designated benchmark is not revis ited for ex ist ing hedge relat ionsh ips 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 ing (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 ing from USD LIBOR w ill be present until 30 June 2023, at which time the amendments to IFRS no longer apply. As at 31 December 2022, the following notional princ ipal amounts of der ivat ive instruments designated in fair value or cash flow hedge accounting relationsh ips were l inked to IBOR reference rates: Fair value hedges $mill ion Cash flow hedges $mill ion Total $mill ion Weighted average exposure Years Interest rate swaps USD LIBOR 35,989 24,090 60,079 2.2 GBP LIBOR – – – – JPY LIBOR – – – – SGD SOR – – – – 35,989 24,090 60,079 2.2 Cross currency swaps USD LIBOR vs Fixed rate foreign currency 1,151 4,539 5,690 1.0 Total notional of hedging instruments in scope of IFRS amendments as at 31 December 2022 37,140 28,629 65,769 2.1 Fair value hedges $mill ion Cash flow hedges $mill ion Total $mill ion Weighted average exposure Years Interest rate 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 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 ips. Where fixed rate instruments are in other currencies, cross currency swaps are used to achieve an equivalent floating USD exposure. ![]() 407 Standard Chartered – Annual Report 2022 Financ ial statements 15. Loans and advances to banks and customers Accounting policy Refer to Note 13 Financ ial instruments for the relevant accounting policy. 2022 $mill ion 2021 $mill ion Loans and advances to banks 39,545 44,410 Expected credit loss (26) (27) 39,519 44,383 Loans and advances to customers 316,107 304,122 Expected credit loss (5,460) (5,654) 310,647 298,468 Total loans and advances to banks and customers 350,166 342,851 The Group has outstanding resident ial mortgage loans to Korea res idents of $19.1 bill ion (2021: $21.7 b ill ion) and Hong Kong residents of $35 bill ion (2021: $34.5 b ill ion). Analysis of loans and advances to customers by geographic region and client segment together with their related impa irment provis ions are set out w ith in the R isk review and Capital review (pages 236 to 325). 16. Reverse repurchase and repurchase agreements includ ing other s im ilar lend ing and borrowing Accounting policy The Group purchases securit ies (a reverse repurchase agreement – ‘reverse repo’) typ ically with financ ial inst itut ions subject to a commitment to resell or return the securit ies at a predeterm ined price. These securit ies 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 ion pa id (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 ity 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 ies (a repurchase agreement – ‘repo’) subject to a comm itment to repurchase or redeem the securit ies at a predeterm ined price. The securit ies are reta ined on the balance sheet as the Group retains substantially all the risks and rewards of ownership and these securit ies are d isclosed as pledged collateral. Considerat ion rece ived (or cash collateral received) is accounted for as a financ ial l iab il ity at amortised cost unless it is either mandatorily classif ied as fa ir value through profit or loss or irrevocably designated at fair value through profit or loss at in it ial recognit ion. Financ ial assets are pledged as collateral as part of sales and repurchases, secur it ies borrow ing and securit isat ion transactions under terms that are usual and customary for such activ it ies. The Group is obliged to return equivalent securit ies. Repo and reverse repo transactions typically entitle the Group and its counterparties to have recourse to assets sim ilar to those provided as collateral in the event of a default. Securit ies sold subject to repos, e ither by way of a Global Master Repurchase Agreement (GMRA), or through a securit ies sale and Total Return Swap (TRS) cont inue to be recognised on the balance sheet as the Group retains substantially the associated risks and rewards of the securit ies (the TRS is not recognised). The counterparty liab il ity is included in deposits by banks or customer accounts, as appropriate. Assets sold under repurchase agreements are considered encumbered as the Group cannot pledge these to obtain funding. ![]() 408 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 16. Reverse repurchase and repurchase agreements includ ing other s im ilar lend ing and borrowing continued Reverse repurchase agreements and other sim ilar secured lend ing 2022 $mill ion 2021 $mill ion Banks 24,932 19,806 Customers 65,035 68,613 89,967 88,419 Of which: Fair value through profit or loss 64,491 80,009 Banks 23,954 18,727 Customers 40,537 61,282 Held at amortised cost 25,476 8,410 Banks 978 1,079 Customers 24,498 7,331 Under reverse repurchase and securit ies borrow ing arrangements, the Group obtains securit ies on terms wh ich permit it to repledge or resell the securit ies to others. Amounts on such terms are: 2022 $mill ion 2021 $mill ion Securit ies and collateral rece ived (at fair value) 124,989 118,636 Securit ies and collateral wh ich can be repledged or sold (at fair value) 123,759 117,408 Amounts repledged/transferred to others for financing act iv it ies, to satisfy liab il it ies under sale and repurchase agreements (at fair value) 44,628 57,879 Repurchase agreements and other sim ilar secured borrow ing 2022 $mill ion 2021 $mill ion Banks 6,968 7,054 Customers 46,846 58,594 53,814 65,648 Of which: Fair value through profit or loss 51,706 62,388 Banks 5,737 5,107 Customers 45,969 57,281 Held at amortised cost 2,108 3,260 Banks 1,231 1,947 Customers 877 1,313 The tables below set out the financial assets prov ided as collateral for repurchase and other secured borrowing transactions: Collateral pledged against repurchase agreements 2022 Fair value through profit or loss $mill ion Fair value through Other Comprehensive Income $mill ion Amortised cost $mill ion Off-balance sheet $mill ion Total $mill ion On-balance sheet Debt securit ies and other el ig ible b ills 2,956 3,630 4,917 – 11,503 Off-balance sheet Repledged collateral received – – – 44,628 44,628 At 31 December 2022 2,956 3,630 4,917 44,628 56,131 Collateral pledged against repurchase agreements 2021 Fair value through profit or loss $mill ion Fair value through Other Comprehensive Income $mill ion Amortised cost $mill ion Off-balance sheet $mill ion Total $mill ion On-balance sheet Debt securit ies and other el ig ible b ills 3,427 2,655 2,601 – 8,683 Off-balance sheet Repledged collateral received – – – 57,879 57,879 At 31 December 2021 3,427 2,655 2,601 57,879 66,562 ![]() 409 Standard Chartered – Annual Report 2022 Financ ial statements 17. Goodwill and intang ible assets Accounting policy Goodwill Goodwill represents the excess of the cost of an acquis it ion over the fair value of the Group’s share of the ident ifiable net assets and contingent liab il it ies of the acqu ired subsid iary, assoc iate or jo int venture at the date of acqu is it ion. Goodwill on acquis it ions of subsid iar ies is included in intang ible assets. Goodw ill on acquis it ions of associates is included in Investments in associates and jo int ventures. Goodw ill included in intang ible assets is assessed at each balance sheet date for impa irment and carried at cost less any accumulated impa irment losses. Ga ins and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Detailed calculations are performed based on forecasting expected cash flows of the relevant cash generating units (CGUs) and discount ing these at an appropr iate discount rate, the determinat ion of wh ich requires the exercise of judgement. Goodwill is allocated to CGUs for the purpose of impa irment testing. CGUs represent the lowest level with in the Group wh ich 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 410). Other accounting estimates and judgements The carrying amount of goodwill is based on the applicat ion of judgements includ ing the bas is of goodwill impa irment calculation assumptions. Judgement is also applied in determinat ion of CGUs. Estimates include forecasts used for determin ing cash flows for CGUs, the appropr iate long-term growth rates to use and discount rates which factor in country risk-free rates and applicable risk premiums. The Group undertakes an annual assessment to evaluate whether the carrying value of goodwill is impa ired. The est imat ion of future cash flows and the level to which they are discounted is inherently uncertain and requires sign ificant judgement and is subject to potential change over time. Acquired intang ibles At the date of acquis it ion of a subsid iary or assoc iate, intang ible assets wh ich are deemed separable and that arise from contractual or other legal rights are capital ised and included with in the net ident ifiable assets acqu ired. These intang ible assets are in it ially measured at fair value, which reflects market expectations of the probabil ity that the future econom ic 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 icators of impa irment. In the event that an asset’s carrying amount is determined to be greater than its recoverable amount, the asset is written down immed iately to the recoverable amount. Computer software Acquired computer software licences are capital ised if the princ iples of development are met on the bas is of the costs incurred to acquire and bring to use the specif ic software. Internally generated software represents substantially all of the total software capital ised. D irect costs of the development of separately ident ifiable internally generated software are capital ised where it is probable that future economic benefits attributable to the software will flow from its use. These costs include staff remuneration costs such as salaries, statutory payments and share-based payments, materials, service providers and contractors provided their time is directly attributable to the software build. Costs incurred in the ongoing maintenance of software are expensed immed iately when incurred. Internally generated software is amortised over each asset’s useful life to a maximum of 10-years. On an annual basis software assets’ residual values and useful lives are reviewed, includ ing assess ing for ind icators of impa irment. Indicators of impa irment include loss of business relevance, obsolescence, exit of the business to which the software relates, technological changes, change in use of the asset, reduction in useful life, plans to reduce usage or scope. For capital ised software, judgement is required to determine which costs relate to research (expensed) and which costs relate to development (capital ised). Further judgement is required to determine the technical feasib il ity of completing the software such that it will be available for use. Estimates are used to determine how the software will generate probable future economic benefits: these estimates include cost savings, income increases, balance sheet improvements, improved functional ity or improved asset safeguarding. Software as a Service (SaaS) is a contractual arrangement that conveys the right to receive access to the supplier’s software applicat ion over the contract term. As such, the Group does not have control and as a result recogn ises an operating expense for these costs over the contract term. Certain costs related to implementat ion of the SaaS may meet the definit ion of an intang ible asset in their own right if it is separately ident ifiable and control is established. These costs are capital ised if it is expected to provide the Group with future economic benefits flowing from the underlying resource and the Group can restrict others from accessing those benefits. ![]() 410 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 17. Goodwill and intang ible assets continued 2022 2021 Goodwill $mill ion Acquired intang ibles $mill ion Computer software $mill ion Total $mill ion Goodwill $mill ion Acquired intang ibles $mill ion Computer software $mill ion Total $mill ion Cost At 1 January 2,595 457 4,464 7,516 2,617 473 3,682 6,772 Exchange translation differences (108) (26) (22) (156) (22) (14) (73) (109) Addit ions – – 1,096 1,096 – – 989 989 Impairment (14) – (7) (21) – – – – Amounts written off – (136) (348) (484) – (2) (134) (136) Classif ied as held for sale (2) – (5) (7) – – – – At 31 December 2,471 295 5,178 7,944 2,595 457 4,464 7,516 Provis ion for amort isat ion At 1 January – 437 1,608 2,045 – 451 1,258 1,709 Exchange translation differences – (29) (11) (40) – (22) (20) (42) Amortisat ion – 4 531 535 – 8 461 469 Impairment charge – – 5 5 – – 4 4 Amounts written off – (136) (331) (467) – – (95) (95) Classif ied as held for sale – – (3) (3) – – – – At 31 December – 276 1,799 2,075 – 437 1,608 2,045 Net book value 2,471 19 3,379 5,869 2,595 20 2,856 5,471 At 31 December 2022, accumulated goodwill impa irment losses incurred from 1 January 2005 amounted to $3,331 mill ion (31 December 2021: $3,317 mill ion), of wh ich $14 mill ion was recogn ised in 2022 (31 December 2021: Nil). Outcome of impa irment assessment An annual assessment is made as to whether the current carrying value of goodwill is impa ired. For the purposes of impa irment testing, goodwill is allocated at the date of acquis it ion to a CGU. Goodwill is considered to be impa ired if the carrying amount of the relevant CGU exceeds its recoverable amount. Indicators of impa irment include changes in the economic performance and outlook of the region includ ing geopol it ical changes, changes in market value of regional investments, large credit defaults and strategic decis ions to ex it 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 ions and an est imated terminal value based on a perpetuity value after year five. The cashflow project ions are based on forecasts approved by management up to 2027. The perpetuity terminal value amount is calculated using year five cashflows using long-term GDP growth rates. All cashflows are discounted using discount rates which reflect market rates appropriate to the CGU. Post-tax discount rates are used to calculate the VIU using the post-tax cashflows. The post-tax discount rate is subsequently grossed up to pre-tax discount rate. The calculated VIU using post-tax and pre-tax discount rate is same. The goodwill allocated to each CGU and key assumptions used in determin ing the recoverable amounts are set out below and are solely estimates for the purposes of assessing impa irment of acqu ired goodwill. Cash generating unit 2022 2021 Goodwill $mill ion Pre Tax discount rates per cent Long-term forecast GDP growth rates per cent Goodwill $mill ion Pre Tax discount rates per cent Long-term forecast GDP growth rates per cent Country CGUs Asia 1,032 1,073 Hong Kong 357 12.4 1.7 357 10.6 2.5 Taiwan 333 11.3 1.7 361 10.4 2.0 Singapore 342 12.3 2.3 341 11.6 2.4 Bangladesh – 24.3 5.4 14 15.0 7.3 Africa & Middle East 85 92 Pakistan 36 30.9 5.9 43 22.2 6.0 Bahrain 49 16.6 0.7 49 13.1 3.0 Global CGUs 1,354 1,430 Global Private Banking 83 14.5 2.0 84 12.4 2.5 Corporate, Commercial & Institut ional Bank ing 1,271 14.7 2.5 1,346 12.5 3.0 2,471 2,595 Bangladesh has had all the goodwill allocated to them written off, totalling $14 mill ion. Th is was primar ily due to lower economic growth forecasts and higher discount rates. As a result, the carrying amount of Bangladesh CGU, which included goodwill, was greater than the recoverable amount (VIU of $83 mill ion). ![]() 411 Standard Chartered – Annual Report 2022 Financ ial statements 17. Goodwill and intang ible assets continued The Group has performed sensit iv ity analysis on the key assumptions for each CGU’s recoverable amount. Hong Kong CGU is considered sensit ive to the key var iables and any ind iv idual movements on the estimates (cashflow, discount rate and GDP growth rate) up to the levels disclosed below would elim inate the current headroom. CGU 2022 Goodwill $mill ion Base Case Sensit iv it ies GDP Discount rate Cashflow Cashflow Cash- flow Downside scenario Extreme downside scenario GDP -1% GDP -1% DR +1% DR +1% +1% -1% +1% -1% +10% -10% +20% -20% -30% CF -10% CF -20% Head- room $mill ion Pre Tax Discount Rate GDP Head- room $mill ion Head- room $mill ion Head- room $mill ion Head- room $mill ion Head- room $mill ion Head- room $mill ion Head- room $mill ion Head- room $mill ion Head- room $mill ion Head- room $mill ion Head- room $mill ion Hong Kong 357 1,115 12.40% 1.66% 1,810 572 361 2,076 2,142 91 3,168 (935) (1,961) (911) (1,760) The table above represents reasonably possible scenarios that could occur if either; economic factors (which drive GDP rates and discount rates); country-specif ic cash flows; or a comb inat ion of both are d ifferent from the assumptions used in the goodwill impa irment assessment at 31 December 2022. For there to be no headroom, the discount rate will need to increase by 1.57 per cent. Sim ilarly, the GDP rates w ill need to decrease by 2.35 per cent and cashflows would need to decrease by 10.89 per cent. Acquired intang ibles These primar ily compr ise those items recognised as part of the acquis it ions of Union Bank (now amalgamated into Standard Chartered Bank (Pakistan) Lim ited), Hs inchu (now amalgamated into Standard Chartered Bank (Taiwan) Lim ited), Pembroke, American Express Bank and ABSA’s custody business in Africa. Maintenance intang ible assets represent the d ifference in the value between the contractual right under acquired leases to receive aircraft in a specif ied ma intenance condit ion at the end of the lease and the actual physical condit ion of the a ircraft at the date of acquis it ion. The acquired intang ibles are amort ised over periods from four years to a maximum of 16 years. The constituents are as follows: 2022 $mill ion 2021 $mill ion Acquired intang ibles compr ise: Aircraft maintenance 5 5 Brand names 1 1 Customer relationsh ips 1 3 Licenses 12 11 Net book value 19 20 ![]() 412 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 18. Property, plant and equipment Accounting policy All property, plant and equipment is stated at cost less accumulated depreciat ion and impa irment losses. Cost includes expenditure that is directly attributable to the acquis it ion of the assets. Subsequent costs are included in the asset’s carrying amount or are recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. At each balance sheet date the assets’ residual values and useful lives are reviewed, and adjusted if appropriate, includ ing assessing for ind icators of impa irment. In the event that an asset’s carry ing 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 ial per iod in which they are incurred. Land and build ings compr ise mainly branches and offices. Freehold land is not depreciated although it is subject to impa irment test ing. Depreciat ion on other assets is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives, as follows: • Owned premises • up to 50 years • Leasehold premises • up to 50 years • Leasehold improvements • shorter of remain ing lease term and 10 years • Equipment and motor vehicles • three to 15 years • Aircraft • up to 18 years • Ships • up to 15 years Where the Group is a lessee of a right-of-use asset, the leased assets are capital ised and included in Property, plant and equipment with a corresponding liab il ity to the lessor recognised in Other liab il it ies, 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 ial per iod in which they are incurred. Other accounting estimates and judgements The carrying amount of the Group’s aircraft leasing portfolio is based on the applicat ion of judgement and est imates to determine the most appropriate recoverable amount for each aircraft when assessing for impa irment. Est imates involve the appropriate cash flows, discount rates and residual values used in determin ing a value- in-use for aircraft, and judgement is required in determin ing the appropr iate observable third-party valuations to use for assessing current market value. 2022 Premises $mill ion Equipment $mill ion Operating lease assets $mill ion Leased premises assets $mill ion Leased equipment assets $mill ion Total $mill ion Cost or valuation At 1 January 1,980 901 4,248 1,854 33 9,016 Exchange translation differences (90) (65) – (111) (4) (270) Addit ions 1 87 124 624 339 1 1,175 Disposals and fully depreciated assets written off 2 (142) (102) (452) (425) (1) (1,122) Transfers to assets held for sale (62) (18) – (5) – (85) As at 31 December 1,773 840 4,420 1,652 29 8,714 Depreciat ion Accumulated at 1 January 795 611 1,155 819 20 3,400 Exchange translation differences (39) (39) – (33) (3) (114) Charge for the year 76 116 202 250 7 651 Impairment charge 1 – 40 9 – 50 Attributable to assets sold, transferred or written off 2 (125) (101) (212) (313) – (751) Transfers to assets held for sale (30) (12) – (2) – (44) Accumulated at 31 December 678 575 1,185 730 24 3,192 Net book amount at 31 December 1,095 265 3,235 922 5 5,522 1 Refer to the cash flow statement under cash flows from invest ing act iv it ies section for the purchase of property, plant and equipment during the year of $835 mill ion on page 344 2 Disposals for property, plant and equipment during the year of $343 mill ion 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 ![]() 413 Standard Chartered – Annual Report 2022 Financ ial statements 18. Property, plant and equipment continued 2021 Premises $mill ion Equipment $mill ion Operating lease assets $mill ion Leased premises assets $mill ion Leased equipment assets $mill ion Total $mill ion 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 ions¹ 107 135 110 373 4 729 Disposals and fully depreciated assets written off² (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 ion Accumulated at 1 January 770 594 1,336 536 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 to assets sold, transferred or written off² (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 amount at 31 December 1,185 290 3,093 1,035 13 5,616 1 Refer to the cash flow statement under cash flows from invest ing act iv it ies section for the purchase of property, plant and equipment during the year of $352 mill ion on page 344 2 Disposals for property, plant and equipment during the year of $816 mill ion 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 Operating lease assets The operating lease assets subsection of property, plant and equipment is the Group’s aircraft operating leasing business, consist ing of 99 commerc ial aircraft at 31 December 2022, of which 97 are narrow-bodies and 2 are wide-bodies. The leases are classif ied as operat ing leases as they do not transfer substantially all the risks and rewards inc idental to the ownersh ip of the assets, and rental income from operating lease assets is disclosed in Note 6. At 31 December 2022, these assets had a net book value of $3,235 mill ion (31 December 2021: $3,093 m ill ion). Under these leases the lessee is responsible for the maintenance and servic ing of the a ircraft 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 ial lease terms range in length up to 12 years, while the average remain ing lease term at 31 December 2022 is approximately five years. By varying the lease terms the effects of changes in cyclical market condit ions at the t ime aircraft become elig ible for re-lease are mit igated. The Group w ill look at entering into a lease extension with exist ing lessees well in advance of lease expiry in order to min im ise the risk of aircraft downtime and aircraft transit ion costs. A ircraft may also be sold from time to time to manage the composit ion and average age of the fleet. A series of stress sensit iv it ies conducted on the narrow-body portfol io highl ight the two b iggest risks remain either an increase in the discount rate, as the major ity of the leased portfol io is valued on a VIU basis, or a substantial number of airl ine cl ients defaulting. A sensit iv ity test was performed on the narrow-body portfolio assuming a discount rate increase of 50 basis points from a base range of 4.50%-5.75% (31 December 2021: 4.50%-5.50%), which resulted in a possible increase in impa irment of $34 mill ion. A further sensit iv ity test considered that the lessees with lower credit ratings defaulted on their current leases. This scenario would result in a possible increase in impa irment of $34 m ill ion. 2022 Min imum lease receivables under operating leases falling due: $mill ion 2021 Min imum lease receivables under operating leases falling due: $mill ion With in one year 358 330 One to two years 337 285 Two to three years 286 251 Three to four years 242 197 Four to five years 211 153 After five years 546 411 1,980 1,627 ![]() 414 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 19. Leased assets Accounting policy The Group assesses whether a contract is a lease in scope of this policy by determin ing whether the contract g ives it the right to use a specif ied underly ing 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 il ity 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 il ity is recognised in ‘Other liab il it ies’. A correspond ing right-of-use asset equal to the liab il ity, 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 il ity using the effective interest method. Depreciat ion on the asset is recognised in ‘Depreciat ion and amortisat ion’, and interest on the lease liab il ity is recognised in ‘Interest expense’. If a leased premise, or a physically dist inct port ion of a premise such as an ind iv idual 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 icator of impa irment. An impa irment 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 ity and l ikel ihood of obta in ing a subtenant. The judgements in determin ing lease balances are the determ inat ion of whether the Group is reasonably certain that it will exercise extension options present in lease contracts. On in it ial recognit ion, the Group cons iders a range of characterist ics such as premises function, regional trends and the term remain ing on the lease to determ ine whether it is reasonably certain that a contractual right to extend a lease will be exercised. Where a change in assumption is confirmed by the local property management team, a remeasurement is performed in the Group-managed vendor system. The estimates are the determinat ion 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 ing informat ion to determ ine 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 ily enters lease contracts that grant it the right to use premises such as office build ings and reta il branches. Exist ing lease l iab il it ies may change in future periods due to changes in assumptions or decis ions to exerc ise lease renewal or terminat ion opt ions, changes in payments due to renegotiat ions of market rental rates as perm itted by those contracts and changes to payments due to rent being contractually linked to an inflat ion index. In general the re-measurement of a lease liab il ity under these circumstances leads to an equal change to the right-of-use asset balance, with no immed iate effect on the income statement. The total cash outflow during the year for premises and equipment leases was $310 mill ion (2021: $331 m ill ion). The total expense during the year in respect of leases with a term less than or equal to 12 months was $nil (2021: $1 mill ion). The right-of-use asset balances and depreciat ion charges are d isclosed in Note 18. The lease liab il ity balances are disclosed in Note 23 and the interest expense on lease liab il it ies is disclosed in Note 3. Maturity analysis The maturity profile for lease liab il it ies assoc iated with leased premises and equipment assets is as follows: 2022 One year or less $mill ion Between one year and two years $mill ion Between two years and five years $mill ion More than five years $mill ion Total $mill ion Other liab il it ies – lease l iab il it ies 272 239 437 310 1,258 2021 One year or less $mill ion Between one year and two years $mill ion Between two years and five years $mill ion More than five years $mill ion Total $mill ion Other liab il it ies – lease l iab il it ies 293 247 521 175 1,236 ![]() 415 Standard Chartered – Annual Report 2022 Financ ial statements 20. Other assets Accounting policy Refer to Note 13 Financ ial instruments for the relevant accounting policy. Commodit ies represent phys ical holdings where the Group has title and exposure to the Market Risk associated with the holding. Commodit ies are fa ir valued with the fair value derived from observable spot or short-term futures prices from relevant exchanges. Other assets include: 2022 $mill ion 2021 $mill ion Financ ial assets held at amort ized cost (Note 13): Hong Kong SAR Government certif icates of indebtedness (Note 23)¹ 7,106 7,284 Cash collateral 12,515 9,217 Acceptances and endorsements 5,264 4,930 Unsettled trades and other financial assets 14,410 18,637 39,295 40,068 Non-financial assets: Commodit ies and em iss ions cert if icates² 10,598 9,265 Other assets 490 599 50,383 49,932 1 The Hong Kong SAR Government certif icates of indebtedness are subordinated to the claims of other parties in respect of bank notes issued 2 Commodit ies and em iss ions cert if icates are carr ied at fair value less costs to sell, $6 bill ion (31 December 2021: $5.7 b ill ion) are class if ied as Level 1 and $4.6 b ill ion are classif ied as Level 2 (31 December 2021: $3.6 b ill ion) 21. Assets held for sale and associated liab il it ies Accounting Policy Non-current assets are classif ied as held for sale and measured at the lower of the ir carrying amount and fair value less cost to sell when: a) Their carrying amounts will be recovered princ ipally through sale. b) They are available for immed iate sale in their present condit ion; and c) Their sale is highly probable. Immediately before the in it ial classif icat ion as held for sale, the carrying amounts of the assets are measured in accordance with the applicable accounting polic ies related to the asset or l iab il ity before reclassif icat ion as held for sale. Upon reclassif icat ion property, plant and equipment are measured at the lower of their carrying amount and fair value less costs to sell. Financ ial instruments continue to be measured per the accounting polic ies in Note 13 Financ ial instruments. The assets below have been presented as held for sale following the approval of Group management and the transactions are expected to complete in 2023. Following a decis ion by the Board of D irectors to exit certain markets in Africa & Middle East, the assets and liab il it ies of those markets have been moved to ‘Held for sale’. Assets held for sale The financial assets reported below are class if ied under Level 1 $345 m ill ion (2021: N il), Level 2 $946mill ion (2021: N il) and Level 3 $100 mill ion (2021: $95 m ill ion). ![]() 416 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 21. Assets held for sale and associated liab il it ies continued 2022 $mill ion 2021 $mill ion Financ ial assets held at fa ir value through profit or loss 3 43 Loans and advances to customers – 20 Equity shares 2 23 Derivat ive financial instruments – Assets 1 – Financ ial assets held at amort ised cost 1,388 52 Cash and balances at central banks 423 – Loans and advances to banks 81 – Loans and advances to customers 508 52 Debt securit ies held at amort ised cost 376 – Goodwill and intang ible assets 4 – Property, plant and equipment 174 239 Vessels¹ 133 230 Others 41 9 Others 56 – 1,625 334 1 Disposal of property, plant and equipment classif ied under assets held for sale dur ing 2022 was $79 mill ion (2021: $149 m ill ion). Liab il it ies held for sale The financial l iab il it ies reported below are class if ied under Level 1 $402m ill ion (2021: N il) and Level 2 $833 mill ion (2021: N il). 2022 $mill ion 2021 $mill ion Financ ial l iab il it ies held at fa ir value through profit or loss 5 – Derivat ive financial instruments 5 – Financ ial l iab il it ies held at amort ised cost 1,230 – Deposits by banks 17 – Customer accounts 1,213 – Other liab il it ies 64 – Provis ions for l iab il it ies and charges 8 – 1,307 – ![]() 417 Standard Chartered – Annual Report 2022 Financ ial statements 22. Debt securit ies in issue Accounting policy Refer to Note 13 Financ ial instruments for the relevant accounting policy. 2022 2021 Certif icates of deposit of $100,000 or more $mill ion Other debt securit ies in issue $mill ion Total $mill ion Certif icates of deposit of $100,000 or more $mill ion Other debt securit ies in issue $mill ion Total $mill ion Debt securit ies in issue 23,457 37,785 61,242 23,896 37,397 61,293 Debt securit ies in issue included with in: Financ ial l iab il it ies held at fa ir value through profit or loss (Note13) – 8,572 8,572 – 5,597 5,597 Total debt securit ies in issue 23,457 46,357 69,814 23,896 42,994 66,890 In 2022, the Company issued a total of $5.2 bill ion sen ior notes for general business purposes of the Group as shown below: Securit ies $mill ion CNH 1,100 mill ion fixed rate sen ior notes due 2026 (callable 2025) 158 $1,250 mill ion fixed rate sen ior notes due 2028 (callable 2027) 1,250 $1,000 mill ion fixed rate sen ior notes due 2026 (callable 2025) 1,000 $500 mill ion float ing rate senior notes due 2026 (callable 2025) 500 SGD 255 mill ion fixed rate sen ior notes due 2033 (callable 2032) 190 HKD 800 mill ion fixed rate sen ior notes due 2025 (callable 2024) 102 $1,000 mill ion fixed rate sen ior notes due 2025 (callable 2024) 1,000 $1,000 mill ion fixed rate sen ior notes due 2028 (callable 2027) 1,000 Total Senior Notes issued 5,200 In 2021, the Company issued a total of $6.8 bill ion sen ior notes for general business purposes of the Group as shown below: Securit ies $mill ion $500 mill ion fixed rate sen ior notes due 2025 (callable 2024) 500 $500 mill ion float ing rate senior notes due 2025 (callable 2024)¹ 500 EUR 500 mill ion fixed rate sen ior notes due 2029 (callable 2028) 569 $1,000 mill ion fixed rate sen ior notes due 2025 (callable 2024) 1,000 $1,250 mill ion fixed rate sen ior notes due 2032 (callable 2031) 1,250 $1,500 mill ion fixed rate sen ior notes due 2025 (callable 2024) 1,500 $1,500 mill ion fixed rate sen ior notes due 2027 (callable 2026) 1,500 Total Senior Notes issued 6,819 1 These notes will be subject to remediat ion under interest rate benchmark reform. Please refer to Note 13 for further informat ion on th is ![]() 418 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 23. Other liab il it ies Accounting policy Refer to Note 13 Financ ial instruments for the relevant accounting policy for financ ial l iab il it ies, 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. 2022 $mill ion 2021 $mill ion Financ ial l iab il it ies held at amort ised cost (Note 13) Notes in circulat ion 1 7,106 7,284 Acceptances and endorsements 5,264 4,930 Cash collateral 9,206 8,092 Property leases² 1,029 1,170 Equipment leases² 8 17 Unsettled trades and other financial l iab il it ies 20,302 21,940 42,915 43,433 Non-financial l iab il it ies Cash-settled share-based payments 81 55 Other liab il it ies 531 826 43,527 44,314 1 Hong Kong currency notes in circulat ion of $7,106 m ill ion (2021: $7,284 m ill ion) that are secured by the Government of Hong Kong SAR cert if icates of indebtedness of the same amount included in Other assets (Note 20) 2 Other financial l iab il it ies include the present value of lease liab il it ies, as requ ired by IFRS 16 from 1 January 2019; refer to Note 19 24. Provis ions for l iab il it ies and charges Accounting policy The Group recognises a provis ion for a present legal or construct ive obligat ion result ing from a past event when it is more likely than not that it will be required to transfer economic benefits to settle the obligat ion and the amount of the obl igat ion can be estimated reliably. Where a liab il ity arises based on partic ipat ion in a market at a specif ied date, the obl igat ion is recognised in the financ ial statements on that date and is not accrued over the period. Other accounting estimates and judgements The recognit ion and measurement of prov is ions for l iab il it ies and charges requ ires sign ificant judgement and the use of estimates about uncertain future condit ions or events. Estimates include the best estimate of the probabil ity of outflow of econom ic resources, cost of settling a provis ion and tim ing of settlement. Judgements are requ ired for inherently uncertain areas such as legal decis ions ( includ ing external advice obtained), and outcome of regulator reviews. 2022 2021 Provis ion for credit commitments $mill ion Other provis ions $mill ion Total $mill ion Provis ion for credit commitments $mill ion Other provis ions $mill ion Total $mill ion At 1 January 346 107 453 367 99 466 Exchange translation differences (39) (2) (41) 9 (1) 8 Transfer – – – – 2 2 Charge against profit (27) 69 42 (30) 54 24 Provis ions ut il ised – (71) (71) – (47) (47) At 31 December 280 103 383 346 107 453 Provis ion for cred it commitment comprises those undrawn contractually committed facil it ies where there is doubt as to the borrowers’ abil ity to meet the ir repayment obligat ions. Other provis ions include $14 mill ion (31 December 2021: $17 m ill ion) recogn ised for certain contracts with suppliers for which the unavoidable costs of meeting the obligat ions exceed the econom ic benefits expected to be received. It is expected that the costs will be incurred over the next 5 years. Other provis ions cons ist mainly of provis ions for legal cla ims and regulatory and enforcement invest igat ions and proceedings. ![]() 419 Standard Chartered – Annual Report 2022 Financ ial statements 25. Contingent liab il it ies and comm itments Accounting policy Financ ial guarantee contracts and loan comm itments The Group issues financ ial guarantee contracts and loan comm itments in return for fees. Financ ial guarantee contracts and any loan commitments issued at below-market interest rates are in it ially recognised at their fair value as a financ ial l iab il ity, and subsequently measured at the higher of the in it ial value less the cumulative amount of income recognised in accordance with the princ iples of IFRS 15 Revenue from Contracts w ith Customers and their expected credit loss provis ion. 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 ial guarantee contracts and loan comm itments are disclosed in the table below. Financ ial guarantees, trade cred its and irrevocable letters of credit are the notional values of contracts issued by the Group’s Transaction Banking business for which an obligat ion to make a payment has not ar isen 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 ial loss suffered. These contracts have var ious legal forms such as letters of credit, guarantee contracts and performance bonds. The contracts are issued to facil itate trade through export and import business, provide guarantees to financ ial inst itut ions where the Group has a local presence, as well as guaranteeing project financ ing involv ing large construct ion projects undertaken by sovereigns and corporates. The contracts may contain performance clauses which require the counterparty performing services or provid ing goods to meet certain condit ions before a r ight 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 ion to prov ide funds to a customer or on behalf of a customer under prespecif ied terms and cond it ions 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 ial statements as commitments. Commitments and contingent liab il it ies are generally cons idered 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 ial assets. The table below shows the contract or underlying princ ipal amounts of unmatured off-balance sheet transact ions at the balance sheet date. The contract or underlying princ ipal amounts ind icate the volume of bus iness outstanding and do not represent amounts at risk. 2022 $mill ion 2021 $mill ion Financ ial guarantees and trade cred its Financ ial guarantees, trade cred its and irrevocable letters of credit 60,410 58,535 60,410 58,535 Commitments Undrawn formal standby facil it ies, credit lines and other commitments to lend One year and over 69,597 69,542 Less than one year 31,688 27,306 Uncondit ionally cancellable 67,383 61,675 168,668 158,523 Capital commitments Contracted capital expenditure approved by the directors but not provided for in these accounts¹ 257 124 1 Of which the Group has commitments totalling $209 mill ion to purchase a ircraft for delivery in 2023 (2021: $96 mill ion). Pre-del ivery payments of $40 mill ion (2021: $26 mill ion) have been made in respect of these commitments As set out in Note 26, the Group has contingent liab il it ies in respect of certain legal and regulatory matters for which it is not practicable to estimate the financ ial impact as there are many factors that may affect the range of possible outcomes. ![]() 420 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 26. Legal and regulatory matters Accounting policy Where appropriate, the Group recognises a provis ion for l iab il it ies 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 ion. The uncertaint ies inherent in legal and regulatory matters affect the amount and tim ing of any potent ial outflows with respect to which provis ions have been establ ished. These uncertaint ies also mean that it is not possible to give an aggregate estimate of contingent liab il it ies ar is ing from such legal and regulatory matters. The Group receives legal claims against it in a number of jur isd ict ions and is subject to regulatory and enforcement invest igat ions and proceedings from time to time. Apart from the matters described below, the Group currently considers none of the ongoing claims, invest igat ions or proceedings to be ind iv idually material. However, in light of the uncertaint ies 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 ict Courts for the Southern and Eastern Distr icts of New York aga inst a number of banks (includ ing Standard Chartered Bank or its affiliates) on behalf of pla int iffs who are, or are relat ives of, vict ims of var ious terrorist attacks in Iraq and Afghanistan. The most recent lawsuit was filed in April 2022 and concerns terrorist attacks that occurred in Afghanistan between 2013 and 2016. None of these lawsuits have specif ied the amount of damages cla imed. The plaint iffs in each of these lawsuits have alleged that the defendant banks aided and abetted the unlawful conduct of parties with connections to terrorist organisat ions in breach of the U.S. Anti-Terrorism Act. The courts have ruled in favour of the banks’ motions to dism iss in six of these lawsuits, includ ing a rul ing issued in December 2022 in which the United States Distr ict Court for the Eastern D istr ict of New York d ism issed a lawsu it filed in August 2021. In January 2023 a panel of the United States Court of Appeals for the Second Circu it upheld a September 2019 ruling by the United States Distr ict Court for the Eastern D istr ict of New York in which a lawsuit filed in November 2014 was dism issed. Wh ile a ruling is awaited in respect of the Group’s motion to dism iss the lawsu it filed in April 2022, the other lawsuits are currently stayed pending a ruling by the United States Supreme Court in another U.S. Anti-Terrorism Act case in which SCB is not involved. An appeal from the December 2022 dism issal rul ing is also pending. In January 2020, a shareholder derivat ive compla int was filed by the City of Philadelph ia in New York State Court against 45 current and former directors and senior officers of the Group. It is alleged that the ind iv iduals breached their duties to the Group and caused a waste of corporate assets by permitt ing the conduct that gave r ise 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 iv iduals were removed from the case. Standard Chartered PLC and Standard Chartered Holdings Lim ited rema ined as named “nominal defendants” in the complaint. In May 2021, Standard Chartered PLC filed a motion to dism iss the compla int. In February 2022, the New York State Court ruled in favour of Standard Chartered PLC’s motion to dism iss the compla int. The plaint iffs are pursuing an appeal against the February 2022 ruling. A hearing date for the plaint iffs’ appeal is awaited. Since October 2020, four lawsuits have been filed in the English High Court against Standard Chartered PLC on behalf of more than 300 shareholders in relation to alleged untrue and/or mislead ing statements and/or om iss ions in informat ion publ ished by Standard Chartered PLC in its rights issue prospectuses of 2008, 2010 and 2015 and/or public statements regarding the Group’s histor ic sanct ions, money laundering and financ ial cr ime compliance issues. These lawsuits have been brought under sections 90 and 90A of the Financ ial Serv ices and Markets Act 2000. These lawsuits are at an early procedural stage. Bernard Madoff’s 2008 confession to running a Ponzi scheme through Bernard L. Madoff Investment Securit ies LLC (BMIS) gave rise to a number of lawsuits against the Group. BMIS and the Fairf ield funds (wh ich invested in BMIS) are in bankruptcy and liqu idat ion, respectively. Between 2010 and 2012, five lawsuits were brought against the Group by the BMIS bankruptcy trustee and the Fairf ield funds’ l iqu idators, in each case seeking to recover funds paid to the Group’s clients pursuant to redemption requests made prior to BMIS’ bankruptcy fil ing. The total amount sought in these cases exceeds USD 300 mill ion, exclud ing any pre-judgment interest that may be awarded. The four lawsuits commenced by the Fairf ield funds’ l iqu idators have been dism issed and the appeals of those d ism issals by the funds’ l iqu idators are ongo ing. The Group has concluded that the threshold for recording provis ions pursuant to IAS 37 Prov is ions, Cont ingent Liab il it ies and Contingent Assets is not met with respect to the above matters; however, the outcomes of these lawsuits are inherently uncertain and diff icult to pred ict. ![]() 421 Standard Chartered – Annual Report 2022 Financ ial statements 27. Subordinated liab il it ies and other borrowed funds Accounting policy Subordinated liab il it ies and other borrowed funds are class if ied as financial instruments. Refer to Note 13 Financ ial instruments for the accounting policy. All subordinated liab il it ies are unsecured, unguaranteed and subord inated to the claims of other creditors includ ing w ithout lim itat ion, 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. 2022 $mill ion 2021 $mill ion Subordinated loan capital – issued by subsid iary undertak ings £200 mill ion 7.75 per cent subord inated notes (callable 2022)¹ – 48 $700 mill ion 8.0 per cent subord inated notes due 2031 (callable 2026)¹ 345 418 345 466 Subordinated loan capital – issued by the Company 2 Primary capital floating rate notes: $400 mill ion float ing rate undated subordinated notes 3 16 16 $300 mill ion float ing rate undated subordinated notes (Series 2) 3 69 69 $400 mill ion float ing rate undated subordinated notes (Series 3) 3 50 50 $200 mill ion float ing rate undated subordinated notes (Series 4) 3 26 26 £900 mill ion 5.125 per cent subord inated notes due 2034 587 848 $2 bill ion 5.7 per cent subord inated notes due 2044 2,172 2,361 $2 bill ion 3.95 per cent subord inated notes due 2023 1,999 2,027 $1 bill ion 5.7 per cent subord inated notes due 2022 – 1,000 $1 bill ion 5.2 per cent subord inated notes due 2024 1,017 1,049 $750 mill ion 5.3 per cent subord inated notes due 2043 679 788 €750 mill ion 3.625 per cent subord inated notes due 2022 – 868 €500 mill ion 3.125 per cent subord inated notes due 2024 502 585 $1.25 bill ion 4.3 per cent subord inated notes due 2027 1,119 1,250 $1 bill ion 3.516 per cent subord inated notes due 2030 (callable 2025) 938 1,012 $500 mill ion 4.886 per cent subord inated notes due 2033 (callable 2028) 473 543 £ 96.035m 7.375% non-cumulative Irredeemable preference shares (reclassed as Debt) 116 129 £ 99.250m 8.25% non-cumulative Irredeemable preference shares (reclassed as Debt) 119 134 $750 mill ion 3.604% fixed rate reset dated subord inated notes due 2033 630 – € 1 bill ion 2.5 per cent subord inated debt 2030 967 1,123 $1.25 bill ion 3.265 per cent subord inated notes due 2036 1,002 1,188 €1 bill ion 1.200 per cent. fixed rate reset dated subord inated notes due 2031 891 1,114 13,370 16,180 Total for Group 13,715 16,646 1 Issued by Standard Chartered Bank 2 In the balance sheet of the Company the amount recognised is $13,684 mill ion (2021: $16,162 m ill ion), w ith the difference being external notes and the effect of hedge accounting achieved on a Group basis 3 These notes will be subject to remediat ion under interest rate benchmark reform. Please refer to Note 13 for further informat ion on th is ![]() 422 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 27. Subordinated liab il it ies and other borrowed funds continued 2022 USD $mill ion GBP $mill ion EUR $mill ion Total $mill ion Fixed rate subordinated debt 10,372 822 2,360 13,554 Floating rate subordinated debt 161 – – 161 Total 10,533 822 2,360 13,715 2021 USD $mill ion GBP $mill ion EUR $mill ion Total $mill ion Fixed rate subordinated debt 11,636 1,160 3,689 16,485 Floating rate subordinated debt 161 – – 161 Total 11,797 1,160 3,689 16,646 Redemptions and repurchases during the year On 25 January 2022, Standard Chartered PLC exercised its right to redeem USD 1 bill ion 5.7 per cent subord inated notes 2022. Further redemption of €750 mill ion 3.625 per cent subord inated notes 2022 & £200 mill ion 7.75 per cent subord inated notes 2022 was made during the year 2022. Issuance during the year On 12 January 2022, Standard Chartered PLC issued USD 750 mill ion 3.603 per cent fixed rate reset dated subord inated notes due 2033. 28. Share capital, other equity instruments and reserves Accounting policy Financ ial instruments issued are classif ied as equ ity when there is no contractual obligat ion to transfer cash or other financial assets, or no obligat ion to issue a variable 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 ies wh ich carry a discret ionary coupon and have no fixed matur ity or redemption date are classif ied as other equ ity instruments. Interest payments on these securit ies are recogn ised, net of tax, as distr ibut ions 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 ion pa id 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 ion rece ived is included in shareholders’ equity of the Group and/or the Company. Number of ordinary shares mill ions Ordinary share capital 1 $mill ion Ordinary share premium $mill ion Preference share premium 2 $mill ion Total share capital and share premium $mill ion Other equity instruments $mill ion At 1 January 2021 3,156 1,578 3,986 1,494 7,058 4,518 Cancellation of shares includ ing share buy-back (77) (39) – – (39) – Addit ional T ier 1 equity issuance – – – – – 2,728 Addit ional T ier 1 equity redemption – – – – – (992) Other movements – – 3 – 3 – At 31 December 2021 3,079 1,539 3,989 1,494 7,022 6,254 Cancellation of shares includ ing share buy-back (184) (92) – – (92) – Addit ional T ier 1 equity issuance – – – – – 1,240 Addit ional T ier 1 redemption – – – – – (990) At 31 December 2022 2,895 1,447 3,989 1,494 6,930 6,504 1 Issued and fully paid ordinary shares of 50 cents each 2 Includes preference share capital of $75,000 ![]() 423 Standard Chartered – Annual Report 2022 Financ ial statements 28. Share capital, other equity instruments and reserves continued Share buy-back On 18 February 2022, 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 $56 mill ion, and the total cons iderat ion pa id was $754 mill ion ( includ ing $4 m ill ion of fees and stamp duty), The buy-back completed on 19 May 2022. The total number of shares purchased was 111,295,408, representing 3.61 per cent of the ordinary shares in issue. The nominal value of the shares was transferred from the share capital to the capital redemption reserve account. The shares were purchased by Standard Chartered PLC on various exchanges not includ ing the Hong Kong Stock Exchange. Number of ordinary shares Highest price paid £ Lowest price paid £ Average price paid per share £ Aggregate price paid £ Aggregate price paid $ February 2022 14,397,852 5.85000 5.14800 5.55490 79,978,036 107,767,620 March 2022 49,510,420 5.44800 4.31400 4.94560 244,860,409 322,288,357 April 2022 29,085,345 5.27000 4.78700 5.05870 147,135,270 190,912,883 May 2022 18,301,791 5.99400 5.44800 5.71980 104,682,211 129,028,610 August 2022 27,826,349 6.23600 5.61600 5.97660 166,308,114 199,113,059 September 2022 34,714,694 6.27000 5.51400 5.93440 206,009,962 232,644,256 October 2022 10,532,794 5.91800 5.49600 5.74910 60,554,337 68,239,759 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 30 June 2022, the Company has 15,000 $5 non-cumulative redeemable preference shares in issue, with a premium of $99,995 making a paid up amount per preference share of $100,000. The preference shares are redeemable at the option of the Company and are classif ied in equity. The available profits of the Company are distr ibuted to the holders of the issued preference shares in prior ity to payments made to holders of the ordinary shares and in prior ity to, or par i passu with, any payments to the holders of any other class of shares in issue. On a wind ing up, the assets of the Company are appl ied to the holders of the preference shares in prior ity to any payment to the ordinary shareholders and in prior ity to, or par i passu with, the holders of any other shares in issue, for an amount equal to any div idends payable (on approval of the Board) and the nom inal 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 idend due is not paid in full or where a resolution is proposed varying the rights of the preference shares. Other equity instruments The table provides details of outstanding fixed rate resetting perpetual subordinated contingent convertible AT1 securit ies issued by Standard Chartered PLC. All issuances are made for general business purposes and to increase the regulatory capital base of the Group. Issuance date Nominal value Proceeds net of issue costs Interest rate 2 Coupon payment dates 3 First reset dates 4 Conversion price per ordinary share 18 August 2016 USD 999 mill ion 1 USD 990 mill ion 7.50% 2 April, 2 October each year 2 April 2022 USD 7.732 18 January 2017 USD 1,000 mill ion USD 992 mill ion 7.75% 2 April, 2 October each year 2 April 2023 USD 7.732 3 July 2019 SGD 750 mill ion USD 552 mill ion 5.375% 3 April, 3 October each year 3 October 2024 SGD 10.909 26 Jun 2020 USD 1,000 mill ion USD 992 mill ion 6% 26 January, 26 July each year 26 January 2026 USD 5.331 14 January 2021 USD 1,250 mill ion USD 1,239 mill ion 4.75% 14 January, 14 July each year 14 July 2031 USD 6.353 19 August 2021 USD 1,500 mill ion USD 1,489 mill ion 4.30% 19 February, 19 August each year 19 August 2028 USD 6.382 15 August 2022 USD 1,250 mill ion USD 1,239 mill ion 7.75% 15 February, 15 August each year 15 February 2028 USD 7.333 1 During the period, the Group repurchased around USD 1,001 mill ion of these secur it ies v ia a tender offer 2 Interest rates for the period from (and includ ing) the issue date to (but excluding) the first reset date 3 Interest payable semi-annually in arrears 4 Securit ies are resettable each date fall ing five years, or an integral multiple of five years, after the first reset date Standard Chartered PLC redeemed $999 mill ion fixed rate resett ing perpetual contingent convertible securit ies on its first optional redemption date of 2 April 2022. The AT1 issuances above are primar ily purchased by inst itut ional investors. ![]() 424 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 28. Share capital, other equity instruments and reserves continued The princ ipal terms of the AT1 secur it ies are descr ibed below: • The securit ies are perpetual and redeemable, at the opt ion 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 ies are also redeemable for certa in regulatory or tax reasons on any date at 100 per cent of their princ ipal amount together with any accrued but unpaid interest up to (but excluding) the date fixed for redemption. Any redemption is subject to Standard Chartered PLC giv ing not ice to the relevant regulator and the regulator granting permiss ion to redeem • Interest payments on these securit ies w ill be accounted for as a div idend. • Interest on the securit ies is due and payable only at the sole and absolute discret ion of Standard Chartered PLC, subject to certain addit ional restr ict ions set out in the terms and condit ions. Accord ingly, 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 ies convert into ordinary shares of Standard Chartered PLC, at a pre-determined price detailed in the table above, should the fully loaded Common Equity Tier 1 ratio of the Group fall below 7.0 per cent. Approximately 947 mill ion ord inary shares would be required to satisfy the conversion of all the securit ies ment ioned above The securit ies rank beh ind 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 ior to the cla ims 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 ior to, the cla ims of holders of the AT1 securit ies in a wind ing–up occurr ing prior to the conversion trigger. Reserves The constituents of the reserves are summarised as follows: • The capital reserve represents the exchange difference on redenominat ion of share cap ital 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 ing on shares issued using a cash box financ ing 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 ion) and Ta iwan ($1.2 bill ion) acqu is it ions, in 2008, 2010 and 2015 for the shares issued by way of a rights issue, primar ily for cap ital 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 in the Company. Of the 2015 fund ing, $1.5 bill ion was used to subscr ibe to addit ional equ ity in Standard Chartered Bank, a wholly owned subsid iary of the Company. Apart from the Korea, Ta iwan and Standard Chartered Bank funding, the merger reserve is considered realised and distr ibutable. • Own credit adjustment reserve represents the cumulative gains and losses on financ ial l iab il it ies des ignated at fair value through profit or loss relating to own credit. Gains and losses on financ ial l iab il it ies des ignated 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 ion of appl icable instruments the balance of any OCA will not be recycled to the income statement, but will be transferred with in equ ity to retained earnings • Fair value through other comprehensive income (FVOCI) debt reserve represents the unrealised fair value gains and losses in respect of financial assets class if ied as FVOCI, net of expected cred it losses and taxation. Gains and losses are deferred in this reserve and are reclassif ied to the income statement when the underlying asset is sold, matures or becomes impa ired. • FVOCI equity reserve represents unrealised fair value gains and losses in respect of financ ial assets class if ied 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 ives that meet the cr iter ia for these types of hedges. Gains and losses are deferred in this reserve and are reclassif ied 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 ied to the income statement when the underlying foreign operation is disposed. Gains and losses aris ing from der ivat ives 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 idend d istr ibut ions, own shares held (treasury shares) and share buy-backs A substantial part of the Group’s reserves is held in overseas subsid iary undertak ings and branches, princ ipally to support local operations or to comply with local regulations. The maintenance of local regulatory capital ratios could potentially restrict the amount of reserves which can be remitted. In addit ion, if these overseas reserves were to be remitted, further unprovided taxation liab il it ies m ight arise. As at 31 December 2022, the distr ibutable reserves of Standard Chartered PLC (the Company) were $13 b ill ion (31 December 2021: $15.0 bill ion). These compr ised retained earnings and $12.6 bill ion of the merger reserve account. D istr ibut ion of reserves is subject to mainta in ing min imum cap ital requirements. ![]() 425 Standard Chartered – Annual Report 2022 Financ ial statements 28. Share capital, other equity instruments and reserves continued Own shares Computershare Trustees (Jersey) Lim ited is the trustee of the 2004 Employee Benefit Trust (‘2004 Trust’) and Ocorian Trustees (Jersey) Lim ited (formerly known as Bedell Trustees L im ited) is the trustee of the 1995 Employees’ Share Ownership Plan Trust (‘1995 Trust’). The 2004 Trust is used in conjunct ion w ith the Group’s employee share schemes and the 1995 Trust is used for the delivery of other employee share-based payments (such as upfront shares and fixed pay allowances). Group companies fund these trusts from time to time to enable the trustees to acquire shares to satisfy these arrangements. Except as disclosed, neither the Company nor any of its subsid iar ies has bought, sold or redeemed any securit ies of the Company listed on The Stock Exchange of Hong Kong Lim ited dur ing the period. Details of the shares purchased and held by the trusts are set out below. 1995 Trust 2004 Trust Total 2022 2021 2022 2021 ¹ 2022 2021 Shares purchased during the period – – 30,203,531 36,487,747 30,203,531 36,487,747 Market price of shares purchased ($mill ion) – – 218 237 218 237 Shares transferred between trusts – – – – – – Shares held at the end of the period – – 27,525,624 22,461,243 27,525,624 22,461,243 Maximum number of shares held during the period 27,976,046 23,076,993 1 Note that 35,768 shares were purchased by the trustee of the 2004 Trust using $0.2 mill ion part ic ipant sav ings as part of Sharesave exercises Div idend wa ivers 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 ions in relation to shares held by them that have not been allocated to employees, whereby any div idend 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 iar ies The table below details the transactions in equity instruments (includ ing convert ible and hybrid instruments) of the Group’s subsid iar ies, includ ing issuances, conversions, redemptions, purchase or cancellation. This is required under the Hong Kong List ing requ irements, appendix 16 paragraph 10. Name and registered address Place of incorporation Descript ion of shares Issued/(redeemed) capital Issued/(redeemed) Shares Proportion of shares held (%) The following companies have the address of 1 Basinghall Avenue, London, EC2V 5DD, United Kingdom Finventures UK Lim ited United Kingdom $1.00 Ordinary shares £25,000,000 25,000,000 100 Standard Chartered I H Lim ited United Kingdom $1.00 Ordinary shares $70,000,036 70,000,036 100 Standard Chartered Holdings Lim ited United Kingdom $2.00 Ordinary shares $45,000,036 22,500,018 100 Standard Chartered Strategic Investments Lim ited 1 United Kingdom $1.00 Ordinary shares $2,697,462 2,697,462 100 Standard Chartered UK Holdings Lim ited 2 United Kingdom $1.00 Ordinary shares $114,079,067 114,079,067 100 Zodia Markets (UK) Lim ited United Kingdom $1.00 Ordinary shares $999,000 999,000 100 Zodia Markets Holdings Lim ited United Kingdom $1.00 Ordinary shares $7,501 7,501 75.01 The following companies have the address of Thomas House, 84 Eccleston Square, London, SW1V 1PX, United Kingdom Zodia Custody Lim ited United Kingdom $1.00 Ordinary shares $14,240,000 14,240,000 95.1 Zodia Holdings Lim ited United Kingdom $1.00 Ordinary-A shares $24,990,000 24,990,000 100 The following companies have the address of Spaces, 25 Wilton Road, Victor ia, London, SW1V 1LW, United Kingdom Resolution Alliance Korea Ltd Republic of Korea KRW5,000 Ordinary shares KRW (100,000,000) (100,000,000) 100 ![]() 426 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements Name and registered address Place of incorporation Descript ion of shares Issued/(redeemed) capital Issued/(redeemed) Shares Proportion of shares held (%) The following companies have the address of Suites 507,508,509,15th floor, Al Sarab Tower, Adgm Square, Al Maryah Island, Abu Dhabi, United Arab Emirates United Arab Emirates Financ ial Inclus ion Technologies Ltd Hong Kong $1.00 Ordinary shares $8,800,000 8,800,000 100 The following company has the address of 39/F, Oxford House,Taikoo Place,979 king’s road, Quarry Bay, Hong Kong Mox Bank Lim ited Hong Kong HKD Ordinary shares HKD639,794,864 63,979,486 65.98 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 is ion, Ward No. 150, Bengaluru, 560102, India. Standard Chartered Research and Technology India Private Lim ited India INR10.00 A Equity shares INR64,673,130 6,467,313 99.601 The following company has the address of StandardChartered@Chiromo, Number 48, Westlands Road, P. O. Box 30003 – 00100, Nairob i, Kenya Solvezy Technology Kenya Lim ited Kenya KES1000.00 Ordinary shares KES295,804,000 295,804 100 Tawi Fresh Kenya Lim ited Kenya KES1,000.00 Ordinary shares KES118,145,000 118,145 100 The following company has the address of 23 De Walden Street, London, W1G 8RW, United Kingdom Shoal Lim ited United Kingdom $1.00 Ordinary shares $2 2 100 The following companies have the address of 27, Fitzw ill iam Street, Dublin, D02 TP23, Ireland Zodia Custody (Ireland) Lim ited Ireland $1.00 Ordinary shares $10,000,000 10,000,000 100 The following companies have the address of 8 Marina Boulevard, #27-01 Marina Bay Financ ial Centre Tower 1, 018981, S ingapore Standard Chartered Private Equity (Singapore) Pte Ltd Singapore $ Ordinary shares $25,000,000 25,000,000 100 The following company has the address of 77 Robinson Road, #25-00 Robinson 77, 068896, Singapore Trust Bank Singapore Lim ited Singapore SGD Ordinary shares SGD96,000,000 96,000,000 60 Standard Chartered Bank Cote d’Ivoire, 23 Boulevard de la République, Abidjan 17, 17 B.P. 1141, Cote d’Ivoire Standard Chartered Bank Cote d’ Ivoire SA Cote d’Ivoire XOF100,000 Ordinary Shares XOF2,508,000,000 25,080 100 26F, Fortune Financ ial Centre, #5, Dong San Huan Zhong Lu, Chaoyang Distr ict , Be ijing , 100020, China Standard Chartered Corporate Advisory Co., Ltd. China $1.00 Ordinary shares $(1,680,000) (1,680,000) 100 The following companies have the address of 80 Robinson Road, #02-00, 068898, Singapore Autumn Life Pte. Ltd. Singapore $ Ordinary-A shares $9,400,000 9,400,000 96.4 Cardspal Pte. Ltd. Singapore $ Ordinary-A shares $2,500,000 2,500,000 100 Pegasus Dealmaking Pte. Ltd. Singapore $ Ordinary shares $71,999 71,999 100 Power2SME Pte. Ltd. Singapore $ Ordinary shares $11,800,000 11,800,000 90.6 SCV Research and Development Pte. Ltd. Singapore $ Ordinary shares $6,000,000 6,000,000 100 SCV Master Holding Company Pte Ltd Singapore $ Ordinary shares $11,800,000 11,800,000 100 Solv-India Pte Ltd Singapore $ Ordinary shares $23,000,000 23,000,000 100 28. Share capital, other equity instruments and reserves continued ![]() 427 Standard Chartered – Annual Report 2022 Financ ial statements Name and registered address Place of incorporation Descript ion of shares Issued/(redeemed) capital Issued/(redeemed) Shares Proportion of shares held (%) 8A, Hony Tower, 1st Financ ial Street, Nanshan Distr ict, Shenzen, Ch ina SC Ventures Investment Management (Shenzhen) Lim ited China $1.00 Ordinary shares $2,000,000 2,000,000 100 EX-26, Ground Floor, Bldg 16-Co Work, Dubai Internet City, Dubai, United Arab Emirates Appro Onboarding Solutions FZ-LLC United Arab Emirates AED1,000.00 Ordinary shares AED6,803,000 6,803 100 The following company has the address of 32, Molesworth Street, Dublin 2, D02Y512, Ireland Zodia Markets (Ireland) Lim ited United Kingdom $1.00 Ordinary Shares $999,000 999,000 100 1 Redenominat ion of £1.00 Ord inary shares to $1.00 Ordinary shares 2 Redenominat ion of £10.00 Ord inary shares to $1.00 Ordinary shares Please see Note 22 Debt securit ies in issue for issuances and redemptions of senior notes. Please see Note 27 Subordinated liab il it ies and other borrowed funds for issuance and redemptions of subordinated liab il it ies and AT1 securit ies. Please see Note 40 Related undertakings of the Group for subsid iar ies liqu idated, d issolved or sold during the year. 29. Non-controlling interests Accounting policy Non-controlling interests are measured at the non-controlling interest’s proportionate share of the acquiree’s ident ifiable net assets. $mill ion At 1 January 2021 325 Comprehensive income for the year (17) Income in equity attributable to non-controlling interests (15) Other profits attributable to non-controlling interests (2) Distr ibut ions (31) Other increases 1 94 At 31 December 2021 371 Comprehensive income for the year (88) Income in equity attributable to non-controlling interests (42) Other profits attributable to non-controlling interests (46) Distr ibut ions (31) Other increases 2 98 At 31 December 2022 350 1 Movement related to non-controlling interests from Mox Bank Lim ited 2 Movements related to non-controlling interests from Mox Bank Lim ited ($39 m ill ion), Trust Bank S ingapore Lim ited ($47 m ill ion), Zod ia Markets Holdings Lim ited ($3 mill ion), Power2SME Pte L im ited ($9 m ill ion) 28. Share capital, other equity instruments and reserves continued ![]() 428 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 30. Retirement benefit obligat ions Accounting policy The Group operates pension and other post-retirement benefit plans around the world, which can be categorised into defined contribut ion plans and defined benefit plans. For defined contr ibut ion plans, the Group pays contr ibut ions to publicly or privately admin istered pens ion plans on a statutory or contractual basis, and such amounts are charged to operating expenses. The Group has no further payment obligat ions once the contr ibut ions have been pa id. For funded defined benefit plans, the liab il ity recognised in the balance sheet is the present value of the defined benefit obligat ion at the balance sheet date less the fa ir value of plan assets. For unfunded defined benefit plans the liab il ity recognised at the balance sheet date is the present value of the defined benefit obligat ion. The defined benefit obligat ion 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 il ity for the year by applying the discount rate used to measure the defined benefit obligat ion at the beg inn ing of the annual period to the net defined benefit liab il ity, taking into account any changes in the net defined benefit liab il ity during the year as a result of contribut ions and benefit payments. Net interest expense, the cost of the accrual of new benefits, benefit enhancements (or reductions) and admin istrat ion expenses met directly from plan assets are recognised in the income statement in the period in which they were incurred. Other accounting estimates and judgements There are many factors that affect the measurement of the retirement benefit obligat ions. Th is measurement requires the use of estimates, such as discount rates, inflat ion, pens ion 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 ions. Th is is the approach adopted across our geographies. Where there are inflat ion-l inked bonds available (e.g. United Kingdom and the eurozone), the Group derives inflat ion based on the market on those bonds, w ith the market yield adjusted in respect of the United Kingdom to take account of the fact that liab il it ies are l inked to Consumer Price Index inflat ion, whereas the reference bonds are l inked to Retail Price Index inflat ion. Where no inflat ion-l inked bonds exist, we determine inflat ion assumpt ions based on a combinat ion of long-term forecasts and short-term inflat ion data. Salary growth assumpt ions reflect the Group’s long-term expectations, taking into account future business plans and macroeconomic data (primar ily expected future long-term inflat ion). Demograph ic assumptions, includ ing mortal ity 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 ic exper ience and/or future expectations. The sensit iv ity of the liab il it ies to changes in these assumptions is shown in the Note below. Retirement benefit obligat ions compr ise: 2022 $mill ion 2021 $mill ion Defined benefit plans obligat ion 128 192 Defined contribut ion plans obl igat ion 18 18 Net obligat ion 146 210 Retirement benefit charge comprises: 2022 $mill ion 2021 $mill ion Defined benefit plans 58 62 Defined contribut ion plans¹ 332 315 Charge against profit (Note 7) 390 377 1 The Group has during the year util ised aga inst defined contribut ion payments, $4 m ill ion forfe ited pension contribut ions in respect of employees who left before their interests vested fully. The residual balance of forfeited contribut ions is $17 mill ion The Group operates over 60 defined benefit plans across its geographies, many of which are closed to new entrants who now join defined contr ibut ion arrangements. The a im of all these plans is, as part of the Group’s commitment to financ ial wellbe ing 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 ions. The defined benefit plans expose the Group to currency r isk, interest rate risk, investment risk and actuarial risks such as longevity risk. The material holdings of government and corporate bonds shown partially hedge movements in the liab il it ies result ing from interest rate and inflat ion changes. Sett ing aside movements from other drivers such as currency fluctuation, the increases in discount rates in most geographies over 2022 have led to lower liab il it ies. These have been partly offset by decreases in the value of bonds held as well as poor performance of growth assets such as equit ies and property, lead ing to a fall in the pension deficit reported. These movements are shown as actuar ial gains and losses in the tables below. Contribut ions into a number of plans in excess of the amounts required to fund benefits accruing have also helped to reduce the net defic it over the year. The disclosures required under IAS 19 have been calculated by independent qualif ied actuar ies based on the most recent full actuarial valuations updated, where necessary, to 31 December 2022. ![]() 429 Standard Chartered – Annual Report 2022 Financ ial statements 30. Retirement benefit obligat ions continued UK Fund The Standard Chartered Pension Fund (the ‘UK Fund’) is the Group’s largest pension plan, representing 53 per cent (31 December 2021: 58 per cent) of total pension liab il it ies. 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 ion, at least one th ird of the trustee directors are nominated by members; the remainder are appointed by the Bank. The trustee directors have a fiduc iary duty to members and are respons ible 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 ion plan. The financial pos it ion of the UK Fund is regularly assessed by an independent qualif ied actuary. The fund ing valuation as at 31 December 2020 was completed in December 2021 by the Scheme Actuary, T Kripps of Will is Towers Watson, us ing assumptions different from those, and agreed with the UK Fund trustee. It showed that the UK Fund was 92% funded at that date, revealing a past service defic it of $153 m ill ion (£127 m ill ion). To repair the defic it, three annual cash payments each of $40 m ill ion (£32.9 m ill ion) were agreed, w ith the first of these paid in December 2021, and two further instalments to be paid in December 2022 and December 2023. However, the agreement allowed that, if the funding posit ion improves to being at or near a surplus in future years, the payments due in 2022 and 2023 will be reduced or elim inated. As a result of the Fund be ing in surplus at the agreed measurement point of mid-year, no payment was made in December 2022. As part of the 2020 valuation, in order to provide security for future contribut ions an add it ional $60 mill ion nom inal gilts (£50 mill ion) were purchased and transferred into the exist ing escrow account of $132 m ill ion g ilts (£110 mill ion), topp ing it up to $192 mill ion The Group has not recognised any addit ional l iab il ity under IFRIC 14, as the Bank has control of any pension surplus under the Trust Deed and Rules. Overseas plans The princ ipal overseas defined benefit arrangements operated by the Group are in Hong Kong, India, Jersey, Korea, Taiwan, United Arab Emirates (UAE) and the United States of America (US). Plans in Hong Kong, India, Korea, Taiwan and UAE remain open for accrual of future benefits. Key assumptions The princ ipal financial assumpt ions used at 31 December 2022 were: Funded plans UK Fund Overseas Plans 1 2022 % 2021 % 2022 % 2021 % Discount rate 4.8 2.0 1.2 – 5.4 0.4 – 3.1 Price Inflation 2.6 2.6 1.0 – 3.1 1.0 – 3.1 Salary increases N/A N/A 3.5 – 4.5 3.5 – 4.5 Pension increases 2.4 2.5 3.1 1.9 – 3.1² 1 The range of assumptions shown is for the funded defined benefit overseas plans in Hong Kong, Jersey, Korea, Taiwan, and the US. These comprise around 75 per cent of the total liab il it ies of overseas funded plans 2 The range of assumptions shown for 2021 also includes Germany Unfunded plans US post-retirement medical Other 1 2022 % 2021 % 2022 % 2021 % Discount rate 5.1 3.1 3.7 – 7.6 2.2 – 6.7 Price inflat ion 2.5 2.5 2.0 – 4.0 2.0 – 4.0 Salary increases N/A N/A 4.0 – 7.8 3.7 – 7.0 Pension increases N/A N/A 0.0 – 2.4 0.0 – 2.6 Post-retirement medical rate 7% in 2022 reducing by 0.5% per annum to 5% in 2026 7% in 2021 reducing by 0.5% per annum to 5% in 2025 N/A N/A 1 The 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 il it ies of other unfunded plans The princ ipal non-financial assumpt ions 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 it ial addit ion parameter of 0.25%. Scal ing factors of 92% for male pensioners, 92% for female pensioners, 92% for male dependants and 82% for female dependants have been applied. The resulting assumptions for life expectancy for the UK Fund are that a male member currently aged 60 will live for 27 years (2021: 27 years) and a female member for 30 years (2021: 30 years) and a male member currently aged 40 will live for 29 years (2021: 29 years) and a female member for 32 years (2021: 31 years) after their 60th birthdays. ![]() 430 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 30. Retirement benefit obligat ions continued Both financial and non-financial assumpt ions can be expected to change in the future, which would affect the value placed on the liab il it ies. For example, changes at the report ing date to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligat ion by the amounts shown below: • If the discount rate increased by 25 basis points the liab il ity would reduce by approximately $30 mill ion for the UK Fund (2021: $65 mill ion) and $15 m ill ion for the other plans (2021: $35 m ill ion) • If the rate of inflat ion increased by 25 basis points the liab il ity, allowing for the consequent impact on pension and salary increases, would increase by approximately $20 mill ion for the UK Fund (2021: $45 m ill ion) and $15 m ill ion for the other plans (2021: $20 mill ion) • If the rate salaries increase compared to inflat ion increased by 25 basis points the liab il ity would increase by nil for the UK Fund (2021: nil) and approximately $10 mill ion for the other plans (2021: $15 m ill ion) • If longevity expectations increased by one year the liab il ity would increase by approximately $35 mill ion for the UK Fund (2021: $80 mill ion) and $10 m ill ion for the other plans (2021: $15 m ill ion) Although this analysis does not take account of the full distr ibut ion of cash flows expected, it does provide an approximat ion of the sensit iv ity to the main assumptions. While changes in other assumptions would also have an impact, the effect would not be as sign ificant. Profile of plan obligat ions Funded plans Unfunded plans UK Fund Overseas Post-retirement medical Other Duration of the defined benefit obligat ion ( in years) 11 9 8 9 (Duration of the defined benefit obligat ion – 2021) 15 11 9 11 Benefits expected to be paid from plans Benefits expected to be paid during 2023 75 61 1 16 Benefits expected to be paid during 2024 77 94 1 14 Benefits expected to be paid during 2025 79 71 1 14 Benefits expected to be paid during 2026 81 74 1 15 Benefits expected to be paid during 2027 83 87 1 14 Benefits expected to be paid during 2028 to 2032 449 481 4 70 Fund values: 2022 2021 At 31 December UK Fund Overseas plans UK Fund Overseas plans Quoted assets $mill ion Unquoted assets $mill ion Total assets $mill ion Quoted assets $mill ion Unquoted assets $mill ion Total assets $mill ion Total assets $mill ion Total assets $mill ion Equit ies 2 – 2 223 – 223 145 306 Government bonds 206 – 206 160 – 160 695 224 Corporate bonds 309 82 391 116 – 116 610 164 Absolute Return Fund – – – – – – 91 – Hedge funds – 14 14 – – – 19 – Infrastructure – 177 177 – – – 87 – Property – 126 126 – – – 127 11 Derivat ives 2 – 2 – – – 10 – Cash and equivalents 257 – 257 35 221 256 108 260 Others 7 4 11 – 63 63 18 67 Total fair value of assets 1 783 403 1,186 534 284 818 1,910 1,032 1 Self-investment is monitored closely and is less than $1 mill ion of Standard Chartered equ it ies and bonds for 2022 (2021: <$1 m ill ion). Self- investment is only allowed where it is not practical to exclude it – for example through investment in index-tracking funds where the Group is a constituent of the relevant index At 31 December 2022 2021 Funded plans Unfunded plans Funded plans Unfunded plans UK Fund $mill ion Overseas plans $mill ion Post- retirement medical $mill ion Other $mill ion UK Fund $mill ion Overseas plans $mill ion Post- retirement medical $mill ion Other $mill ion Total fair value of assets 1,186 818 N/A N/A 1,910 1,032 N/A N/A Present value of liab il it ies (1,138) (817) (10) (167) (1,822) (1,076) (13) (223) Net pension plan asset/(obligat ion) 48 1 (10) (167) 88 (44) (13) (223) ![]() 431 Standard Chartered – Annual Report 2022 Financ ial statements 30. Retirement benefit obligat ions continued The pension cost for defined benefit plans was: 2022 Funded plans Unfunded plans UK Fund $mill ion Overseas plans $mill ion Post-retirement medical $mill ion Other $mill ion Total $mill ion Current service cost 1 – 47 – 6 53 Past service cost and curtailments 2 – 2 – – 2 Settlement cost 2 – – – – – Interest income on pension plan assets (34) (32) – – (66) Interest on pension plan liab il it ies 33 31 – 5 69 Total charge to profit before deduction of tax (1) 48 – 11 58 Net losses on plan assets 3 486 113 – – 599 Gains on liab il it ies (453) (143) (2) (42) (640) Total losses/(gains) recognised directly in statement of comprehensive income before tax 33 (30) (2) (42) (41) Deferred taxation 7 13 – – 20 Total losses/(gains) after tax 40 (17) (2) (42) (21) 1 Includes admin istrat ive expenses paid out of plan assets of $1 mill ion (2021: $1 m ill ion) 2 Includes various small costs and gains from plan amendments and settlements in India, Kenya, Maurit ius, South Korea and Sr i Lanka 3 The actual return on the UK Fund assets was a loss of $452 mill ion and on overseas plan assets was a loss of $82 m ill ion 2021 Funded plans Unfunded plans UK Fund $mill ion Overseas plans $mill ion Post-retirement medical $mill ion Other $mill ion Total $mill ion 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 il it ies 27 29 – 4 60 Total charge to profit before deduction of tax 1 53 – 8 62 Net gains on plan assets 3 (6) (65) – – (71) Gains on liab il it ies (87) (10) (2) (9) (108) Total gains recognised directly in statement of comprehensive income before tax (93) (75) (2) (9) (179) Deferred taxation – 17 – – 17 Total gains after tax (93) (58) (2) (9) (162) 1 Includes admin istrat ive expenses paid out of plan assets of $1 mill ion (2020: $2 m ill ion) 2 Includes various small costs and gains from plan amendments and settlements in India, Kenya, South Korea and Sri Lanka 3 The actual return on the UK Fund assets was a gain of $32 mill ion and on overseas plan assets was a ga in of $92 mill ion Movement in the defined benefit pension plans and post-retirement medical defic it dur ing the year comprise: Funded plans Unfunded plans UK Fund $mill ion Overseas plans $mill ion Post-retirement medical $mill ion Other $mill ion Total $mill ion Surplus/(deficit) at January 2022 88 (44) (13) (223) (192) Contribut ions – 67 1 12 80 Current service cost 1 – (47) – (6) (53) Past service cost and curtailments – (2) – – (2) Settlement costs and transfers impact – – – – – Net interest on the net defined benefit asset/liab il ity 1 1 – (5) (3) Actuarial(losses)/gains (33) 30 2 42 41 Assets held for sale 3 – (4) – 2 (2) Exchange rate adjustment (8) – – 11 3 Surplus/(deficit) at 31 December 2022² 48 1 (10) (167) (128) 1 Includes admin istrat ive expenses paid out of plan assets of $1 mill ion (2021: $1 m ill ion) 2 The deficit total of $128 m ill ion is made up of plans in defic it of $248 m ill ion (2021: $355 m ill ion) net of plans in surplus with assets totalling $120 mill ion (2021: $163 mill ion) 3 Assets held for sale includes funded and unfunded plans in Cameroon, Cote D’Ivoire, Jordan and Zimbabwe ![]() 432 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 30. Retirement benefit obligat ions continued Funded plans Unfunded plans UK Fund $mill ion Overseas plans $mill ion Post-retirement medical $mill ion Other $mill ion Total $mill ion (Deficit)/surplus at January 2021 (48) (124) (16) (246) (434) Contribut ions 45 58 1 18 122 Current service cost 1 – (55) – (9) (64) Past service cost and curtailments – 1 – 4 5 Settlement costs and transfers impact – 3 – 1 4 Net interest on the net defined benefit asset/liab il ity (1) (2) – (4) (7) Actuarial gains 93 75 2 9 179 Adjustment for Indonesia scheme – – – – – Exchange rate adjustment (1) – – 4 3 Surplus/(deficit) at 31 December 2021 2 88 (44) (13) (223) (192) 1 Includes admin istrat ive expenses paid out of plan assets of $1 mill ion (2020: $2 m ill ion) 2 The deficit total of $192 m ill ion is made up of plans in defic it of $355 m ill ion (2020: $476 m ill ion) net of plans in surplus with assets totalling $163 mill ion (2020: $42 mill ion) The Group’s expected contribut ion to its defined benefit pension plans in 2023 is $61 mill ion. 2022 2021 Assets $mill ion Obligat ions $mill ion Total $mill ion Assets $mill ion Obligat ions $mill ion Total $mill ion At 1 January 2022 2,942 (3,134) (192) 2,957 (3,391) (434) Contribut ions 1 81 (1) 80 123 (1) 122 Current service cost 2 – (53) (53) – (64) (64) Past service cost and curtailments – (2) (2) – 5 5 Settlement costs & impact of transfers 3 (5) 5 – 10 (6) 4 Interest cost on pension plan liab il it ies – (69) (69) – (60) (60) Interest income on pension plan assets 66 – 66 53 – 53 Benefits paid out 2 (176) 176 – (220) 220 – Actuarial (losses)/gains 4 (599) 640 41 71 108 179 Assets held for sale (18) 16 (2) – – – Exchange rate adjustment (287) 290 3 (52) 55 3 At 31 December 2022 2,004 (2,132) (128) 2,942 (3,134) (192) 1 Includes employee contribut ions of $1 m ill ion (2021: $1 m ill ion) 2 Includes admin istrat ive expenses paid out of plan assets of $1 mill ion (2021: $1 m ill ion) 3 Impact of settlements relates to the buyout of a pension plan in Switzerland which was agreed in December. 4 Actuarial gain on obligat ion compr ises of $708 mill ion ga in (2021: $108 mill ion ga in) from financ ial assumpt ion changes, $9 mill ion ga in (2021: $3 mill ion ga in) from demographic assumption changes and $77 mill ion loss (2021: $3 m ill ion loss) from exper ience ![]() 433 Standard Chartered – Annual Report 2022 Financ ial 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 2023 in respect of 2022 performance, which vest in 2024-2026, is recognised as an expense over the period from 1 January 2022 to the vesting dates in 2024-2026. 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 ions (for example, profitabil ity 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 ial opt ion pric ing model. Non-market vest ing condit ions 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 ion of or ig inal est imates, if any, in the income statement and a corresponding adjustment to equity over the remain ing vest ing period. Forfeitures prior to vesting attributable to factors other than the failure to satisfy service condit ions and non-market vest ing condit ions are treated as a cancellat ion and the remain ing unamort ised 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 il ity recognised on the balance sheet for all unpaid amounts, with any changes in fair value charged or credited to staff costs in the income statement until the awards are exercised. Where forfeitures occur prior to vesting that are attributable to factors other than a failure to satisfy service condit ions or market-based performance cond it ions, the cumulat ive charge incurred up to the date of forfeiture is credited to the income statement. Any revaluation related to cash-settled awards is recorded as an amount due from subsid iary undertakings. Other accounting estimates and judgements Share-based payments involve judgement and estimat ion uncerta inty in determin ing the expenses and carry ing values of share awards at the balance sheet date. • LTIP awards are determined using an estimat ion of the probab il ity of meet ing certain metrics over a three-year performance period using the Monte Carlo simulat ion model. • Deferred shares and restricted shares are determined using an estimat ion of expected d iv idends. • The 2013 Sharesave Plan valuation is determined using a binom ial opt ion-pric ing model. The Group operates a number of share-based arrangements for its executive directors and employees. Details of the share- based payment charge are set out below. 2022¹ 2021¹ Cash $mill ion Equity $mill ion Total $mill ion Cash $mill ion Equity $mill ion Total $mill ion Deferred share awards 16 92 108 9 81 90 Other share awards 20 71 91 10 67 77 Total share-based payments 36 163 199 19 148 167 1 No 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 to employees and former employees of the Group, includ ing d irectors and former executive directors: • Long Term Incentive Plan (LTIP) awards: granted with vesting subject to performance measures. Performance measures attached to awards granted previously include: relative total shareholder return (TSR); return on tangible equity (RoTE) (with a Common Equity Tier 1 (CET1) underpin); and strategic measures. Each measure is assessed independently over a three-year period. LTIP awards have an ind iv idual conduct gateway requirement that results in the award lapsing if not met • Deferred awards are used to deliver the deferred portion of variable remuneration, in line with both market practice and regulatory requirements. These awards vest in instalments on anniversar ies of the award date spec if ied at the t ime of grant. Deferred awards are not subject to any plan lim it. Th is enables the Group to meet regulatory requirements relating to deferral levels, and is in line with market practice ![]() 434 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 31. Share-based payments continued • Restricted share awards, made outside of the annual performance process as replacement buy-out awards to new jo iners who forfeit awards on leaving their previous employers, vest in instalments on the anniversar ies of the award date spec if ied at the time of grant. This enables the Group to meet regulatory requirements relating to buy-outs, and is in line with market practice. In line with sim ilar plans operated by our compet itors, restricted share awards are not subject to an annual lim it 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 ing l ife of the 2021 Plan during which new awards can be made is nine years. The 2011 Plan has expired and no further awards will be granted under this plan. Valuation – LTIP awards The vesting of awards granted in both 2022 and 2021 is subject to relative TSR performance measures, achievement of a strategic scorecard and satisfact ion of RoTE (subject to a cap ital CET1 underpin). The vesting of awards also have addit ional condit ions under strateg ic measures related to targets set for sustainab il ity linked to business strategy. The fair value of the TSR component is calculated using the probabil ity of meet ing the measures over a three-year performance period, using a Monte Carlo simulat ion 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 idend equ ivalents accrue for the LTIP awards made in 2022 or 2021 and the fair value takes this into account, calculated by reference to market consensus div idend y ield. 2022 2021 Grant date 14–March 15–March Share price at grant date (£) 4.88 4.9 Vesting period (years) 3–Jul 3–Jul Expected div ided y ield (%) 3.4 3.4 Fair value (RoTE) (£) 1.24, 1.20 1.25, 1.20 Fair value (TSR) (£) 0.70, 0.68 0.72, 0.71 Fair value (Strategic) (£) 1.65, 1.60 1.66, 1.60 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 idends. For awards granted to mater ial risk takers in 2022, the fair value of awards takes into account the lack of div idend equ ivalents, calculated by reference to market consensus div idend y ield. Deferred share awards Grant date 2022 09 November 20 June 14 March Share price at grant date (£) 5.62 6.04 4.88 Vesting period (years) Expected div idend y ield (%) Fair value (£) Expected div idend y ield (%) Fair value (£) Expected div idend y ield (%) Fair value (£) 1-3 years N/A 5.62 N/A 6.04 N/A 4.88 1-5 years 3.4 5.17 3.4, 3.4 5.56, 5.56 N/A, 3.4, 3.4, 3.4 4.88, 4.48, 4.41, 4.34 3-7 years – – – – 3.4,3.4,3.4 4.48, 4.13, 3.99 Grant date 2021 21 June 15 March Share price at grant date (£) 4.69 4.90 Vesting period (years) Expected div idend y ield (%) Fair value (£) Expected div idend y ield (%) 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 ![]() 435 Standard Chartered – Annual Report 2022 Financ ial statements 31. Share-based payments continued Other restricted share awards Grant date 2022 28-Nov 09-Nov 20-Jun 14-Mar Share price at grant date (£) 5.90 5.62 6.04 4.88 Vesting period (years) Expected div idend yield (%) Fair value (£) Expected div idend yield (%) Fair value (£) Expected div idend yield (%) Fair value (£) Expected div idend yield (%) Fair value (£) 4 months 3.4 5.56 1 year 3.4 5.71 3.4 5.44 3.4 5.84 3.4 4.72 1.4 years 3.4 5.38 3.4 3.4 2 years 3.4 5.52 3.4 5.26 3.4 5.65 3.4 4.56 2.4 years 3.4 5.2 3.4 3.4 3 years 3.4 5.34 3.4 5.08 3.4 5.46 3.4 4.41 4 years 3.4 5.16 3.4 4.92 3.4 5.28 3.4 4.27 5 years 3.4 4.99 3.4 5.11 3.4 4.13 6 years 3.4 3.99 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 idend yield (%) Fair value (£) Expected div idend yield (%) Fair value (£) Expected div idend 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 3.4 4.43 4 years 3.4 3.82 3.4 4.10 3.4 4.29 5 years 3.4 3.70 – – – – All Employee Sharesave Plans 2013 Sharesave Plan Under the 2013 Sharesave Plan, employees may open a savings contract. Employees can save up to £250 per month over three years to purchase ordinary shares in the Company at a discount of up to 20 per cent on the share price at the date of inv itat ion (the ‘option exercise price’), after which they have a period of six months to exercise the option. There are no performance measures attached to options granted under the 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 ies law and regulatory restrict ions. In these countr ies, where possible, the Group offers an equivalent cash-based alternative to its employees. The 2013 Sharesave Plan was approved by shareholders in May 2013, and expires in May 2023. A new Sharesave plan will be taken to shareholders for approval at the Annual General Meeting in May 2023. Valuation – Sharesave: Options under the Sharesave plans are valued using a binom ial opt ion-pric ing model. The same fa ir value is applied to all employees includ ing execut ive directors. The fair value per option granted and the assumptions used in the calculation are as follows: All Employee Sharesave Plan (Sharesave) 2022 2021 Grant date 28 November 30 September Share price at grant date (£) 5.80 4.37 Exercise price (£) 4.23 3.67 Vesting period (years) 3 3 Expected volatil ity (%) 39.3 35.1 Expected option life (years) 3.33 3.33 Risk-free rate (%) 3.21 0.42 Expected div idend y ield (%) 3.4 3.4 Fair value (£) 2.08 1.11 The expected volatil ity is based on histor ical volat il ity over the last three years, or three years pr ior 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 idend y ield is calculated by reference to market consensus div idend y ield. ![]() 436 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 31. Share-based payments continued Lim its 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 ionary 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 ing of Secur it ies on the Stock Exchange of Hong Kong. Deta ils are set out in the market announcement made on 5 May 2021. Reconcil iat ion of share award movements for the year to 31 December 2022 2011 Plan 1 Sharesave Weighted average Sharesave exercise price (£) LTIP Deferred / Restricted shares Outstanding at 1 January 2022 11,627,751 39,718,654 16,897,075 3.95 Granted 2,3 3,066,288 25,037,706 5,777,197 – Lapsed (2,927,828) (1,121,849) (2,700,678) 4.29 Exercised (426,260) (17,185,471) (2,864,075) 5.03 Outstanding at 31 December 2022 11,339,951 46,449,040 17,109,519 3.81 Total number of securit ies ava ilable for issue under the plan 11,339,951 46,449,040 17,109,519 Percentage of the issued shares this represents as at 31 December 2022 0.39 1.60 0.59 3.81 Exercisable as at 31 December 2022 – 1,191,693 1,699,772 4.96 Range of exercise prices (£)³ – – 3.14 – 5.13 – Intrins ic value of vested but not exerc ised options ($ mill ion) 0.02 8.93 2.59 Weighted average contractual remain ing l ife (years) 7.88 8.25 2.27 Weighted average share price for awards exercised during the period (£) 5.09 4.93 5.94 1 Granted under the 2021 Plan and 2011 Plan. Employees do not contribute to the cost of these awards. 2 3,048,826 (LTIP) granted on 14 March 2022, 14,989 (LTIP) granted as a notional div idend on 1 March 2022, 2,473 (LTIP) granted as a not ional div idend on 8 August 2022, 23,434,127 (Deferred/Restricted shares) granted on 14 March 2022, 77,479 (Deferred/Restricted shares) granted as a notional div idend on 1 March 2022, 584,322 (DRSA/RSA) granted on 20 June 2022, 43,918 (Deferred/Restricted shares) granted as a notional div idend on 8 August 2022, 771,103 (Deferred/Restr icted shares) granted on 9 November 2022, 126,757 (Deferred/Restricted shares) granted on 28 November 2022 under the 2021 Plan. 5,777,197 (Sharesave) granted on 28 November 2022 under the 2013 Sharesave Plan. 3 For Sharesave granted in 2022 the exercise price is £4.23 per share, a 20% discount from the closing price on 1 November 2022. The closing price on 1 November 2022 was £5.282. ![]() 437 Standard Chartered – Annual Report 2022 Financ ial statements 31. Share-based payments continued Reconcil iat ion of share award movements for the year to 31 December 2021 2011 Plan 1 Sharesave Weighted average Sharesave exercise price (£) LTIP Deferred/ Restricted shares Outstanding at 1 January 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 Total number of securit ies ava ilable for 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 ic value of vested but not exerc ised options ($ mill ion) 0.02 10.33 0.38 Weighted average contractual remain ing l ife (years) 7.85 8.12 2.18 Weighted average share price for awards exercised during the period (£) 4.97 4.89 4.66 1 Employees do not contribute towards the cost of these awards 2 16,704,511 (DRSA/RSA) granted on 15 March 2021, 94,954 (DRSA/RSA) granted as notional div idend on 01 March 2021, 4,023,843 (LTIP) granted on 15 March 2021, 10,954 (LTIP) granted as notional div idend on 01 March 2021, 197,111 (DRSA/RSA) granted on 21 June 2021. 34,606 (DRSA/RSA) granted as not ional div idend on 13 August 2021, 3,274 (LTIP) granted as notional div idend 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 idends were granted under the 2011 Plan. Sharesave opt ions granted in 2021 were granted under the 2013 Sharesave Plan 3 For Sharesave 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 of £4.578 32. Investments in subsid iary undertak ings, jo int ventures and assoc iates Accounting policy Subsid iar ies Subsid iar ies are all entit ies, includ ing structured ent it ies, wh ich 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 ity to affect those returns through its power over the investee. The assessment of power is based on the Group’s practical abil ity to d irect the relevant activ it ies 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 iar ies 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 iary rema ins, this is remeasured to its fair value and the change in carrying amount is recognised in the income statement. Associates and jo int arrangements Joint arrangements are where two or more parties either have rights to the assets, and obligat ions of the joint arrangement (joint operat ions), or have rights to the net assets of the jo int arrangement (joint venture). The Group evaluates the contractual terms of joint arrangements to determ ine whether a jo int arrangement is a jo int operat ion or a jo int venture. The Group did not have any contractual interest in jo int operat ions. An associate is an entity over which the Group has sign ificant influence. Investments in associates and jo int ventures are accounted for by the equ ity method of accounting and are in it ially recognised at cost. The Group’s investment in associates and jo int ventures includes goodwill ident ified on acqu is it ion (net of any accumulated impa irment loss). The Group’s share of its associates’ and jo int ventures’ post-acqu is it ion profits or losses is recognised in the income statement, and its share of post-acquis it ion movements in other comprehensive income is recognised in reserves. The cumulative post-acquis it ion movements are adjusted against the carrying amount of the investment. When the Group’s share of losses in an associate or a jo int venture equals or exceeds its interest in the associate, includ ing any other unsecured rece ivables, the Group does not recognise further losses, unless it has incurred obligat ions or made payments on behalf of the assoc iate or joint venture. Unrealised gains and losses on transactions between the Group and its associates and jo int ventures are el im inated to the extent of the Group’s interest in the associates and jo int ventures. At each balance sheet date, the Group assesses whether there is any object ive ev idence of impa irment in the investment in associates and jo int ventures. Such ev idence includes a sign ificant or prolonged decl ine in the fair value of the Group’s investment in an associate or jo int venture below its cost, among other factors. ![]() 438 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 32. Investments in subsid iary undertak ings, jo int ventures and assoc iates continued Sign ificant account ing estimates and judgements The Group applies judgement in determin ing if it has control, jo int control or s ign ificant influence over subsid iar ies, jo int ventures and associates respectively. These judgements are based upon ident ify ing the relevant activ it ies of counterparties, being those activ it ies that sign ificantly affect the ent it ies returns, and further mak ing a decis ion of if the Group has control over those entit ies, joint control, or has s ign ificant influence (being the power to partic ipate in the financ ial and operat ing policy decis ions but not control them). These judgements are at times determined by equity holdings, and the voting rights associated with those holdings. However, further considerat ions includ ing but not l im ited to board seats, adv isory committee members and special ist knowledge of some decis ion-makers are also taken into account. Further judgement is required when determin ing 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 ion of other shareholders. Impairment testing of investments in associates and jo int ventures, and on a Company level investments in subsid iar ies is performed if there is a possible ind icator of impa irment. Judgement is used to determine if there is object ive ev idence of impa irment. Objective ev idence 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 ial d iff iculty, or breaches of contracts/regulatory fines of the associate or jo int venture. Further judgement is required when consider ing broader ind icators of impa irment such as losses of active markets or ratings downgrades across key markets in which the associate or jo int venture operate in. Impairment testing is based on estimates includ ing forecast ing 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 ion of future cash flows and the level to which they are discounted is inherently uncertain and requires sign ificant judgement. Business combinat ions The acquis it ion method of accounting is used to account for the acquis it ion of subsid iar ies by the Group. The cost of an acquis it ion is measured as the fair value of the assets given, equity instruments issued and liab il it ies incurred or assumed at the date of exchange, together with the fair value of any contingent considerat ion payable. The excess of the cost of acquis it ion over the fair value of the Group’s share of the ident ifiable net assets and cont ingent liab il it ies acqu ired is recorded as goodwill (see Note 17 for details on goodwill recognised by the Group). If the cost of acquis it ion is less than the fair value of the net assets and contingent liab il it ies of the subs id iary acqu ired, the difference is recognised directly in the income statement. Where the fair values of the ident ifiable net assets and cont ingent liab il it ies acqu ired have been determined provis ionally, or where contingent or deferred considerat ion is payable, adjustments aris ing from the ir subsequent final isat ion are not reflected in the income statement if (i) they arise with in 12 months of the acqu is it ion date (or relate to acquis it ions completed before 1 January 2014) and (i i) the adjustments ar ise from better informat ion about cond it ions ex ist ing at the acqu is it ion date (measurement period adjustments). Such adjustments are applied as at the date of acquis it ion 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 ion not class if ied as financial instruments, which are accounted for in accordance with the appropriate accounting policy, and changes in contingent considerat ion class if ied as equ ity, which is not remeasured. Changes in ownership interest in a subsid iary, wh ich do not result in a loss of control, are treated as transactions between equity holders and are reported in equity. Where a business combinat ion is achieved in stages, the previously held equity interest is remeasured at the acquis it ion date fair value with the resulting gain or loss recognised in the income statement. In the Company’s financial statements, investment in subsid iar ies, associates and jo int ventures are held at cost less impa irment and d iv idends from pre-acqu is it ion 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 inated in the Group accounts. Investments in subsid iary undertak ings 2022 $mill ion 2021 $mill ion As at 1 January 60,429 57,407 Addit ions 1 1,545 4,023 Disposal 2 (999) (1,001) As at 31 December 60,975 60,429 1 Includes internal Addit ional T ier 1 Issuances of $1 bill ion by Standard Chartered Bank, $500 m ill ion by Standard Chartered Bank (Hong Kong) Ltd (2021: Add it ional Tier 1 issuances of $2.7 bill ion by Standard Chartered Bank and $1.3 b ill ion by Standard Chartered Hold ings Lim ited) 2 Redemption of Addit ional T ier1 capital of $1 bill ion by Standard Chartered Bank (2021: Add it ional T ier1 capital of $1 bill ion by Standard Chartered Bank) ![]() 439 Standard Chartered – Annual Report 2022 Financ ial statements 32. Investments in subsid iary undertak ings, jo int ventures and assoc iates continued At 31 December 2022, the princ ipal subs id iary undertak ings, all ind irectly held except for Standard Chartered Bank (Hong Kong) Lim ited, and pr inc ipally engaged in the business of banking and provis ion of other financial serv ices, were as follows: Country and place of incorporation or registrat ion Main areas of operation Group interest in ordinary share capital % Standard Chartered Bank, England and Wales United Kingdom, Middle East, South Asia, Asia Pacif ic, Americas and, through Group companies, Africa 100 Standard Chartered Bank (Hong Kong) Lim ited, Hong Kong Hong Kong 100 Standard Chartered Bank (Singapore) Lim ited, S ingapore Singapore 100 Standard Chartered Bank Korea Lim ited, Korea Korea 100 Standard Chartered Bank (China) Lim ited, Ch ina 1 China 100 Standard Chartered Bank (Taiwan) Lim ited, Ta iwan Taiwan 100 Standard Chartered Bank AG, Germany Germany 100 Standard Chartered Bank Malaysia Berhad, Malaysia Malaysia 100 1 Under PRC law, registered as Standard Chartered Bank (China) Lim ited Country and place of incorporation or registrat ion Main areas of operation Group interest in ordinary share capital % Standard Chartered Bank (Thai) Public Company Lim ited, Thailand Thailand 99.87 Standard Chartered Bank (Pakistan) Lim ited, Pak istan Pakistan 98.99 Standard Chartered Bank Botswana Lim ited, Botswana Botswana 75.83 Standard Chartered Bank Kenya Lim ited, Kenya Kenya 74.32 Standard Chartered Bank Nepal Lim ited, Nepal Nepal 70.21 Standard Chartered Bank Ghana PLC, Ghana Ghana 69.42 Mox Bank Lim ited, Hong Kong Hong Kong 65.98 A complete list of subsid iary undertak ing is included in Note 40. The Group does not have any material non-controlling interest except as listed above, which contribute $(6.2) mill ion (31 December 2021: $17 mill ion) of the (loss)/Profit attr ibutable to non-controlling interest and $261 mill ion (31 December 2021: $298 mill ion) of the equ ity attributable to non-controlling interests While the Group’s subsid iar ies are subject to local statutory capital and liqu id ity requirements in relation to foreign exchange remittance, these restrict ions ar ise in the normal course of business and do not sign ificantly restr ict the Group’s abil ity to access or use assets and settle liab il it ies of the Group. The Group does not have sign ificant restr ict ions on its abil ity to access or use its assets and settle its liab il it ies other than those resulting from the regulatory framework with in wh ich the banking subsid iar ies operate. These frameworks require banking operations to keep certain levels of regulatory capital, liqu id assets, exposure l im its and comply w ith other required ratios. These restrict ions are summar ised below: Regulatory and liqu id ity requirements The Group’s subsid iar ies are required to mainta in m in imum cap ital, leverage ratios, liqu id ity and exposure ratios which therefore restrict the abil ity of these subs id iar ies to distr ibute cash or other assets to the parent company. The subsid iar ies are also required to mainta in balances w ith central banks and other regulatory authorit ies in the countries in which they operate. At 31 December 2022, the total cash and balances with central banks was $58 bill ion (31 December 2021: $73 bill ion) of wh ich $9 bill ion (31 December 2021: $8 b ill ion) is restricted. Statutory requirements The Group’s subsid iar ies are subject to statutory requirements not to make distr ibut ions of capital and unrealised profits to the parent company, generally to mainta in solvency. These requ irements restrict the abil ity of subs id iar ies to remit div idends to the Group. Certain subsid iar ies are also subject to local exchange control regulations which provide for restrict ions on export ing capital from the country other than through normal div idends. ![]() 440 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 32. Investments in subsid iary undertak ings, jo int ventures and assoc iates continued Contractual requirements The encumbered assets in the balance sheet of the Group’s subsid iar ies are not available for transfer around the Group. Encumbered assets are disclosed in Risk review and Capital review (page 236 to 325). Share of profit from investment in associates and jo int ventures compr ises: 2022 $mill ion 2021 $mill ion Loss from investment in jo int ventures (7) (2) Profit from investment in associates 163 198 Total 156 196 Interests in associates and jo int ventures 2022 $mill ion 2021 $mill ion As at 1 January 2,147 2,162 Exchange translation difference (232) 43 Addit ions 26 90 Share of profits 156 196 Div idend rece ived (58) (38) Disposals (1) (16) Impairment¹ (336) (300) Share of FVOCI and Other reserves (79) 10 Other movements 2 8 – As at 31 December 1,631 2,147 1 Other impa irment ma inly relates to the Group’s investment in its associate China Bohai Bank (Bohai) 2 Movement related to CurrencyFair A complete list of the Group’s interest in associates is included in Note 40. The Group’s princ ipal assoc iates are: Associate Nature of activ it ies Main areas of operation Group interest in ordinary share capital % China Bohai Bank Banking China 16.26 CurrencyFair Lim ited Exchange Ireland Banking Ireland 43.42 On the 10th September 2021, The Group, through its subsid iary Standard Chartered UK Hold ings Lim ited completed its investment in CurrencyFair Lim ited, an Ir ish foreign exchange payments platform. The Group purchased CurrencyFair through the contribut ion of its exist ing investment in its jo int venture, Assembly Payments Pte. Lim ited and a cash injection into CurrencyFair of $35 mill ion, wh ich 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 ificant influence over CurrencyFair and as such would equity method account the investment. The transaction will facil itate creat ion of a combined payments and foreign exchange products franchise, combin ing the customer base, staff, expertise and capabil it ies of both CurrencyFair and Assembly Payments. The fair value of considerat ion for the investment was as follows: Considerat ion $mill ion Fair value of the Group’s investment in Assembly Payments 1 36 Cash considerat ion 35 Total considerat ion/ investment in associate 71 1 The fair value of Assembly Payments was determined to be $60 mill ion, of wh ich 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 ion result ing in a profit on disposal of $20 mill ion The Group’s ownership percentage in China Bohai Bank is 16.26%. Although the Group’s investment in China Bohai Bank is less than 20 per cent but it is considered to be an associate because of the sign ificant influence the Group is able to exercise over the management and financ ial and operat ing polic ies. Th is influence is primar ily through board representat ion and the provis ion of techn ical expertise to Bohai. The Group applies the equity method of accounting for investments in associates. ![]() 441 Standard Chartered – Annual Report 2022 Financ ial statements 32. Investments in subsid iary undertak ings, jo int ventures and assoc iates continued Bohai has a statutory year end of 31 December, but publishes its year-end financ ial statements after the Group. As it is impract icable for Boha i to prepare financ ial statements earl ier for use of the Group, the Group recognises its share of Bohai’s earnings on a three-month lag basis. Therefore, the Group recognised its share of Bohai’s profits and movements in other comprehensive income for the 12 months ended 30 September 2022 in the Group’s consolidated statemement of income and consolidated statement of comprehensive income for the year ended 31 December 2022, respectively. There have been no material events after 30 September 2022 which would require adjustments in respect of the share of Bohai’s profits and movements in OCI recognised by the Group for the period ended on 31 December 2022. If the Group did not have sign ificant influence in Bohai, the investment would be carried at fair value rather than the current carrying value. Impairment testing At 31 December 2022, the listed equity value of Bohai is below the carrying amount of the Group‘s investment in associate. As a result, the Group assessed the carrying value of its investment in Bohai for impa irment and concluded that an impa irment loss of $308 mill ion (2021: $300 m ill ion) was requ ired. The revised carrying value of the Group’s investment in Bohai of $1,421 mill ion (2021: $1,917 mill ion) represents the h igher of the value in use and fair value less costs to sell. The financ ial forecasts used for the VIU calculation reflects the current economic condit ions. The reduct ion (compared to 2021) in the recoverable amount of Bohai is primar ily a result of industry challenges and uncertaint ies that may impact profitab il ity, as well as lower net profits reported in Q3 2022 (than in Q3 2021), which is used as a starting point for the VIU calculation. Bohai 2022 $mill ion 2021 $mill ion VIU 1,421 1,917 Carrying amount 1 1,729 2,217 Fair value² 685 1,114 1 The Group’s 16.26% share in the net assets less other equity instruments which the Group does not hold 2 Number of shares held by the Group multipl ied by the quoted share pr ice at 31 December Basis of recoverable amount The impa irment test was performed by compar ing the recoverable amount of Bohai, determined as the higher of VIU and fair value less costs to sell, with its carrying amount. The value in use (‘VIU’) is calculated using a div idend d iscount model (‘DDM’), which estimates the distr ibutable future cash flows to the equity holders, after adjust ing for the regulatory cap ital requirements, for a 5-year period, after which a terminal value (‘TV’) is calculated based on the ‘Gordon Growth’ model. The key assumptions in the VIU are as follows: • Short to medium term project ions are based on management’s best est imates of future profits available to ordinary shareholders and have been determined with reference to the latest published financ ial results and h istor ical performance of Bohai; • The projections use publ icly available informat ion and include normalised performance over the forecast period, inclus ive of: (i) net profit growth assumptions based on China GDP; (i i) ECL assumpt ions using Bohai histor ical ECL and the preva il ing Chinese market challenges and uncertaint ies as a bas is; and (i i i) net interest margin increases from 2024 with reference to third party market interest rate forecasts in China; • The discount rate applied to these cash flows was estimated with reference to transaction and broker data in the local Chinese market, cross checked to the capital asset pric ing model (CAPM), wh ich includes a long term risk-free rate, beta and company risk premium assumptions for Bohai; • A long term growth rate for China is used to extrapolate the expected short to medium term earnings to perpetuity to derive a terminal value; and • An estimat ion of RWAs and RWA growth to determ ine 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 ing requ ired retained earnings over time to meet the target capital rations. The key assumptions used in the VIU calculation: 2022 % 2021 % Pre tax discount rate 13.03 14.83 Forecast profit long term growth rate 4.00 4.75 Long term RWA growth rate 4.00 4.75 Min imum CET 1 rat io¹ 7.50 7.50 1 At 30 September 2022, Bohai’s CET 1 ratio was 8.05% ![]() 442 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 32. Investments in subsid iary undertak ings, jo int ventures and assoc iates continued The sensit iv it ies d isclosed below are for changes to the discount rate, normalised profits and RWA assumptions of Bohai. All these sensit iv ity analyses assume a CET 1 capital requirement of 7.50%, consistent with local legislat ion. The GDP growth assumptions affect the forecast profits and RWA estimates over the short to medium term and in the terminal period, and sensit iv it ies are already d isclosed, thus a separate sensit iv ity has not been included for this input. Carrying amount Pre impa irment $mill ion Base Case Sensit iv it ies – 2022 VIU $mill ion Headroom $mill ion Pre tax discount rate GDP Discount rate Forecast profit 1 RWA Combined Combined RWA -10% RWA +10% +1% -1% +10% -10% +10% -10% CF -10% CF +10% Impairment $mill ion Impairment $mill ion Impairment $mill ion Impairment $mill ion Impairment $mill ion Impairment $mill ion Impairment $mill ion Impairment $mill ion 1,729 1,421 (308) 13.03% 4.00% (504) (48) (67) (552) (578) (40) (283) (336) 1 Results include changes to NIM and addit ional ECL overlay assumpt ions, which are not necessarily linear To improve the headroom to zero would require, on the basis of changing ind iv idual assumptions an increase in forecast profits by 12.76 per cent, decrease in discount rate by 1.15 per cent and a decrease in RWA by 11.50 per cent. The following table sets out the summarised financ ial statements of Ch ina Bohai Bank prior to the Group’s share of the associates being applied: 30 Sep 2022 $mill ion 30 Sep 2021 $mill ion Total assets 236,396 250,951 Total liab il it ies 220,662 234,196 Operating income 1 3,958 4,840 Net profit 1 1,186 1,230 Other comprehensive income 1 (457) 44 1 This represents twelve months of earnings (1 October to 30 September) ![]() 443 Standard Chartered – Annual Report 2022 Financ ial statements 33. Structured entit ies Accounting policy A structured entity is an entity that has been designed so that voting or sim ilar r ights are not the dominant factor in decid ing who controls the entity. Contractual arrangements determine the rights and therefore relevant activ it ies of the structured entity. Structured entit ies are generally created to ach ieve a narrow and well-defined object ive w ith restrict ions around the ir activ it ies. Structured entit ies are consol idated when the substance of the relationsh ip between the Group and the structured entity ind icates the Group has power over the contractual relevant act iv it ies of the structured entity, is exposed to variable returns, and can use that power to affect the variable return exposure. In determin ing whether to consol idate a structured entity to which assets have been transferred, the Group takes into account its abil ity to d irect the relevant activ it ies of the structured entity. These relevant activ it ies are generally evidenced through a unilateral right to liqu idate the structured ent ity, investment in a substantial proportion of the securit ies issued by the structured entity or where the Group holds specif ic subord inate securit ies that embody certa in controlling rights. The Group may further consider relevant activ it ies embedded with in contractual arrangements such as call opt ions which give the practical abil ity to d irect the entity, special relationsh ips between the structured ent ity and investors, and if a single investor has a large exposure to variable returns of the structured entity. Judgement is required in determin ing control over structured ent it ies. The purpose and des ign of the entity is considered, along with a determinat ion of what the relevant act iv it ies 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 ipal 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 ies, specif ically if market condit ions have an effect on the var iable return exposure of different investors. The Group has involvement with both consolidated and unconsolidated structured entit ies, wh ich may be established by the Group as a sponsor or by a third-party. Interests in consolidated structured entit ies: A structured entity is consolidated into the Group’s financ ial statements where the Group controls the structured entity, as per the determinat ion in the accounting policy above. The following table presents the Group’s interests in consolidated structured entit ies. 2022 $mill ion 2021 $mill ion Aircraft and ship leasing 3,531 3,450 Princ ipal and other structured finance 330 229 Total 3,861 3,679 Interests in unconsolidated structured entit ies: Unconsolidated structured entit ies are all structured ent it ies that are not controlled by the Group. The Group enters into transactions with unconsolidated structured entit ies in the normal course of business to facil itate customer transact ions and for specif ic investment opportunit ies. Th is is predominantly with in the CCIB business segment. An interest in a structured entity is contractual or non-contractual involvement which creates variab il ity of the returns of the Group aris ing from the performance of the structured ent ity. ![]() 444 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 33. Structured entit ies continued The table below presents the carrying amount of the assets recognised in the financ ial statements relat ing to interests held in unconsolidated structured entit ies, the max imum exposure to loss relating to those interests and the total assets of the structured entit ies. Max imum exposure to loss is primar ily l im ited to the carry ing amount of the Group’s on-balance sheet exposure to the structured entity. For derivat ives, the max imum 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. 2022¹ 2021 (Restated)² Asset- backed securit ies $mill ion Corporate Lending & Structured Finance $mill ion Princ ipal Finance funds $mill ion Other activ it ies $mill ion Total $mill ion Asset- backed securit ies $mill ion Corporate Lending & Structured Finance¹ $mill ion Princ ipal Finance funds $mill ion Other activ it ies $mill ion Total $mill ion Group’s interest - assets Financ ial assets held at fa ir value through profit or loss 851 – 136 – 987 1,144 – 128 35 1,307 Loans and advances/Investment securit ies at amort ised cost 18,696 35,928 – 246 54,870 13,635 34,114 – – 47,749 Investment securit ies (fa ir value through other comprehensive income) 2,248 – – – 2,248 2,221 – – – 2,221 Other assets – – 8 – 8 – – 10 – 10 Total assets 21,795 35,928 144 246 58,113 17,000 34,114 138 35 51,287 Off-balance sheet – 18,385 93 – 18,478 42 17,773 102 – 17,917 Group’s maximum exposure to loss 21,795 54,313 237 246 76,591 17,042 51,887 240 35 69,204 Total assets of structured entit ies 177,194 53,657 291 1,828 232,970 241,580 48,833 1,014 37 291,465 1 As at 31 December 2022 Corporate Lending & Structured Finance includes $14,261 mill ion (2021: $15,549 m ill ion) related to Loans and advances/ investment securit ies at amort ized cost with in Structured F inance and $21,667 mill ion (2021: $18,565 m ill ion) w ith in Corporate Lend ing; Group’s maximum exposure to loss with in Structured F inance of $22,971 mill ion (2021: $24,146 m ill ion) and $31,342 m ill ion (2021: $27,741 m ill ion) w ith in Corporate Lend ing; and Total assets of structured entit ies w ith in Structured F inance of $35,732 mill ion (2021: $31,683 m ill ion) and $17,925 m ill ion (2021: $17,149 m ill ion) w ith in Corporate Lend ing 2 The 2021 have been restated to reflect the addit ion of the Group’s interest in certain entit ies reported on the Group’s balance sheet but not prev iously disclosed as unconsolidated structured entit ies, assoc iated off-balance sheet exposure, maximum exposure to loss, and the total assets of structured entit ies. The restatement results in increases to the following: Loans and advances/investment securit ies at amort ized cost with in Structured F inance of $12,083 mill ion and Corporate Lending of $18,565 mill ion; Group’s max imum exposure to loss with in Structured F inance of $19,545 mill ion and Corporate Lend ing of $27,741 mill ion; Off-balance sheet with in Structured F inance of $7,462 mill ion and Corporate Lend ing of $9,176 mill ion; and Total assets of structured ent it ies w ith in Structured F inance of $17,728 mill ion and Corporate Lend ing of $17,149 mill ion The main types of activ it ies for which the Group util ises unconsol idated structured entit ies cover synthet ic credit default swaps for managed investment funds (includ ing spec ial ised Pr inc ipal F inance funds), portfolio management purposes, structured finance and asset-backed securit ies. These are deta iled as follows: • Asset-backed securit ies (ABS): The Group also has investments in asset-backed securit ies issued by third-party sponsored and managed structured entit ies. For the purpose of market mak ing and at the discret ion of ABS trad ing desk, the Group may hold an immater ial amount of debt secur it ies from structured ent it ies or ig inated by cred it portfolio management. This is disclosed in the ABS column above. • Portfolio management (Group sponsored entit ies): For the purposes of portfol io management, the Group purchased credit protection via synthetic credit default swaps from note-issu ing structured ent it ies. Th is 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 ies. The Group cont inues to own or hold all of the risks and returns relating to these assets. The credit protection obtained from the regulatory-compliant securit isat ion only serves to protect the Group against losses upon the occurrence of elig ible cred it 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 ies, but may hold an ins ign if icant 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 ies to collateral ise the structured entit ies swap obl igat ions to the Group, and to repay the princ ipal to investors at maturity. The structured entit ies re imburse the Group on actual losses incurred, through the use of the cash collateral or realisat ion of the collateral secur ity. Correspondingly, the structured entit ies wr ite down the notes issued by an equal amount of the losses incurred, in reverse order of senior ity. All fund ing is committed for the life of these vehicles and the Group has no ind irect exposure in respect of the vehicles’ liqu id ity posit ion. The Group has reputat ional 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 ies have Standard Chartered brand ing. • Corporate Lending & Structured finance: Corporate Lending comprises secured lending in the normal course of business to third parties through structured entit ies. Structured finance comprises interests in transactions that the Group or, more usually, a customer has structured, using one or more structured entit ies, wh ich provide benefic ial arrangements for customers. The Group’s exposure pr imar ily represents the provis ion of fund ing to these structures as a financ ial intermed iary, for wh ich it receives a lender’s return. The transactions largely relate to real estate financing and the prov is ion of a ircraft leasing and ship finance. • Princ ipal finance fund: The Group’s exposure to Princ ipal F inance Funds represents committed or invested capital in unleveraged investment funds, primar ily invest ing in pan-Asian infrastructure, real estate and private equity. • Other activ it ies: Other activ it ies include structured entit ies created to support marg in financ ing transact ions, the refinanc ing of exist ing cred it and debt facil it ies, as well as setting up of bankruptcy remote structured entit ies. ![]() 445 Standard Chartered – Annual Report 2022 Financ ial statements 34. Cash flow statement Adjustment for non-cash items and other adjustments included with in income statement Group Company 2022 $mill ion 2021 $mill ion 2022 $mill ion 2021 $mill ion Amortisat ion of d iscounts and premiums of investment securit ies 237 9 – – Interest expense on subordinated liab il it ies 570 497 615 551 Interest expense on senior debt securit ies in issue 794 528 696 522 Other non-cash items (12) (113) 301 (30) Pension costs for defined benefit schemes 58 62 – – Share-based payment costs 199 167 – – Impairment losses on loans and advances and other credit risk provis ions 836 254 – – Div idend income from subsid iar ies – – (1,047) (2,244) Other impa irment 439 372 – – Gain on disposal of property, plant and equipment (62) (93) – – Loss/(gain) on disposal of FVOCI and AMCST financ ial assets 190 (179) – – Depreciat ion and amort isat ion 1,186 1,181 – – Fair value changes through profit or loss (365) (48) – – Foreign currency revaluation (365) (337) – – Profit from associates and jo int ventures (156) (196) – – Total 3,549 2,104 565 (1,201) Change in operating assets Group Company 2022 $mill ion 2021 $mill ion 2022 $mill ion 2021 $mill ion (Increase)/decrease in derivat ive financial instruments (11,873) 16,527 259 630 Decrease/(increase) in debt securit ies, treasury b ills and equity shares held at fair value through profit or loss 9,888 (7,707) 289 (2,864) Decrease/(increase) in loans and advances to banks and customers 26 (41,066) – – Net increase in prepayments and accrued income (1,056) (84) – – Net decrease/(increase) in other assets 2,470 (5,574) (806) (3,132) Total (545) (37,904) (258) (5,366) Change in operating liab il it ies Group Company 2022 $mill ion 2021¹ $mill ion 2022 $mill ion 2021¹ $mill ion Increase/(decrease) in derivat ive financial instruments 17,145 (17,664) 1,004 – Net (decrease)/increase in deposits from banks, customer accounts, debt securit ies in issue, Hong Kong notes in circulat ion and short posit ions (9,259) 66,805 106 3,977 Increase/(decrease) in accruals and deferred income 1,381 176 4 (15) Net decrease in other liab il it ies (481) (3,363) (2,080) (839) Total 8,786 45,954 (966) 3,123 1 Prior period has been restated ![]() 446 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 34. Cash flow statement continued Disclosures Group Company 2022 $mill ion 2021 $mill ion 2022 $mill ion 2021 $mill ion Subordinated debt (includ ing accrued interest): Opening balance 16,885 16,892 16,395 16,301 Proceeds from the issue 750 1,137 750 1,137 Interest paid (667) (580) (619) (576) Repayment (1,848) (546) (1,800) (546) Foreign exchange movements (338) (201) (337) (201) Fair value changes (1,502) (401) (1,098) (305) Accrued interest and others 648 584 604 585 Closing balance 13,928 16,885 13,895 16,395 Senior debt (includ ing accrued interest): Opening balance 29,904 29,990 16,981 20,889 Proceeds from the issue 11,902 10,944 1,500 2,250 Interest paid (845) (690) (506) (504) Repayment (7,838) (9,945) (2,980) (5,408) Foreign exchange movements (729) (678) (431) (366) Fair value changes (1,051) (402) (1,014) (372) Accrued Interest and Others 945 685 530 492 Closing balance 32,288 29,904 14,080 16,981 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 it ion, includ ing treasury b ills and other elig ible b ills, loans and advances to banks, and short-term government securit ies. The following balances with less than three months’ maturity from the date of acquis it ion have been ident ified by the Group as being cash and cash equivalents. Group Company 2022 $mill ion 2021 $mill ion 2022 $mill ion 2021 $mill ion Cash and balances at central banks 58,263 72,663 – – Less: restricted balances (9,173) (8,152) – – Treasury bills and other elig ible b ills 17,936 9,132 – – Loans and advances to banks 20,558 24,788 – – Trading securit ies 1,135 1,174 – – Amounts owed by and due to subsid iary undertak ings – – 7,417 11,336 Total 88,719 99,605 7,417 11,336 ![]() 447 Standard Chartered – Annual Report 2022 Financ ial statements 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 ional informat ion for key management compensat ion. Key management comprises non-executive directors, executive directors of Standard Chartered PLC, the Court directors of Standard Chartered Bank and the persons discharg ing manager ial responsib il it ies (PDMR) of Standard Chartered PLC. 2022 $mill ion 2021 $mill ion Salaries, allowances and benefits in kind 39 40 Share-based payments 26 28 Bonuses paid or receivable 4 4 Terminat ion benefits 1 - Total 70 72 Transactions with directors and others At 31 December 2022, the total amounts to be disclosed under the Companies Act 2006 (the Act) and the List ing Rules of the Hong Kong Stock Exchange Lim ited (Hong Kong L ist ing Rules) about loans to d irectors were as follows: 2022 2021 Number $mill ion Number $mill ion Directors¹ 3 – 3 – 1 Outstanding loan balances were below $50,000 The loan transactions provided to the directors of Standard Chartered PLC were a connected transaction under Chapter 14A of the Hong Kong List ing Rules. It was fully exempt as financial ass istance 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 2022, Standard Chartered Bank had in place a charge over $89 mill ion (2021: $100 m ill ion) 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 ing Author ity or the Hong Kong List ing Rules. Details of non-revenue transactions with Temasek Holdings (Private) Lim ited are set out on page 222. Company The Company has received $1,012 mill ion (2021: $907 m ill ion) of net interest income from its subsid iar ies. 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. 2022 2021 Standard Chartered Bank $mill ion Standard Chartered Bank (Hong Kong) Lim ited $mill ion Others 1 $mill ion Standard Chartered Bank $mill ion Standard Chartered Bank (Hong Kong) Lim ited $mill ion Others 1 $mill ion Assets Due from subsid iar ies 6,860 141 255 10,814 82 279 Derivat ive financial instruments 47 – – 266 54 – Debt securit ies 18,787 4,469 526 19,047 4,852 1,173 Total assets 25,694 4,610 781 30,127 4,988 1,452 Liab il it ies Due to subsid iar ies 2 – – – – – Derivat ive financial instruments 1,283 61 – 339 – – Total liab il it ies 1,285 61 – 339 – – 1 Others include Standard Chartered Bank (Singapore) Lim ited, Standard Chartered Hold ings Lim ited and Standard Chartered I H L im ited ![]() 448 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 36. Related party transactions continued Associate and jo int ventures The following transactions with related parties are on an arm’s length basis: 2022 $mill ion 2021 (Restated)¹ $mill ion Assets Loans and advances 20 22 Derivat ive assets 18 2 Total assets 38 24 Liab il it ies Deposits 610 984 Derivat ive l iab il it ies – 1 Other liab il it ies 19 – Total liab il it ies 629 985 Loan commitments and other guarantees² 164 80 1 Prior period has been restated 2 The maximum loan commitments and other guarantees during the period were $164 mill ion (2021: $80 m ill ion) 37. Post balance sheet events On 9 January 2023, Standard Chartered PLC issued $1 bill ion 6.170 per cent F ixed Rate Reset Notes due 2027 and $1.5 bill ion 6.301 per cent Fixed Rate Reset Notes due 2029. The Group announced, on 11 January 2023, the launch of the process to explore alternatives for the future ownership of its aviat ion finance bus iness with in the CCIB bus iness segment. While an auction is now underway, no commitment to a sale existed at 31 December 2022 and, in accordance with IFRS 5, the Group did not meet the requirements to classify the business as ‘held for sale’. While it is not possible to estimate the financ ial effect of a sale at th is stage, as no bids have been received yet, we do not expect to execute it at below our book values. A share buy-back for up to a maximum considerat ion of $1 b ill ion has been declared by the d irectors after 31 December 2022. This will reduce the number of ordinary shares in issue by cancelling the repurchased shares. A final div idend for 2022 of 14 cents per ord inary share was declared by the directors after 31 December 2022. 38. Auditor’s remuneration Auditor’s remuneration is included with in other general adm in istrat ion expenses. The amounts paid by the Group to their princ ipal aud itor, 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 ion of other serv ices. 2022 $mill ion 2021 $mill ion Audit fees for the Group statutory audit 22.2 15.9 Of which fees for the audit of Standard Chartered Bank Group 16.3 11.8 Fees payable to EY for other services provided to the SC PLC Group: Audit of Standard Chartered PLC subsid iar ies 12.8 10.8 Total audit fees 35.0 26.7 Audit-related assurance services 5.5 5.3 Other assurance services 4.3 3.2 Other non-audit services 0.1 0.1 Corporate finance transaction services 0.3 0.6 Total non-audit fees 10.2 9.2 Total fees payable 45.2 35.9 The following is a descript ion of the type of serv ices included with in the categor ies 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 ial statements of the Group and the separate financial statements of Standard Chartered PLC • Audit-related fees consist of fees such as those for services required by law or regulation to be provided by the auditor, reviews of inter im financial informat ion, report ing on regulatory returns, reporting to a regulator on client assets and extended work performed over financial informat ion and controls author ised by those charged with governance • Other assurance services include agreed-upon-procedures in relation to statutory and regulatory fil ings • Corporate finance transaction services are fees payable to Ernst & Young LLP for issu ing comfort letters Expenses incurred in respect of their role as auditor, were reimbursed to EY LLP $0.6 mill ion (2021: $0.2 m ill ion). Such expenses d id not exceed 1% of total fees charged above. ![]() 449 Standard Chartered – Annual Report 2022 Financ ial statements 39. Standard Chartered PLC (Company) Classif icat ion and measurement of financ ial instruments Financ ial assets 2022 2021 Derivat ives held for hedging $mill ion Amortised cost $mill ion Non-trading mandatorily at fair value through profit or loss $mill ion Total $mill ion Derivat ives held for hedging $mill ion Amortised cost $mill ion Non-trading mandatorily at fair value through profit or loss $mill ion Total $mill ion Derivat ives 61 – – 61 320 – – 320 Investment securit ies – 8,423 15,358 1 23,781 – 9,424 15,647 1 25,071 Amounts owed by subsid iary undertakings – 7,417 – 7,417 – 11,336 – 11,336 Total 61 15,840 15,358 31,259 320 20,760 15,647 36,727 1 Standard Chartered Bank, Standard Chartered Bank (Hong Kong) Lim ited, Standard Chartered Bank (Ch ina) Lim ited and Standard Chartered Bank (S ingapore) Lim ited issued Loss Absorbing Capacity (LAC) elig ible debt secur it ies Instruments classif ied as amort ised cost, which include investment securit ies and amounts owed by subs id iary undertak ings, are recorded in stage 1 for the recognit ion of expected cred it losses. Derivat ives held for hedg ing are held at fair value and are classif ied as Level 2 and Level 3 wh ile the counterparty is Standard Chartered Bank and external counterparties. Debt securit ies compr ise corporate securit ies issued by Standard Chartered Bank and have a fair value equal to carrying value of $8,423 mill ion (2021: $9,424 m ill ion). In 2022 and 2021, amounts owed by subsid iary undertak ings have a fair value equal to carrying value. Financ ial l iab il it ies 2022 2021 Derivat ives held for hedging $mill ion Amortised cost $mill ion Designated at fair value through profit or loss $mill ion Total $mill ion Derivat ives held for hedging $mill ion Amortised cost $mill ion Designated at fair value through profit or loss $mill ion Total $mill ion Derivat ives 1,343 – – 1,343 339 – – 339 Debt securit ies in issue – 13,891 10,397 24,288 – 16,809 9,472 26,281 Subordinated liab il it ies and other borrowed funds – 11,239 2,445 13,684 – 13,830 2,332 16,162 Amounts owed to subsid iary undertakings – 2 – 2 – – – – Total 1,343 25,132 12,842 39,317 339 30,639 11,804 42,782 Derivat ives held for hedg ing are held at fair value and are classif ied as Level 2 and Level 3 wh ile the counterparty is Standard Chartered Bank and external counter parties. The fair value of debt securit ies in issue held at amortised cost is $13,611 mill ion (2021: $17,171 m ill ion). The fair value of subordinated liab il it ies and other borrowed funds held at amort ised cost is $10,434 mill ion (2021: $14,569 mill ion). Derivat ive financial instruments Derivat ives 2022 2021 Notional princ ipal amounts $mill ion Assets $mill ion Liab il it ies $mill ion Notional princ ipal amounts $mill ion Assets $mill ion Liab il it ies $mill ion Foreign exchange derivat ive contracts: Forward foreign exchange 9,351 47 61 8,362 54 51 Currency swaps 574 – 71 2,049 – 207 Interest rate derivat ive contracts: Swaps 15,423 – 1,211 14,465 266 81 Credit derivat ive contracts 3,256 14 – – – – Total 28,604 61 1,343 24,876 320 339 ![]() 450 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 39. Standard Chartered PLC (Company) continued Credit risk Maximum exposure to credit risk 2022 $mill ion 2021 $mill ion Derivat ive financial instruments 61 320 Debt securit ies 23,781 25,071 Amounts owed by subsid iary undertak ings 7,417 11,336 Total 31,259 36,727 In 2022 and 2021, amounts owed by subsid iary undertak ings were neither past due nor impa ired; the Company had no ind iv idually impa ired loans. In 2022 and 2021, the Company had no impa ired debt secur it ies. The debt secur it ies held by the Company are issued by Standard Chartered Bank, Standard Chartered Bank (Hong Kong) Lim ited, Standard Chartered Bank (Ch ina) Lim ited and Standard Chartered Bank (Singapore) Lim ited, subs id iary undertak ings with credit ratings of A+. There is no material expected credit loss on these instruments as they are Stage 1 assets, and of a high quality. Liqu id ity risk The following table analyses the residual contractual maturity of the assets and liab il it ies of the Company on a d iscounted basis: 2022 One month or less $mill ion Between one month and three months $mill ion Between three months and six months $mill ion Between six months and nine months $mill ion Between nine months and one year $mill ion Between one year and two years $mill ion Between two years and five years $mill ion More than five years and undated $mill ion Total $mill ion Assets Derivat ive financial instruments 45 – – – – – 16 – 61 Investment securit ies 2,000 – – – – – 5,351 16,430 23,781 Amount owed by subsid iary undertakings 719 1,250 140 – 840 1,523 2,081 864 7,417 Investments in subsid iary undertakings – – – – – – – 60,975 60,975 Other assets – – – – – – – – – Total assets 2,764 1,250 140 – 840 1,523 7,448 78,269 92,234 Liab il it ies Derivat ive financial instruments 77 3 – – – 75 330 858 1,343 Senior debt – – – – – 2,090 14,155 8,043 24,288 Amount owed to subsid iary undertakings – – – – – – – 2 2 Other liab il it ies 175 134 95 14 5 – – – 423 Subordinated liab il it ies and other borrowed funds 2,004 88 13 248 14 1,900 2,078 7,339 13,684 Total liab il it ies 2,256 225 108 262 19 4,065 16,563 16,242 39,740 Net liqu id ity gap 508 1,025 32 (262) 821 (2,542) (9,115) 62,027 52,494 ![]() 451 Standard Chartered – Annual Report 2022 Financ ial statements 39. Standard Chartered PLC (Company) continued 2021 One month or less $mill ion Between one month and three months $mill ion Between three months and six months $mill ion Between six months and nine months $mill ion Between nine months and one year $mill ion Between one year and two years $mill ion Between two years and five years $mill ion More than five years and undated $mill ion Total $mill ion Assets Derivat ive financial instruments 55 1 2 – – 55 104 103 320 Investment securit ies – – – – 960 4,444 2,947 16,720 25,071 Amount owed by subsid iary undertakings 2,335 159 216 305 853 2,349 2,132 2,987 11,336 Investments in subsid iary undertakings – – – – – – – 60,429 60,429 Total assets 2,390 160 218 305 1,813 6,848 5,183 80,239 97,156 Liab il it ies Derivat ive financial instruments 47 – – 4 95 – 117 76 339 Senior debt – – – – – 4,542 11,873 9,866 26,281 Other debt securit ies in issue – – – – – – – – – Amount owed to subsid iary undertakings – – – – – – – – – Other liab il it ies 169 126 83 15 10 – – 59 462 Subordinated liab il it ies and other borrowed funds 1,007 47 15 240 883 2,409 2,470 9,091 16,162 Total liab il it ies 1,223 173 98 259 988 6,951 14,460 19,092 43,244 Net liqu id ity gap 1,167 (13) 120 46 825 (103) (9,277) 61,147 53,912 Financ ial l iab il it ies on an und iscounted basis 2022 One month or less $mill ion Between one month and three months $mill ion Between three months and six months $mill ion Between six months and nine months $mill ion Between nine months and one year $mill ion Between one year and two years $mill ion Between two years and five years $mill ion More than five years and undated $mill ion Total $mill ion Derivat ive financial instruments 77 3 – – – 75 330 858 1,343 Debt securit ies in issue 88 66 262 145 271 2,896 15,676 9,057 28,461 Subordinated liab il it ies and other borrowed funds 2,097 174 33 273 17 2,035 2,552 14,668 21,849 Other liab il it ies 9 15 – – – – – – 24 Total liab il it ies 2,271 258 295 418 288 5,006 18,558 24,583 51,677 2021 One month or less $mill ion Between one month and three months $mill ion Between three months and six months $mill ion Between six months and nine months $mill ion Between nine months and one year $mill ion Between one year and two years $mill ion Between two years and five years $mill ion More than five years and undated $mill ion Total $mill ion Derivat ive financial instruments 47 – – 4 95 – 117 76 339 Debt securit ies in issue 102 30 179 130 196 5,144 13,122 11,019 29,922 Subordinated liab il it ies and other borrowed funds 1,114 134 37 261 917 2,522 2,786 15,376 23,147 Other liab il it ies – – – – – – – 59 59 Total liab il it ies 1,263 164 216 395 1,208 7,666 16,025 26,530 53,467 ![]() 452 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 40. Related undertakings of the Group As at 31 December 2022, 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 iar ies of the Group. Standard Chartered Bank (Hong Kong) Lim ited, Standard Chartered Fund ing (Jersey) Lim ited, Stanchart Nom inees Lim ited, Standard Chartered Hold ings Lim ited and Standard Chartered Nom inees Lim ited are d irectly held subsid iar ies, all other related undertakings are held ind irectly. Unless otherw ise stated, the princ ipal country of operat ion of each subsid iary is the same as its country of incorporation Note 32 details undertakings that have a sign ificant contr ibut ion to the Group’s net profit or net assets. Subsid iary Undertak ings Name and registered address Activ ity Place of incorporation Descript ion of shares Proportion of shares held (%) The following companies have the address of 1 Basinghall Avenue, London, EC2V 5DD, United Kingdom FinVentures UK Lim ited Investment Holding Company United Kingdom $1.00 Ordinary shares 100 Pembroke Aircraft Leasing (UK) Lim ited Leasing Business United Kingdom £1.00 Ordinary shares 100 SC (Secretaries) Lim ited Others United Kingdom £1.00 Ordinary shares 100 SC Transport Leasing 1 LTD 7,8 Leasing Business United Kingdom £1.00 Ordinary shares 100 SC Transport Leasing 2 Lim ited 7,8 Leasing Business United Kingdom £1.00 Ordinary shares 100 SC Ventures Innovation Investment L.P. Investment Holding Company United Kingdom Lim ited Partnersh ip interest 100 SCMB Overseas Lim ited Investment Holding Company United Kingdom £0.10 Ordinary shares 100 Stanchart Nominees Lim ited Nominee Services United Kingdom £1.00 Ordinary shares 100 Standard Chartered Africa Lim ited Investment Holding Company United Kingdom £1.00 Ordinary shares 100 Standard Chartered Bank Banking & Financ ial Services United Kingdom US$0.01 Non-Cumulative Irredeemable Preference 100 US$1.00 Ordinary 100 US$5.00 Non-Cumulative Redeemable Preference 100 Standard Chartered Foundation 1 Charity projects United Kingdom Guarantor 100 Standard Chartered Health Trustee (UK) Lim ited Trustee Services United Kingdom £1.00 Ordinary shares 100 Standard Chartered Holdings Lim ited Investment Holding Company United Kingdom $2.00 Ordinary shares 100 Standard Chartered I H Lim ited Investment Holding Company United Kingdom $1.00 Ordinary shares 100 Standard Chartered Leasing (UK) 3 Lim ited⁹ Leasing Business United Kingdom $1.00 Ordinary shares 100 Standard Chartered Leasing (UK) Lim ited 7,8,9 Leasing Business United Kingdom $1.00 Ordinary shares 100 Standard Chartered NEA Lim ited Investment Holding Company United Kingdom $1.00 Ordinary shares 100 Standard Chartered Nominees Lim ited Nominee Services United Kingdom £1.00 Ordinary shares 100 Standard Chartered Nominees (Private Clients UK) Lim ited Nominee Services United Kingdom $1.00 Ordinary shares 100 Standard Chartered Strategic Investments Lim ited Investment Holding Company United Kingdom $1.00 Ordinary shares 100 Standard Chartered Securit ies (Afr ica) Holdings Lim ited Investment Holding Company United Kingdom $1.00 Ordinary shares 100 Standard Chartered Trustees (UK) Lim ited Trustee Services United Kingdom £1.00 Ordinary shares 100 Standard Chartered UK Holdings Lim ited Investment Holding Company United Kingdom $1.00 Ordinary shares 100 The SC Transport Leasing Partnership 1 Leasing Business United Kingdom Lim ited Partnersh ip interest 100 The SC Transport Leasing Partnership 2 Leasing Business United Kingdom Lim ited Partnersh ip interest 100 The SC Transport Leasing Partnership 3 Leasing Business United Kingdom Lim ited Partnersh ip interest 100 The SC Transport Leasing Partnership 4 Leasing Business United Kingdom Lim ited Partnersh ip interest 100 ![]() 453 Standard Chartered – Annual Report 2022 Financ ial statements Name and registered address Activ ity Place of incorporation Descript ion of shares Proportion of shares held (%) The BW Leasing Partnership 1 LP 1 Leasing Business United Kingdom Lim ited Partnersh ip interest 100 The BW Leasing Partnership 2 LP 1 Leasing Business United Kingdom Lim ited Partnersh ip interest 100 The BW Leasing Partnership 3 LP 1 Leasing Business United Kingdom Lim ited Partnersh ip interest 100 The BW Leasing Partnership 4 LP 1 Leasing Business United Kingdom Lim ited Partnersh ip interest 100 The BW Leasing Partnership 5 LP 1 Leasing Business United Kingdom Lim ited Partnersh ip interest 100 Zodia Markets (UK) Lim ited Banking & Financ ial Services United Kingdom $1.00 Ordinary shares 100 Zodia Markets Holdings Lim ited Banking & Financ ial Services United Kingdom $1.00 Ordinary shares 75.0 The following companies have the address of 2 More London Rivers ide, London SE1 2JT, United Kingdom Bricks (C&K) LP 1 Lim ited Partnersh ip interest United Kingdom Lim ited Partnersh ip interest 100 Bricks (C) LP 1 Lim ited Partnersh ip interest United Kingdom Lim ited Partnersh ip interest 100 Bricks (T) LP 1 Lim ited Partnersh ip interest United Kingdom Lim ited Partnersh ip interest 100 The following companies have the address of 8th Floor, 20 Farringdon Street, London, EC4A 4AB, United Kingdom. SC Ventures G.P. Lim ited Investment Holding Company United Kingdom £1.00 Ordinary shares 100 Assembly Payments UK Ltd Payment Services Provider United Kingdom $1.00 Ordinary shares 100 The following company has the address of 1 Bartholomew Lane, London, EC2N 2AX, United Kingdom Corrasi Covered Bonds LLP Trustee Services United Kingdom Membership Interest 50.0 The following companies have the address of Thomas House, 84 Eccleston Square, London, SW1V 1PX, United Kingdom Zodia Custody Lim ited Custody services United Kingdom $1.00 Ordinary shares 95.1 Zodia Holdings Lim ited Investment holding company United Kingdom $1.00 Ordinary shares 100 The following company has the address of Robert Denholm House, Bletchingly Road, Nutfield, Redhill, RH1 4HW, United Kingdom CurrencyFair (UK) Lim ited Banking & Financ ial Services United Kingdom £1.00 Ordinary shares 100 The following company has the address of 23 De Walden Street, London, W1G 8RW, United Kingdom Shoal Lim ited Dig ital marketplace for sustainable and “green” products. United Kingdom US$1.00 Ordinary 100 The following company has the address of 1 Poultry, London, EC2R 8EJ, United Kingdom Zai Technologies Lim ited Payment Services Provider. United Kingdom £1.00 Ordinary 100 The following company has the address Edifíc io K ilamba, 8º Andar Avenida 4 de Fevereiro, Marginal, Luanda, Angola Standard Chartered Bank Angola S.A. Banking & Financ ial Services Angola AOK8,742.05 Ordinary shares 60.0 The following company has the address of Level 5, 345 George St, Sydney NSW 2000, Australia Standard Chartered Grindlays Pty Lim ited Investment Holding Company Australia AUD Ordinary shares 100 40. Related undertakings of the Group continued Subsid iary undertak ings continued ![]() 454 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements Name and registered address Activ ity Place of incorporation Descript ion of shares Proportion of shares held (%) The following company has the address of 17/31 Queen Street, Melbourne VIC 3000, Australia Assembly Payments Australia Pty Ltd Holding Company Australia $ Ordinary shares 100 The following company has the address of Wilsons Landing, Level 5, 6A Glen Street, Milsons Point NSW 2061, Australia CurrencyFair Australia Pty Ltd Foreign Currency conversion services. Australia AUD Ordinary 100 The following company has the address of Level 20, 31 Queen Street, Melbourne VIC 3000, Australia Zai Australia Pty Ltd Payment Service Provider Australia $1.00 Ordinary 100 AUD0.01 Ordinary shares The following companies have the address of 5th Floor Standard House Bldg, The Mall, Queens Road, PO Box 496, Gaborone, Botswana Standard Chartered Bank Insurance Agency (Proprietary) Lim ited Insurance Services Botswana BWP Ordinary shares 100 Standard Chartered Investment Services (Proprietary) Lim ited Nominee Services Botswana BWP Ordinary shares 100 Standard Chartered Bank Botswana Lim ited Banking & Financ ial Services Botswana BWP Ordinary shares 75.8 Standard Chartered Botswana Nominees (Proprietary) Lim ited Nominee Services Botswana BWP Ordinary shares 100 Standard Chartered Botswana Education Trust 2 CSR programme. Botswana Interest in Trust 100 The following company has the address of Avenida Brigade iro Far ia Lima, no 3.477, 6º andar, conjunto 62 - Torre Norte, Condomin io Pat io Victor Malzoni, CEP 04538-133, Sao Paulo, Brazil Standard Chartered Representação e Partic ipações Ltda Banking & Financ ial Services Brazil BRL1.00 Ordinary shares 100 The following company has the address of G01-02, Wisma Haj i Mohd Taha Build ing, Jalan Gadong, BE4119, Brune i Darussalam Standard Chartered Securit ies (B) Sdn Bhd Investment Management Brunei Darussalam BND1.00 Ordinary shares 100 The following company has the address of Standard Chartered Bank Cameroon S.A, 1155, Boulevard de la Liberté, Douala, B.P. 1784, Cameroon Standard Chartered Bank Cameroon S.A. Banking & Financ ial Services Cameroon XAF10,000.00 Ordinary shares 100 The following company has the address of 66 Wellington Street, West, Suite 4100, Toronto Domin ion Centre, Toronto ON M5K 1B7, Canada CurrencyFair (Canada) Ltd Dormant Canada CAD$ Common shares 100 The following company has the address of Maples Corporate Services Lim ited, PO Box 309, Ugland House, Grand Cayman KY1-1104, Cayman Islands Cerulean Investments LP Investment Holding Company Cayman Islands Lim ited Partnersh ip interest 100 40. Related undertakings of the Group continued Subsid iary undertak ings continued ![]() 455 Standard Chartered – Annual Report 2022 Financ ial statements Name and registered address Activ ity Place of incorporation Descript ion of shares Proportion of shares held (%) The following company has the address of Maples Finance Lim ited, PO Box 1093 GT, Queensgate House, Georgetown, Grand Cayman, Cayman Islands SCB Investment Holding Company Lim ited Investment Holding Company Cayman Islands US$1,000.00 Ordinary-A 99.9 The following company has the address of No. 1034, Managed by Tianjin Dongjiang Secretar ial Services , Co., Ltd., Room 202, Office Area of Inspection Warehouse,, No.6262 Ao Zhou Road, Dongjiang Free Trade Port Zone,, T ianjin Pilot Free Trade Zone, China Pembroke Aircraft Leasing (Tianjin) Lim ited 3 Holding Company China $1.00 Ordinary shares 100 The following company has the address of No. 1035, Managed by Tianjin Dongjiang Secretar ial Services , Co., Ltd., Room 202, Office Area of Inspection Warehouse,, No.6262 Ao Zhou Road, Dongjiang Free Trade Port Zone,, T ianjin Pilot Free Trade Zone, China Pembroke Aircraft Leasing Tianjin 1 Lim ited 3 SPV for Aircraft Operating Lease Business China CNY1.00 Ordinary shares 100 The following company has the address of No. 1036, Managed by Tianjin Dongjiang Secretar ial Services , Co., Ltd., Room 202, Office Area of Inspection Warehouse,, No.6262 Ao Zhou Road, Dongjiang Free Trade Port Zone,, T ianjin Pilot Free Trade Zone, China Pembroke Aircraft Leasing Tianjin 2 Lim ited 3 SPV for Aircraft Operating Lease Business China CNY1.00 Ordinary shares 100 The following company has the address of Standard Chartered Tower, 201 Century Avenue, Pudong, Shanghai 200120, China Standard Chartered Bank (China) Lim ited 3 Commercial banking China CNY Ordinary shares 100 The following company has the address of No. 35, Xinhuanbe i Road, TEDA, Tianjin, 300457, China Standard Chartered Global Business Services Co. Lim ited 3 Research, development, other services China $ Ordinary shares 100 The following companies have the address of Units Unit 802B, 803, 1001A,10 02B,1003-1005,1101-1105, 1201- 1205,1302C,1303, No. 235 Tianhe North Road, Tianhe Distr ict,, Guangzhou C ity, Guangdong Province, China Standard Chartered Global Business Services (Guangzhou) Co.Ltd. 3 Research, development, other services China $ Ordinary shares 100 Standard Chartered (Guangzhou) Business Management Co.Ltd. 3 Business consulting services China $ Ordinary shares 100 The following company has the address of 8A, Hony Tower, 1st Financ ial Street, Nanshan Distr ict, Shenzen, Ch ina SC Ventures Investment Management (Shenzhen) Lim ited Serve as a fund manager in China China US$1.00 Ordinary 100 The following company has the address of Room 2619, No 9, Linhe West Road, Tianhe Distr ict, Guangzhou, Ch ina Guangzhou CurrencyFair Information Technology Lim ited³ Foreign Currency conversion services. China CNY Ordinary shares 100 40. Related undertakings of the Group continued Subsid iary undertak ings continued ![]() 456 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements Name and registered address Activ ity Place of incorporation Descript ion of shares Proportion of shares held (%) The following company has the address of No. 188 Yeshen Rd, 11F, A-1161 RM, Pudong New Distr ict, Shangha i, 31, 201308, China Standard Chartered Trading (Shanghai) Lim ited 3 wholesale of base metal and its products China $15,000,000.00 Ordinary Shares 100 The following company has the address of Standard Chartered Bank Cote d’Ivoire, 23 Boulevard de la République, Abidjan 17, 17 B.P. 1141, Cote d’Ivoire Standard Chartered Bank Cote d’ Ivoire SA Banking & Financ ial Services Cote d’Ivoire XOF100,000.00 Ordinary shares 100 The following company has the address of 8 Ecowas Avenue, Banjul, Gambia Standard Chartered Bank Gambia Lim ited Banking & Financ ial Services Gambia GMD1.00 Ordinary shares 74.8 The following company has the address of Taunusanlage 16, 60325, Frankfurt am Main, Germany Standard Chartered Bank AG Banking & Financ ial Services Germany € Ordinary shares 100 The following companies have the address of Standard Chartered Bank Build ing, 87 Independence Avenue, P.O. Box 768, Accra,Ghana Standard Chartered Bank Ghana PLC Banking & Financ ial Services Ghana GHS Ordinary shares 69.4 GHS0.52 Non-cumulative Irredeemable Preference Shares 87.0 Standard Chartered Ghana Nominees Lim ited Nominee Services Ghana GHS Ordinary shares 100 The following company has the address of Standard Chartered Bank Ghana Lim ited, 87, Independence Avenue, Post Office Box 678, Accra, Ghana Standard Chartered Wealth Management Lim ited Company Investment Management Ghana GHS Ordinary shares 100 The following company has the address of 18/F., Standard Chartered Tower, 388 Kwun Tong Road, Kwun Tong, Kowloon, Hong Kong Horsford Nominees Lim ited Nominee Services Hong Kong HKD Ordinary shares 100 The following companies have the address of 14th Floor, One Taikoo Place, 979 King’s Road, Quarry Bay, Hong Kong. Kozagi Lim ited Investment Holding Company Hong Kong HKD Ordinary shares 100 Standard Chartered PF Real Estate (Hong Kong) Lim ited Investment Holding Company Hong Kong $ Ordinary shares 100 The following companies have the address of 15/F., Two International Finance Centre, No. 8 Finance Street, Central, Hong Kong Marina Acacia Shipp ing L im ited Leasing Business Hong Kong $ Ordinary shares 100 Marina Amethyst Shipp ing L im ited Leasing Business Hong Kong $ Ordinary shares 100 Marina Angelite Shipp ing L im ited Leasing Business Hong Kong $ Ordinary shares 100 Marina Beryl Shipp ing L im ited Leasing Business Hong Kong $ Ordinary shares 100 Marina Emerald Shipp ing L im ited Leasing Business Hong Kong $ Ordinary shares 100 Marina Flax Shipp ing L im ited Leasing Business Hong Kong $ Ordinary shares 100 Marina Gloxin ia Sh ipp ing L im ited Leasing Business Hong Kong $ Ordinary shares 100 40. Related undertakings of the Group continued Subsid iary undertak ings continued ![]() 457 Standard Chartered – Annual Report 2022 Financ ial statements Name and registered address Activ ity Place of incorporation Descript ion of shares Proportion of shares held (%) Marina Hazel Shipp ing L im ited Leasing Business Hong Kong $ Ordinary shares 100 Marina Ilex Shipp ing L im ited Leasing Business Hong Kong $ Ordinary shares 100 Marina Iridot Shipp ing L im ited Leasing Business Hong Kong $ Ordinary shares 100 Marina Leasing Lim ited Leasing Business Hong Kong $ Ordinary shares 100 Marina Mimosa Shipp ing L im ited Leasing Business Hong Kong $ Ordinary shares 100 Marina Moonstone Shipp ing L im ited Leasing Business Hong Kong $ Ordinary shares 100 Marina Peridot Shipp ing L im ited Leasing Business Hong Kong $ Ordinary shares 100 Marina Sapphire Shipp ing L im ited Leasing Business Hong Kong $ Ordinary shares 100 Marina Tourmaline Shipp ing L im ited Leasing Business Hong Kong $ Ordinary shares 100 Standard Chartered Leasing Group Lim ited Investment Holding Company Hong Kong $ Ordinary shares 100 The following company has the address of 25/F, Standard Chartered Bank Build ing, 4-4A Des Voeux Road Central, Hong Kong Standard Chartered Trade Support (HK) Lim ited Corporate Finance & Advisory Services Hong Kong HKD Ordinary shares 100 The following company has the address of 13/F Standard Chartered Bank Build ing, 4-4A Des Voeux Road Central, Hong Kong Standard Chartered Private Equity Lim ited Investment Holding Company Hong Kong HKD Ordinary shares 100 The following company has the address of 14/F, Standard Chartered Bank Build ing, 4-4A Des Voeux Road, Central, Hong Kong Standard Chartered Trust (Hong Kong) Lim ited Investment Management Hong Kong HKD Ordinary shares 100 The following company has the address of 15/F, Two International Finance Centre, No. 8 Finance Street, Central, Hong Kong Standard Chartered Securit ies (Hong Kong) Lim ited Corporate Finance & Advisory Services Hong Kong HKD Ordinary shares 100 The following company has the address of 21/F, Standard Chartered Tower, 388 Kwun Tong Road, Kwun Tong, Kowloon, Hong Kong Standard Chartered Asia Lim ited Investment Holding Company Hong Kong HKD Deferred shares 100 HKD Ordinary shares 100 The following company has the address of 32/F, Standard Chartered Bank Build ing, 4-4A Des Voeux Road, Central, Hong Kong Standard Chartered Bank (Hong Kong) Lim ited Banking & Financ ial Services Hong Kong HKD Ordinary-A 100 HKD Ordinary-B 100 US$ Ordinary-C 100 US$ Ordinary-D 100 The following company has the address of 39/F., Oxford House, Taikoo Place, 979 King’s Road, Quarry Bay, Hong Kong Mox Bank Lim ited Banking & Financ ial Services Hong Kong HKD Ordinary shares 66.0 The following company has the address of 31/F, Tower 2 Times Square, 1 Matheson St, Causeway Bay, Hong Kong Assembly Payments HK Lim ited Online payment platform Hong Kong HKD Ordinary Shares 100 40. Related undertakings of the Group continued Subsid iary undertak ings continued ![]() 458 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements Name and registered address Activ ity Place of incorporation Descript ion of shares Proportion of shares held (%) The following company has the address of Suites 1103-4 AXA Tower, Landmark East, 100 How Ming Street, Kwun Tong, Hong Kong Currencyfair Asia Lim ited Foreign Currency conversion services. Hong Kong HKD Ordinary shares 100 The following company has the address of 2 Floor Sabari Complex 24 Field Marshal, Capriappa RD Shanthala Nagar, Ashok Nagar, Bangalore, Karnataka, , 560025, India Assembly Payments India Private Lim ited Activ it ies auxil iary to financial intermed iat ion India INR100.00 Ordinary 100 The following company has the address of 1st Floor, Europe Build ing, No.1, Haddows Road, Nungambakkam, Chennai, 600 006, India Standard Chartered Global Business Services Private Lim ited Offshore Support Services 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 Standard Chartered Finance Private Lim ited Support Services India INR10.00 Ordinary shares 98.6 The following company has the address of Ground Floor, Crescenzo Build ing, G Block, C 38/39 , Bandra Kurla Complex, Bandra (East) , Mumbai , Mumbai , Maharashtra , 400051, India Standard Chartered Private Equity Advisory (India) Private Lim ited Support Services India INR1,000.00 Ordinary shares 100 The following company has the address of Second Floor, Indiqube Edge, Khata No. 571/630/6/4, Sy.No.6/4, Ambalipura Village, Varthur Hobli, Marathahalli Sub-Div is ion, Ward No. 150, Bengaluru, 560102, India. Standard Chartered Research and Technology India Private Lim ited Support Services India INR10.00 A Equity shares 100 INR10.00 Cumulative Redeemable Preference 100 The following company has the address of Crescenzo, 6th Floor, Plot No 38-39 G Block , Bandra Kurla Complex, , Bandra East , Mumbai , Maharashtra , 400051, India Standard Chartered Capital Lim ited Banking & Financ ial Services 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 Standard Chartered Securit ies (Ind ia) Lim ited Banking & Financ ial Services India INR10.00 Equity shares 100 The following company has the address of Ground Floor, Crescenzo Build ing, G Block, C 38/39 , Bandra Kurla Complex, Bandra (East) , Mumbai , Mumbai , Maharashtra , 400051, India St Helen’s Nominees India Private Lim ited Nominee Services India INR10.00 Equity shares 100 40. Related undertakings of the Group continued Subsid iary undertak ings continued ![]() 459 Standard Chartered – Annual Report 2022 Financ ial statements Name and registered address Activ ity Place of incorporation Descript ion of shares Proportion of shares held (%) The following company has the address of Vaishnav i Seren ity, First Floor, No. 112, Koramangala Industrial Area, 5th Block, Koramangala, Bangalore, Karnataka, 560095, India Standard Chartered (India) Modeling and Analytics Centre Private Lim ited Support Services 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 ited Dormant Ireland €1.00 Ordinary 100 CurrencyFair Nominees Lim ited Nominee company Ireland €1.00 Ordinary 100 The following companies have the address of 32 Molesworth Street, Dublin 2, D02Y512, Ireland Inishbrophy Leasing Lim ited Leasing Business Ireland €1.00 Ordinary shares 100 Inishcannon Leasing Lim ited Leasing Business Ireland $1.00 Ordinary shares 100 Inishcrean Leasing Lim ited Leasing Business Ireland $1.00 Ordinary shares 100 Inishdawson Leasing Lim ited Leasing Business Ireland €1.00 Ordinary shares 100 Inisherk in Leas ing Lim ited Leasing Business Ireland $1.00 Ordinary shares 100 Inishoo Leasing Lim ited Leasing Business Ireland $1.00 Ordinary shares 100 Nightjar Lim ited Leasing Business Ireland $1.00 Ordinary shares 100 Pembroke Aircraft Leasing 1 Lim ited Leasing Business Ireland €1.00 Ordinary shares 100 Pembroke Aircraft Leasing 2 Lim ited Leasing Business Ireland €1.00 Ordinary shares 100 Pembroke Aircraft Leasing 3 Lim ited Leasing Business Ireland $1.00 Ordinary shares 100 Pembroke Aircraft Leasing 4 Lim ited Leasing Business Ireland $1.00 Ordinary shares 100 Pembroke Aircraft Leasing 5 Lim ited Leasing Business Ireland $1.00 Ordinary shares 100 Pembroke Aircraft Leasing 6 Lim ited Leasing Business Ireland $1.00 Ordinary shares 100 Pembroke Aircraft Leasing 7 Lim ited Leasing Business Ireland $1.00 Ordinary shares 100 Pembroke Aircraft Leasing 8 Lim ited Leasing Business Ireland $1.00 Ordinary shares 100 Pembroke Aircraft Leasing 9 Lim ited Leasing Business Ireland $1.00 Ordinary shares 100 Pembroke Aircraft Leasing 10 Lim ited Leasing Business Ireland $1.00 Ordinary shares 100 Pembroke Aircraft Leasing 11 Lim ited Leasing Business Ireland $1.00 Ordinary shares 100 Pembroke Aircraft Leasing 12 Lim ited Leasing Business Ireland $1.00 Ordinary shares 100 Pembroke Aircraft Leasing 13 Lim ited Leasing Business Ireland $1.00 Ordinary shares 100 Pembroke Aircraft Leasing 14 Lim ited Leasing Business Ireland $1.00 Ordinary shares 100 Pembroke Aircraft Leasing 15 Lim ited Leasing Business Ireland $1.00 Ordinary shares 100 Pembroke Aircraft Leasing 16 Lim ited Leasing Business Ireland $1.00 Ordinary shares 100 Pembroke Aircraft Leasing Holdings Lim ited Leasing Business Ireland $1.00 Ordinary shares 100 Pembroke Capital Lim ited Leasing Business Ireland €1.25 Ordinary shares 100 US$1.00 Ordinary Skua Lim ited Leasing Business Ireland $1.00 Ordinary shares 100 Zodia Markets (Ireland) Lim ited Banking & Financ ial Services Ireland $1.00 Ordinary shares 100 The following company has the address of 27 Fitzw ill iam Street, Dublin, D02 TP23, Ireland Zodia Custody (Ireland) Lim ited Custody services 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 ited FX transfer services Ireland €0.001 Ordinary shares 100 €0.001 Ordinary shares 27.9 40. Related undertakings of the Group continued Subsid iary undertak ings continued ![]() 460 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements Name and registered address Activ ity Place of incorporation Descript ion of shares Proportion of shares held (%) The following company has the address of First Names House, Victor ia Road, Douglas, IM2 4DF, Isle of Man Pembroke Group Lim ited 4 Aircraft leasing, fleet advisory and technical services 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 Standard Chartered Assurance Lim ited Insurance Services Isle of Man $1.00 Ordinary shares 100 US$1.00 Redeemable Preference 100 Standard Chartered Isle of Man Lim ited 5 Insurance & Reinsurance Company Isle of Man $1.00 Ordinary shares 100 The following company has the address of 21/F, Sanno Park Tower, 2-11-1 Nagatacho, Chiyoda-ku, Tokyo, 100-6155, Japan Standard Chartered Securit ies (Japan) Lim ited Banking & Financ ial Services Japan JPY Ordinary 100 The following company has the address of 15 Castle Street, St Helier, JE4 8PT, Jersey SCB Nominees (CI) Lim ited Nominee Services Jersey $1.00 Ordinary shares 100 The following company has the address of IFC 5, St Helier, JE1 1ST, Jersey Standard Chartered Funding (Jersey) Lim ited 5 Investment Holding Company Jersey £1.00 Ordinary shares 100 The following companies have the address of StandardChartered@ Chiromo, Number 48, Westlands Road, P. O. Box 30003 - 00100, Nairob i, Kenya Solveazy Technology Kenya Ltd B2B dig ital platform Kenya KES1,000.00 Ordinary 100 Standard Chartered Bancassurance Intermediary Lim ited Insurance Services Kenya KES1,00.00 Ordinary shares 100 Standard Chartered Investment Services Lim ited Investment services Kenya KES20.00 Ordinary shares 100 Standard Chartered Bank Kenya Lim ited Banking & Financ ial Services Kenya KES5.00 Ordinary shares 74.3 Standard Chartered Securit ies (Kenya) Lim ited Corporate Finance & Advisory Services Kenya KES10.00 Ordinary shares 100 KES5.00 Preference 100 Standard Chartered Financ ial Serv ices Lim ited Merchant Banking Kenya KES20.00 Ordinary shares 100 Standard Chartered Kenya Nominees Lim ited1 Nominee Services Kenya KES20.00 Ordinary shares 100 Tawi Fresh Kenya Lim ited Dig ital Marketplace, Ecommerce Kenya KES1,000.00 Ordinary 100 The following company has the address of 47 Jongno, Jongno-gu, Seoul, 110-702, Republic of Korea Standard Chartered Bank Korea Lim ited Banking & Financ ial Services 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 of Korea Standard Chartered Securit ies Korea Co., Ltd Asset Management Korea, Republic of KRW5,000.00 Ordinary shares 100 40. Related undertakings of the Group continued Subsid iary undertak ings continued ![]() 461 Standard Chartered – Annual Report 2022 Financ ial statements Name and registered address Activ ity Place of incorporation Descript ion of shares Proportion of shares held (%) The following company has the address of Atrium Build ing, Maarad Street, 3rd Floor, P.O.Box: 11-4081 Riad El Solh, Beirut, Beirut Central Distr ict, Lebanon Standard Chartered Metropolitan Holdings SAL Investment Holding Company 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 Nominee Services Malaysia RM Ordinary shares 100 Cartaban Nominees (Asing) Sdn Bhd Nominee Services Malaysia RM Ordinary shares 100 Cartaban Nominees (Tempatan) Sdn Bhd Nominee Services Malaysia RM Ordinary shares 100 Golden Maestro Sdn Bhd Investment Holding Company Malaysia RM Ordinary shares 100 Price Solutions Sdn Bhd Direct Sales/Collection Services Malaysia RM Ordinary shares 100 SCBMB Trustee Berhad Trustee Services Malaysia RM Ordinary shares 100 Standard Chartered Bank Malaysia Berhad Banking & Financ ial Services Malaysia RM Irredeemable Convertible Preference shares 100 RM Ordinary shares 100 Standard Chartered Saadiq Berhad Banking & Financ ial Services Malaysia RM Ordinary shares 100 The following companies have the address of TMF Trust Labuan Lim ited, Brumby Centre, Lot 42,, Jalan Muhibbah, 87000 Labuan F.T., Malaysia Marina Morganite Shipp ing L im ited 6 Ownership and leasing of vessels Malaysia $ Ordinary shares 100 Marina Moss Shipp ing L im ited 6 Ownership and Leasing of vessels Malaysia $ Ordinary shares 100 Marina Tanzanite Shipp ing L im ited 6 Ownership and leasing of vessels Malaysia $ Ordinary shares 100 The following company has the address of Suite 18-1, Level 18, Vertical Corporate Tower B, Avenue 10, The Vertical, Bangsar South City , No. 8, Jalan Kerinch i , 59200 Kuala Lumpur, Wilayah Persekutuan, Malaysia Resolution Alliance Sdn Bhd Investment Holding Company Malaysia RM Ordinary shares 100 Irredeemable Preference 100 The following company has the address of 12th Floor, Menara Symphony , No. 5, Jalan Prof. Khoo Kay Kim, Seksyen 13, 46200 Petaling Jaya , Selangor, Malaysia Solv Sdn. Bhd. B2B dig ital platform offering financ ial serv ices Malaysia RM5.00 Ordinary 100 The following company has the address of Level 1, Wisma Standard Chartered, Jalan Teknologi 8, Taman Teknologi Malaysia, 57000 Bukit Jalil, Kuala Lumpur, Wilayah Persekutuan, Malaysia Standard Chartered Global Business Services Sdn Bhd Offshore Support Services Malaysia RM Ordinary shares 100 40. Related undertakings of the Group continued Subsid iary undertak ings continued ![]() 462 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements Name and registered address Activ ity Place of incorporation Descript ion of shares Proportion of shares held (%) The following company has the address of 10th Floor, Menara Hap Seng, No. 1&3, Jalan P. Ramlee, 50250 Kuala Lumpur, Malaysia Assembly Payments Malaysia Sdn. Bhd. Other financial serv ice activ it ies Malaysia RM Ordinary shares 100 The following companies have the address of Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, MH96960, Marshall Islands Marina Alysse Shipp ing L im ited 6 Ownership, Leasing of vessels Marshall Islands $1.00 Ordinary shares 100 Marina Amandier Shipp ing L im ited 6 Ownership, Leasing of vessels Marshall Islands $1.00 Ordinary shares 100 Marina Ambroisee Shipp ing L im ited 6 Ownership, Leasing of vessels Marshall Islands $1.00 Ordinary shares 100 Marina Angelica Shipp ing L im ited 6 Ownership, Leasing of vessels Marshall Islands $1.00 Ordinary shares 100 Marina Aventurine Shipp ing L im ited 6 Ownership, Leasing of vessels Marshall Islands $1.00 Ordinary shares 100 Marina Buxus Shipp ing L im ited 6 Ownership, Leasing of vessels Marshall Islands $1.00 Ordinary shares 100 Marina Citr ine Sh ipp ing L im ited 6 Ownership, Leasing of vessels Marshall Islands $1.00 Ordinary shares 100 Marina Dahlia Shipp ing L im ited 6 Ownership, Leasing of vessels Marshall Islands $1.00 Ordinary shares 100 Marina Dittany Shipp ing L im ited 6 Ownership, Leasing of vessels Marshall Islands $1.00 Ordinary shares 100 Marina Dorado Shipp ing L im ited 6 Ownership, Leasing of vessels Marshall Islands $1.00 Ordinary shares 100 Marina Lilac Shipp ing L im ited 6 Ownership, Leasing of vessels Marshall Islands $1.00 Ordinary shares 100 Marina Lolite Shipp ing L im ited 6 Ownership, Leasing of vessels Marshall Islands $1.00 Ordinary shares 100 Marina Obsid ian Sh ipp ing L im ited 6 Ownership, Leasing of vessels Marshall Islands $1.00 Ordinary shares 100 Marina Protea Shipp ing L im ited 6 Ownership, Leasing of vessels Marshall Islands $1.00 Ordinary shares 100 Marina Quartz Shipp ing L im ited 6 Ownership, Leasing of vessels Marshall Islands $1.00 Ordinary shares 100 Marina Remora Shipp ing L im ited 6 Ownership, Leasing of vessels Marshall Islands $1.00 Ordinary shares 100 Marina Turquoise Shipp ing L im ited 6 Ownership, Leasing of vessels Marshall Islands $1.00 Ordinary shares 100 Marina Zircon Shipp ing L im ited 6 Ownership, Leasing of vessels Marshall Islands $1.00 Ordinary shares 100 The following companies have the address of 6/F, Standard Chartered Tower, 19, Bank Street, Cybercity, Ebene, 72201, Maurit ius Standard Chartered Bank (Maurit ius) Lim ited Banking & Financ ial Services Maurit ius $ Ordinary shares 100 Standard Chartered Private Equity (Maurit ius) L im ited Investment Management Maurit ius $1.00 Ordinary shares 100 Standard Chartered Private Equity (Maurit ius) II L im ited Investment Management Maurit ius $1.00 Ordinary shares 100 Standard Chartered Private Equity (Maurit ius) lll L im ited Investment Management Maurit ius $1.00 Ordinary shares 100 40. Related undertakings of the Group continued Subsid iary undertak ings continued ![]() 463 Standard Chartered – Annual Report 2022 Financ ial statements Name and registered address Activ ity Place of incorporation Descript ion of shares Proportion of shares held (%) The following company has the address of Mondial Management Services Ltd, Unit 2L, 2nd Floor Standard Chartered Tower, 19 Cybercity, Ebene, Maurit ius Subcontinental Equit ies L im ited Investment Holding Company Maurit ius $1.00 Ordinary shares 100 The following company has the address of IQEQ Corporate Services (Maurit ius) Ltd, 33, Edith Cavell Street, Port Louis, 11324, Maurit ius Actis Treit Holdings (Maurit ius) L im ited¹ Investment Holding Company Maurit ius Class A $1.00 Ordinary shares 62.0 The following company has the address of Standard Chartered Bank Nepal Lim ited, Madan Bhandar i Marg, Ward No.34, Kathmandu Metropolitan City, Kathmandu Distr ict, Bagmat i Zone, Kathmandu, Nepal Standard Chartered Bank Nepal Lim ited Banking & Financ ial Services Nepal NPR100.00 Ordinary shares 70.2 The following company has the address of Hoogoorddreef 15, 1101 BA, Amsterdam, Netherlands Pembroke Holland B.V. Leasing Business Netherlands €450.00 Ordinary shares 100 The following companies have the address of 1 Basinghall Avenue, London, EC2V 5DD, United Kingdom Standard Chartered Holdings (Africa) B.V.⁵ Holding company Netherlands €4.50 Ordinary shares 100 Standard Chartered Holdings (Asia Pacif ic) B.V. 5 Holding company Netherlands €4.50 Ordinary shares 100 Standard Chartered Holdings (International) B.V. 5 Holding company Netherlands €4.50 Ordinary shares 100 Standard Chartered MB Holdings B.V. 5 Holding company. Netherlands €4.50 Ordinary shares 100 The following company has the address of 4 All good Place, Rototuna North, Hamilton, New Zealand, 3210 PromisePay Lim ited Payment Services Provider New Zealand NZD Ordinary shares 100 The following companies have the address of 142, Ahmadu Bello Way, Victor ia Island, Lagos, 101241, N iger ia Standard Chartered Bank Niger ia Lim ited Banking & Financ ial Services Niger ia NGN1.00 B Redeemable Preference 100 NGN1.00 Irredeemable Non Cumulative Preference 100 NGN1.00 Ordinary 100 Standard Chartered Capital & Advisory Niger ia L im ited Corporate Finance & Advisory Services Niger ia NGN1.00 Ordinary shares 100 Standard Chartered Nominees (Niger ia) Lim ited Custody Services Niger ia NGN1.00 Ordinary shares 100 The following company has the address of 3/F Main SCB Build ing, I.I Chundr igar Road, Karachi, Sindh, 74000, Pakistan Price Solution Pakistan (Private) Lim ited Banking & Financ ial Services Pakistan PKR10.00 Ordinary shares 100 The following company has the address of P.O. Box No. 5556I.I. Chundrigar Road, Karachi, 74000, Pakistan Standard Chartered Bank (Pakistan) Lim ited Banking & Financ ial Services Pakistan PKR10.00 Ordinary shares 98.9 40. Related undertakings of the Group continued Subsid iary undertak ings continued ![]() 464 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements Name and registered address Activ ity Place of incorporation Descript ion of shares Proportion of shares held (%) The following company has the address of Rondo Ignacego Daszyńskiego 2B, 00-843, Warsaw, Poland Standard Chartered Global Business Services spółka z ograniczoną odpowiedz ialnośc ią Offshore Support Services Poland PLN50.00 Ordinary shares 100 The following company has the address of Al Faisal iah Office Tower Floor No 7 (T07D) , King Fahad Highway, Olaya Distr ict, R iyadh P.O box 295522 , Riyadh, 11351 , Saudi Arabia Standard Chartered Capital (Saudi Arabia) Custody Services 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 ited Banking & Financ ial Services Sierra 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 ited 1 Investment Holding Company Singapore SGD Ordinary 100 Actis Treit Holdings No.2 (Singapore) Private Lim ited 1 Investment Holding Company Singapore SGD Ordinary 100 The following companies have the address of 8 Marina Boulevard, Marina Bay Financ ial Centre Tower 1,, Level 25-01, 018981, Singapore, Singapore Standard Chartered Private Equity (Singapore) Pte. Ltd Investment Holding Company Singapore $ Ordinary shares 100 Standard Chartered Real Estate Investment Holdings (Singapore) Private Lim ited Investment Holding Company Singapore $ Ordinary shares 100 The following companies have the address of 8 Marina Boulevard, Level 26, Marina Bay Financ ial Centre, Tower 1, 018981, Singapore Marina Aquata Shipp ing Pte. Ltd. Leasing Business Singapore $ Ordinary shares 100 Marina Aruana Shipp ing Pte. Ltd. Leasing Business Singapore SGD & USD Ordinary shares 100 Marina Cobia Shipp ing Pte. Ltd. Leasing Business Singapore SGD & USD Ordinary shares 100 Marina Fatmarin i Sh ipp ing Pte. Ltd. Leasing Business Singapore $ Ordinary shares 100 Marina Frabandari Shipp ing Pte. Ltd. Leasing Business Singapore $ Ordinary shares 100 Marina Gerbera Shipp ing Pte. Ltd. Leasing Business Singapore $ Ordinary shares 100 Marina Opah Shipp ing Pte. Ltd. Leasing Business Singapore SGD Ordinary shares 100 Marina Partawati Shipp ing Pte. Ltd. Leasing Business Singapore $ Ordinary shares 100 The following company has the address of 7 Changi Business Park Crescent, #03-00 Standard Chartered @ Changi, 486028, Singapore Raffles Nominees (Pte.) Lim ited Nominee Services Singapore SGD Ordinary shares 100 The following companies have the address of 8 Marina Boulevard, #27-01 Marina Bay Financ ial Centre Tower 1, 018981, Singapore SCTS Capital Pte. Ltd Nominee Services Singapore SGD Ordinary shares 100 SCTS Management Pte. Ltd. Nominee Services Singapore SGD Ordinary shares 100 40. Related undertakings of the Group continued Subsid iary undertak ings continued ![]() 465 Standard Chartered – Annual Report 2022 Financ ial statements Name and registered address Activ ity Place of incorporation Descript ion of shares Proportion of shares held (%) Standard Chartered Bank (Singapore) Lim ited Banking & Financ ial Services Singapore SGD Non-cumulative Class C Tier-1 preference 100 SGD Ordinary-A 100 US$ Non-cumulative Class B Tier-1 Preference 100 US$ Ordinary-A 100 US$ Ordinary-B 100 US$ Ordinary-C 100 Standard Chartered Trust (Singapore) Lim ited Trustee Services Singapore SGD Ordinary shares 100 Standard Chartered Holdings (Singapore) Private Lim ited Investment Holding Company Singapore SGD Ordinary 100 US$ Ordinary 100 Standard Chartered Nominees (Singapore) Pte Ltd Nominee Services Singapore SGD Ordinary shares 100 The following companies have the address of 80 Robinson Road, #02-00, 068898, Singapore Autumn Life Pte. Ltd. Support Services Singapore $ Ordinary shares 100 Cardspal Pte. Ltd. Support Services Singapore $ Ordinary shares 100 Audax Financ ial Technology Pte. Ltd Support Services Singapore $ Ordinary shares 100 Letsbloom Pte. Ltd. Others Singapore $ Ordinary shares 100 SCV Research and Development Pte. Ltd. Others Singapore $ Ordinary shares 100 Pegasus Dealmaking Pte. Ltd. Mergers and Acquis it ions (M&A) marketplace Singapore $ Ordinary shares 100 The following companies have the address of Tricor WP Corporate Services Pte Ltd, 80 Robinson Road #02-00, 068898, Singapore Power2SME Pte. Ltd. Investment Holding Entity Singapore $ Ordinary shares 90.6 SCV Master Holding Company Pte. Ltd. Investment Holding Entity Singapore $ Ordinary shares 100 Solv-India Pte. Ltd. Investment Holding Entity Singapore $ Ordinary shares 100 The following company has the address of 77 Robinson Road, #25-00 Robinson 77, 068896, Singapore Trust Bank Singapore Lim ited Banking & Financ ial Services Singapore SGD Ordinary shares 60.0 The following company has the address of 1 Robinson Road, #17-00, AIA Tower, 048542, Singapore CurrencyFair (Singapore) Pte.Ltd Foreign Currency conversion services. 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. Transaction/Payment Processing Services Singapore SGD Ordinary shares 100 Assembly Payments Pte. Ltd. Investment holding company Singapore $ Ordinary shares 100 $ Preference shares 100 The following company has the address of Abogado Pte Ltd, No. 8 Marina Boulevard, #05-02 MBFC Tower 1, 018981, Singapore Standard Chartered IL&FS Management (Singapore) Pte. Lim ited Investment Management Singapore $ Ordinary 50.0 40. Related undertakings of the Group continued Subsid iary undertak ings continued ![]() 466 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements Name and registered address Activ ity Place of incorporation Descript ion of shares Proportion of shares held (%) The following companies have the address of 2nd Floor, 115 West Street, Sandton, Johannesburg, 2196, South Africa CMB Nominees (RF) PTY Lim ited Nominee Services South Africa ZAR1.00 Ordinary shares 100 Standard Chartered Nominees South Africa Proprietary Lim ited (RF) Nominee Services 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 Payment Services Provider South Africa ZAR1.00 Ordinary 100 The following company has the address of 1F, No.177 & 3F-6F, 17F-19F, No.179, Liaon ing Street, Zhongshan D ist., Taipe i, 104, Taiwan Standard Chartered Bank (Taiwan) Lim ited Banking & Financ ial Services Taiwan TWD10.00 Ordinary shares 100 The following companies have the address of 1 Floor, International House, Shaaban Robert Street/Garden Avenue, PO Box 9011, Dar Es Salaam, Tanzania, United Republic of Standard Chartered Bank Tanzania Lim ited Banking & Financ ial Services Tanzania TZS1,000.00 Ordinary shares 100 TZS1,000.00 Preference 100 Standard Chartered Tanzania Nominees Lim ited Nominee Services Tanzania TZS1,000.00 Ordinary shares 100 The following company has the address of No. 140, 11th, 12th and 14th Floor, Wireless Road, Lumpin i, Patumwan, Bangkok, 10330, Thailand Standard Chartered Bank (Thai) Public Company Lim ited Banking & Financ ial Services Thailand THB10.00 Ordinary shares 99.9 The following company has the address of Buyukdere Cad. Yapi Kredi Plaza C Blok, Kat 15, Levent, Istanbul, 34330, Türkiye Standard Chartered Yatir im Bankas i Turk Anonim Sirket i Banking & Financ ial Services Türkiye TRL0.10 Ordinary shares 100 The following company has the address of Standard Chartered Bank Bldg, 5 Speke Road, PO Box 7111, Kampala, Uganda Standard Chartered Bank Uganda Lim ited Banking & Financ ial Services Uganda UGS1,000.00 Ordinary shares 100 The following company has the address of EX-26, Ground Floor, Bldg 16-Co Work, Dubai Internet City, Dubai, United Arab Emirates Appro Onboarding Solutions FZ-LLC IT solutions provider and support service provider. United Arab Emirates AED1,000.00 Ordinary shares 100 40. Related undertakings of the Group continued Subsid iary undertak ings continued ![]() 467 Standard Chartered – Annual Report 2022 Financ ial statements Name and registered address Activ ity Place of incorporation Descript ion of shares Proportion of shares held (%) The following company has the address of Suites 507, 508, 509, 15th Floor, Al Sarab Tower, Adgm Square, Al Maryah Island, Abu Dhabi Financ ial Inclus ion Technologies Ltd Dig ital wallet and technology payments platform United Arab Emirates US$1.00 Ordinary 100 The following company has the address of 505 Howard St. #201, San Francisco, CA 94105, United States SC Studios, LLC Offshore Support Services United States Membership Interest 100 The following company has the address of Standard Chartered Bank, 37F, 1095 Avenue of the Americas, New York 10036, United States Standard Chartered Bank International (Americas) Lim ited Banking & Financ ial Services United States $1,000.00 Ordinary shares 100 The following companies have the address of Corporation Trust Centre, 1209 Orange Street, Wilm ington DE 19801, United States Standard Chartered Holdings Inc. Investment Holding Company United States $100.00 Common shares 100 Standard Chartered Securit ies (North America) LLC Banking & Financ ial Services United States Membership Interest 100 The following company has the address of 50 Fremont Street, San Francisco CA 94105, United States Standard Chartered Overseas Investment, Inc. Investment Holding Company United States $10.00 Ordinary shares 100 The following companies have the address of C/O Corporation Service Company, 251 Little Falls Drive, Wilm ington DE 19808, Un ited States CurrencyFair (USA) Inc Dormant United States $1.00 Uncertif icated Shares 100 Standard Chartered Trade Services Corporation Trade Services United States $0.01 Common shares 100 The following company has the address of 25 Taylor St, San Francisco, CA, 94102-3916 Assembly Escrow Inc Payment Services Provider United States $0.0001 Ordinary 100 The following company has the address of 555 Washington Av, St Louis, MO, United States of America, 63101 Assembly Payments, Inc Payment services provider United States $0.0001 Ordinary 100 The following company has the address of Level 3, #CP1.L01 and #CP2.L01, Capital Place, 29 Lieu Gia i Street, Ngoc Khanh Ward, Ba Dinh Distr ict, Ha No i, 10000, Vietnam Standard Chartered Bank (Vietnam) Lim ited Banking & Financ ial Services Vietnam VND Charter Capital shares 100 40. Related undertakings of the Group continued Subsid iary undertak ings continued ![]() 468 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements Name and registered address Activ ity Place of incorporation Descript ion of shares Proportion of shares held (%) The following companies have the address of Vistra Corporate Services Centre, Wickhams Cay II, Road Town, Tortola, VG1110, Virg in Islands, Br it ish Sky Favour Investments Lim ited 6 Investment Holding Company Virg in Islands, Br it ish $1.00 Ordinary shares 100 Sky Harmony Holdings Lim ited 6 Investment Holding Company Virg in Islands, Br it ish $1.00 Ordinary shares 100 The following companies have the address of Stand No. 4642, Corner of Mwaimwena Road and Addis Ababa Dri, Lusaka, Zambia, 10101, Zambia Standard Chartered Bank Zambia Plc Banking & Financ ial Services Zambia ZMW0.25 Ordinary shares 90.0 Standard Chartered Zambia Securit ies Services Nominees Lim ited Nominee Services Zambia ZMW1.00 Ordinary shares 100 The following companies have the address of Africa Unity Square Build ing, 68 Nelson Mandela Avenue, Harare, Zimbabwe Africa Enterprise Network Trust 2 Investment Holding Company Zimbabwe Interest in Trust 100 Standard Chartered Bank Zimbabwe Lim ited Banking & Financ ial Services Zimbabwe $1.00 Ordinary shares 100 Standard Chartered Nominees Zimbabwe (Private) Lim ited Nominee Services Zimbabwe $2.00 Ordinary shares 100 1 The Group has determined that these undertakings are excluded from being consolidated into the Groups accounts, and do not meet the defin it ion of a Subsid iary under IFRS. See notes 31 and 32 for the consol idat ion pol icy and disclosure of the undertaking. 2 No share capital by virtue of being a trust 3 Lim ited l iab il ity company 4 The Group has determined the princ ipal place of operat ion to be Ireland 5 The Group has determined the princ ipal place of operat ion to be United Kingdom 6 The Group has determined the princ ipal place of operat ion to be Hong Kong 7 Company is exempt from the requirements of the companies Act relating to the audit of ind iv idual accounts by virtue of S479A 8 Company numbers of the subsid iar ies taking an audit exemption are SC Transport Leasing 1 LTD 06787116, SC Transport Leasing 2 Lim ited 06787090 and Standard Chartered Leasing (UK) Lim ited 05513184 9 Directly held related undertaking Joint ventures Name and registered address Activ ity Place of Incorporation Descript ion 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. Provis ion of trade finance products and services Singapore $ Ordinary shares 50.0 $ Preference shares 100 40. Related undertakings of the Group continued Subsid iary undertak ings continued ![]() 469 Standard Chartered – Annual Report 2022 Financ ial statements 40. Related undertakings of the Group continued Associates Name and registered address Activ ity Place of Incorporation Descript ion of shares Proportion of shares held (%) The following company has the address of 41 Luke Street, London, EC2A 4DP , United Kingdom Fintech for International Development Ltd Financ ial intermed iat ion United Kingdom $0.0001 Ordinary-A 44.4 The following company has the address of Bohai Bank Build ing, No.218 Ha i He Dong Lu, Hedong Distr ict, T ianjin, China, 300012, China China Bohai Bank Co., Ltd. General commercial banking businesses China CNY1.00 Ordinary shares 16.2 The following company has the address of 17/F, 100, Gongpyeong-dong, Jongno-gu, Seoul, Korea, Republic of Ascenta IV Investment making Korea, Republic of KRW1.00 Partnership 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. Investment Holding Company Singapore $1.00 Ordinary shares 9.9 The following company has the address of 10 Marina Boulevard #08-08, Marina Bay, Financ ial Centre, 018983, S ingapore Verif ied Impact Exchange Hold ings Pte. Ltd Exchange offering liqu id ity of trade Singapore SGD Ordinary shares 15.0 $ Redeemable Convertible Preference shares 28.5 The following company has the address of Victor ia House, State House Avenue, Victor ia, MAHE, Seychelles Seychelles International Mercantile Banking Corporation Lim ited. Commercial Bank Seychelles SCR1,000.00 Ordinary shares 22.0 The following company has the address of Avenue de Tivol i 2, 1007, Lausanne, Switzerland Metaco SA Integrated infrastructure solutions Switzerland CHF 0.01 Preference A Shares 29.5 ![]() 470 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements 40. Related undertakings of the Group continued Sign ificant investment holdings and other related undertakings Name and registered address Activ ity Place of Incorporation Descript ion of shares Proportion of shares held (%) The following company has the address of 1 Bartholomew Lane, London, EC2N 2AX, United Kingdom Corrasi Covered Bonds (LM) Lim ited Liqu idat ion member (Bond holders) United Kingdom £1.00 Ordinary 20.0 The following company has the address of Intertrust Corporate Services (Cayman) Lim ited, 190 Elg in Avenue, George Town, Grand Cayman , KY1- 9005, Cayman Islands ATSC Cayman Holdco Lim ited Investment holding Cayman Islands $0.01 Ordinary-A shares 5.2 $0.01 Ordinary-B shares 100 The following company has the address of 3, Floor 1, No.1, Shiner Wuxingca iyuan, West Er Huan Rd, , Xi Shan Distr ict, Kunming, Yunnan Province, PRC , China Yunnan Golden Shiner Property Development Co., Ltd. Real Estate Developers China CNY1.00 Ordinary shares 37.5 The following companies have the address of Unit 605-08, 6/F Wing On Centre, 111 Connaught Road, Central, Sheung Wan, Hong Kong Actis Temple Stay Holdings (HK) Lim ited Investment holding Hong Kong $ Class A Ordinary shares 39.6 $ Class B Ordinary shares 39.6 Actis Rivendell Holdings (HK) Lim ited Investment holding Hong Kong $ Class A Ordinary shares 39.6 $ Class B Ordinary shares 39.6 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 ited Other business activ it ies India INR10.00 Ordinary shares 26.0 The following company has the address of 4thFloor, 274, Chital ia House, Dr. Cawasji Hormusji Road, Dhob i Talao, Mumbai City, Maharashtra, India 400 002, Mumbai, 400 002, India Industrial Minerals and Chemical Co. Pvt. Ltd Minerals and Chemical India INR100.00 Ordinary shares 26.0 The following company has the address of Deloitte Anj in Korea, 5F., One IFC, 23, Yoido-dong, Youngdeungpo-gu, Seoul, Korea, Republic of Ascenta III Investment making Korea KRW Class B Equity Interest 31.0 The following company has the address of 3 Jalan Pisang, c/o Watiga Trust Ltd, 199070 Singapore SCIAIGF Liqu idat ing Trust 1 Investment Holding Company Singapore Interest in trust 43.9 The following company has the address of 49, Sungei Kadut Avenue, #03-01 S729673, Singapore Omni Centre Pte. Ltd. Real Estate Owners & Developers Singapore SGD Redeemable Convertible Preference shares 99.9 The following company has the address of 251 Little Falls Drive, Wilm ington, New Castle DE 19808, United States Paxata, Inc. Data Analytics United States US$0.0001 Series C2 Preferred Stock 40.7 US$0.0001 Series C3 Preferred Stock 8.91 ![]() 471 Standard Chartered – Annual Report 2022 Financ ial statements 40. Related undertakings of the Group continued In liqu idat ion Subsid iary Undertak ings Name and registered address Activ ity Place of Incorporation Descript ion of shares Proportion of shares held (%) The following company has the address of “C/O Teneo Restructuring Lim ited 156 Great Charles Street Queensway Birm ingham West M idlands B3 3HN” Standard Chartered Masterbrand Licens ing L im ited To manage intellectual property for Group United Kingdom $1.00 Ordinary Shares 100 The following companies have the address of Bucktrout House, Glategny Esplanade, St Peter Port, GY1 3HQ, Guernsey Birdsong Lim ited Fiduc iary Serv ices Guernsey £1.00 Ordinary shares 100 Nominees One Lim ited Fiduc iary Serv ices Guernsey £1.00 Ordinary shares 100 Nominees Two Lim ited Fiduc iary Serv ices Guernsey £1.00 Ordinary shares 100 Songbird Lim ited Fiduc iary Serv ices Guernsey £1.00 Ordinary shares 100 Standard Chartered Secretaries (Guernsey) Lim ited Fiduc iary Serv ices Guernsey £1.00 Ordinary shares 100 Standard Chartered Trust (Guernsey) Lim ited Fiduc iary Serv ices Guernsey £1.00 Ordinary shares 100 The following company has the address of 8/Floor, Gloucester Tower , The Landmark, 15 Queen’s Road Central, Hong Kong Leopard Hong Kong Lim ited Corporate Finance & Advisory Services Hong Kong $ Ordinary shares 100 The following company has the address of 30 Rue Schrobilgen, 2526, Luxembourg Standard Chartered Financ ial Serv ices (Luxembourg) S.A. Banking services Luxembourg €25.00 Ordinary shares 100 The following company has the address of Jiron Huascar 2055, Jesus Maria, Lima 15072, Peru Banco Standard Chartered en Liqu idac ion Financ ial counsell ing services Peru $75.133 Ordinary shares 100 The following company has the address of Luis Alberto de Herrera 1248, Torre II, Piso 11, Esc. 1111, Uruguay Standard Chartered Uruguay Representacion S.A. Leasing Business Uruguay UYU1.00 Ordinary shares 100 The following company has the address of C/O Teneo Financ ial Adv isory Lim ited, 156 Great Charles Street, Queensway, Birm ingham, West M idlands, B3 3HN, United Kingdom Standard Chartered Leasing (UK) 2 Lim ited Investment Holding Entity United Kingdom $1.00 Ordinary shares 100 The following company has the address of C/o WALKERS CORPORATE LIMITED, 190 Elgin Avenue George Town Grand Cayman KY1-9008 , Cayman Islands Sirat Holdings Lim ited Leasing Business Cayman Islands $0.01 Ordinary shares 100 The following company has the address of TMF Trust Labuan Lim ited, Brumby Centre, Lot 42,, Jalan Muhibbah, 87000 Labuan F.T., Malaysia Pembroke Leasing (Labuan) 3 Berhad Investment Holding Company Malaysia $ Ordinary shares 100 ![]() 472 Standard Chartered – Annual Report 2022 Financ ial statements Notes to the financial statements Name and registered address Activ ity Place of Incorporation Descript ion of shares Proportion of shares held (%) The following company has the address of c/o Ocorian Corporate Services (Maurit ius) Ltd, 6th Floor, Tower A, 1 Cybercity, Ebene, 72201, Maurit ius Standard Chartered Financ ial Hold ings Investment Holding Company Maurit ius $1.00 Ordinary shares 100 The following company has the address of 142, Ahmadu Bello Way, Victor ia Island, Lagos, 101241, Niger ia Cherroots Niger ia L im ited Investment Holding Company Niger ia NGN1.00 Ordinary Shares 100 Liqu idated/d issolved/sold Subsid iary Undertak ings Name and registered address Activ ity Place of Incorporation Descript ion of shares Proportion of shares held (%) The following companies have the address of Unit 605-08, 6/F Wing On Centre, 111 Connaught Road, Central, Sheung Wan, Hong Kong Actis Jack Holdings (HK) Lim ited Investment holding Hong Kong $ Class A Ordinary shares 39.6 $ Class B Ordinary shares 39.6 Actis Young City Holdings (HK) Lim ited Investment holding Hong Kong $ Class A Ordinary shares 39.6 $ Class B Ordinary shares 39.6 The following company has the address of 2 More London Rivers ide, London SE1 2JT, United Kingdom Bricks (M) LP1 Investment Holding Company United Kingdom Lim ited Partnersh ip interest 100 The following company has the address of 26F, Fortune Financ ial Centre, #5, Dong San Huan Zhong Lu, Chaoyang Distr ict, Be ijing, P. R. China. Standard Chartered Corporate Advisory Co. Ltd Corporate Finance & Advisory Services China $1.00 Ordinary shares 100 The following company has the address of 13/F Standard Chartered Bank Build ing, 4-4A Des Voeux Road Central, Hong Kong Standard Chartered Private Equity Managers (Hong Kong) Lim ited Corporate Finance & Advisory Services Hong Kong HKD Ordinary shares 100 The following company has the address of Vistra Corporate Services Centre, Ground Floor, NPF Build ing, Beach Road, Apia, Samoa Standard Chartered Nominees (Western Samoa) Lim ited Nominee Services Samoa $1.00 Ordinary shares 100 The following company has the address of “C/O Teneo Restructuring Lim ited 156 Great Charles Street Queensway Birm ingham West M idlands B3 3HN” Compass Estates Lim ited Investment holding United Kingdom £1.00 Ordinary shares 100 The following company has the address of 32 Molesworth Street, Dublin 2, D02Y512, Ireland Inishlynch Leasing Lim ited Leasing Business Ireland €1.00 Ordinary shares 100 40. Related undertakings of the Group continued In liqu idat ion continued Subsid iary Undertak ings continued ![]() 473 Standard Chartered – Annual Report 2022 Financ ial statements Name and registered address Activ ity Place of Incorporation Descript ion of shares Proportion of shares held (%) The following company has the address of Menara Standard Chartered, 3rd Floor, Jl. Prof.Dr. Satrio no. 164, Setiabud i, Jarkarta Selatan, Indonesia PT Solusi Cakra Indonesia (dalam liku idas i) Banking & Financ ial Services Indonesia IDR23,809,600.00 Ordinary shares 99.0 The following company has the address of No. 157 – 157 A, Jakarta Barat, 11130, Indonesia. PT. Price Solutions Indonesia (dalam liku idas i) Direct Sales/Collection Services Indonesia $100.00 Ordinary shares 100 The following company has the address of Standard Chartered@Chiromo, Number 48, Westlands Road, P. O. Box 30003 - 00100, Nairob i, Kenya Standard Chartered Management Services Lim ited Investment Management Kenya KES20.00 Ordinary shares 100 The following company has the address of M6-2701, West 27Fl, Suha-dong, 26, Eulji-ro 5-g il, Jung-gu, Seoul, Korea, Republic of Resolution Alliance Korea Ltd Investment Management Korea, Republic of KRW5,000.00 Ordinary shares 100 The following company has the address of 8 Marina Boulevard, Level 27, Marina Bay Financ ial Centre, Tower 1, 018981, Singapore Standard Chartered (2000) Lim ited Others Singapore SGD1.00 Ordinary shares 100 The following company has the address of C/o IQ EQ Corporate Services (Maurit ius) Ltd, 33 Ed ith Cavell Street, Port Louis, 11324, Maurit ius FAI Lim ited Investment Advisory services Maurit ius $1.00 Ordinary shares 76.5 The following company has the address of Standard Chartered Bank France, 32 Rue de Monceau,75008, Paris, France Pembroke Lease France SAS Leasing Business France €1.00 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 To undertake investments in non-performing loans Malaysia RM Ordinary shares 100 The following company has the address of 8/Floor, Gloucester Tower , The Landmark, 15 Queen’s Road Central, Hong Kong Leopard Hong Kong Lim ited Holding Company Hong Kong $ Ordinary shares 100 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 Admin istrat ion of shared ATM network Malaysia RM1.00 Ordinary shares 25.0 40. Related undertakings of the Group continued Liqu idated/d issolved/sold continued Subsid iary Undertak ings continued ![]() #### Creating a cultural exchange for good #### Supplementary information 476 Supplementary financial informat ion 484 Supplementary people informat ion 488 Supplementary sustainab il ity informat ion 493 2022 Sustainab il ity Aspirat ions 496 Shareholder informat ion 500 Main awards and accolades 502 Glossary #### Celebrating our Community #### Champions #### This year, we are celebrating the inspiring employee volunteering (EV) work undertaken by our colleagues. #### Employee volunteering is a core component of our community engagement and runs through our DNA. It enables our employees to do the right thing and strengthens their relationships with our communities as well as each other. Each employee is entitled to up to four days of paid volunteering leave a year, which can #### be used for bank-wide initiatives or supporting charitable causes of their choice. #### With thousands of EV hours undertaken globally, here are three champions who are truly here for good. 474 Standard Chartered – Annual Report 2022 Supplementary informat ion Meet Arie Vid i N Nurchol is, Singapore Arie mobil ised h is Client Acquis it ions and Client Care Centre team of 400 people to volunteer together. With over 90 per cent of his colleagues being Muslim, they came together to support their local orphanage during Ramadan. They provided daily breakfasts and rolled up their sleeves to help with the build ing and ma intenance work at the orphanage. As part of their cultural exchange, at the end of the year, they also supported an annual Christmas gathering at a local catholic orphanage, provid ing food and gifts to the children. This work not only brought their team together but uplifted the children they vis ited. ![]() Meet Chantele Pereira, United States Chantele worked on a number of in it iat ives in 2022 aimed at nurturing the next generation of leaders. She led our Women in Tech programme in the Americas, specif ically our #Bossg irls in it iat ive, which is an entrepreneurship bootcamp for high schoolers in the United States. As part of her work, she managed volunteer recruitment and taught financial educat ion as part of the curriculum. Chantele also mentored students in the Leadership Enterprise for a Diverse America programme. The programme aims to divers ify the talent pipel ine by help ing high school students from under-resourced communit ies ga in entry to the nation’s most selective colleges. Meet Antony Ngure, Kenya When our team in Kenya entered a partnership with the Nairob i Arboretum Conservancy Commun ity Forest Associat ion and comm itted to creating a tree nursery of 1 mill ion seedl ings by 2024, Antony was determined to help. Antony mobil ised 367 team members to help plant seedlings. This translated to 32 per cent staff partic ipat ion in EV, in Kenya. He also led the distr ibut ion of 23,000 seedlings to the partic ipants of our second susta inable marathon in 2022 – up from 5,000 seedlings distr ibuted in 2021. His commitment to the environment earned him the nickname – Antony wa mit i (Antony of trees). #### Mentoring the next generation of leaders #### Antony of trees plants seedlings in Kenya 475 Standard Chartered – Annual Report 2022 Supplementary informat ion ![]() 476 Standard Chartered – Annual Report 2022 Supplementary informat ion Supplementary financial informat ion Five-year summary 2022 $mill ion 2021 $mill ion 2020 $mill ion 2019 $mill ion 2018 $mill ion Operating profit before impa irment losses and taxat ion 5,405 3,777 4,374 4,484 3,142 Impairment losses on loans and advances and other credit risk provis ions (836) (254) (2,325) (908) (653) Other impa irment (425) (372) (98) (136) (182) Profit before taxation 4,286 3,347 1,613 3,713 2,548 Profit/(loss) attributable to shareholders 2,948 2,315 724 2,303 1,054 Loans and advances to banks 1 39,519 44,383 44,347 53,549 61,414 Loans and advances to customers 1 310,647 298,468 281,699 268,523 256,557 Total assets 819,922 827,818 789,050 720,398 688,762 Deposits by banks 1 28,789 30,041 30,255 28,562 29,715 Customer accounts 1 461,677 474,570 439,339 405,357 391,013 Shareholders’ equity 43,162 46,011 45,886 44,835 45,118 Total capital resources 2 63,731 69,282 67,383 66,868 65,353 Information per ordinary share Basic earnings/(loss) per share 85.9c 61.3c 10.4c 57.0c 18.7c Underlying earnings per share 101.1c 85.8c³ 36.1c 75.7c 61.4c Div idends per share 4 18c 12.0c – 22.0c 17.0c Net asset value per share 1,453.3c 1,456.4c 1,409.3c 1,358.3c 1,319.3c Net tangible asset value per share 1,249.0c 1,277.0c 1,249.0c 1,192.5c 1,167.7c Return on assets 5 0.4% 0.3% 0.1% 0.3% 0.3% Ratios Statutory return on ordinary shareholders’ equity 6.0% 4.2% 0.8% 4.2% 1.4% Statutory return on ordinary shareholders’ tangible equity 6.8% 4.8% 0.9% 4.8% 1.6% Underlying return on ordinary shareholders’ equity 6.9% 5.9%³ 2.6% 5.6% 4.6% Underlying return on ordinary shareholders’ tangible equity 8.0% 6.8%³ 3.0% 6.4% 5.1% Statutory cost to income ratio (excluding UK bank levy) 66.3% 73.6% 68.1% 68.7% 76.6% Statutory cost to income ratio (includ ing UK bank levy) 66.9% 74.3% 70.4% 70.9% 78.8% Underlying cost to income ratio (excluding UK bank levy) 65.5% 69.8% 66.4% 65.9% 67.7% Underlying cost to income ratio (includ ing UK bank levy) 66.2% 70.5% 68.7% 68.2% 69.9% Capital ratios: CET1 6 14.0% 14.1% 14.4% 13.8% 14.2% Total capital 6 21.7% 21.3% 21.2% 21.2% 21.6% 1 Excludes amounts held at fair value through profit or loss 2 Shareholders’ funds, non-controlling interests and subordinated loan capital 3 Other Impairment includes $308 mill ion impa irment charge relat ing to the Group’s investment in its associate China Bohai Bank (Bohai). The 2021 comparative has been restated for consistency to reclassify the $300 mill ion impa irment from Other impa irment w ith in Underly ing profit which has resulted in the restatement of Underlying basic earnings per ordinary share (cents), underlying return on equity and underlying return on tangible equity 4 Div idend pa id during the year per share 5 Represents profit attributable to shareholders div ided by the total assets of the Group 6 Unaudited #### Supplementary financialinformation ![]() 477 Standard Chartered – Annual Report 2022 Supplementary informat ion Analysis of underlying performance by key market The following tables provide informat ion for key markets in which the Group operates. The numbers are prepared on a management view. Refer to Note 2 for details. 2022 Hong Kong $mill ion Korea $mill ion China $mill ion Taiwan $mill ion Singapore $mill ion India $mill ion Indonesia $mill ion UAE $mill ion UK $mill ion US $mill ion Operating income 3,715 1,143 1,155 475 1,915 1,227 214 629 1,023 1,029 Operating expenses (2,022) (731) (841) (335) (1,081) (763) (183) (368) (742) (602) Operating profit before impa irment losses and taxat ion 1,693 412 314 140 834 464 31 261 281 427 Credit impa irment (579) (55) (200) (15) 84 (31) 4 81 35 13 Other impa irment³ (38) (1) (3) (1) (2) (1) – – 35 – Profit from associates and joint ventures – – 179 – – – – – – – Underlying profit before taxation 1,076 356 290 124 916 432 35 342 351 440 Total assets employed 171,086 68,903 39,508 21,919 97,914 30,412 5,237 19,624 187,832 67,019 Of which: loans and advances to customers 1 85,359 49,264 15,652 11,283 59,872 15,025 2,403 7,913 39,356 19,951 Total liab il it ies employed 165,499 58,992 33,124 20,216 104,320 23,210 4,257 16,256 140,160 64,825 Of which: customer accounts 1 138,713 43,620 24,347 18,509 79,409 15,199 2,924 12,710 104,482 28,424 2021 Hong Kong $mill ion Korea $mill ion China $mill ion Taiwan $mill ion Singapore $mill ion India $mill ion Indonesia 2 $mill ion UAE $mill ion UK $mill ion US $mill ion Operating income 3,440 1,102 1,087 493 1,608 1,282 213 546 895 818 Operating expenses (2,008) (772) (765) (362) (1,054) (744) (180) (362) (721) (533) Operating profit before impa irment losses and taxat ion 1,432 330 322 131 554 538 33 184 174 285 Credit impa irment (251) (14) (49) (4) 88 (23) (3) 58 58 27 Other impa irment³ – 2 – – (1) 1 – – 96 – Profit from associates and joint ventures – – 175 – – – – – – – Underlying profit before taxation 1,181 318 448 127 641 516 30 242 328 312 Total assets employed 177,460 67,311 37,908 23,349 94,881 28,416 4,837 19,224 193,807 68,148 Of which: loans and advances to customers 1 89,063 45,323 18,014 12,363 56,454 14,991 2,257 8,937 52,878 19,375 Total liab il it ies employed 166,727 58,406 35,637 21,790 93,884 20,509 3,769 13,922 149,064 70,648 Of which: customer accounts 1 141,256 47,867 27,618 20,281 75,154 14,730 2,622 11,466 105,490 37,407 1 Loans and advances to customers includes FVTPL and customer accounts includes FVTPL and repurchase agreements 2 Indonesia performance has been presented includ ing Nexus for current year and pr ior year 3 Other Impairment includes $308 mill ion impa irment charge relat ing to the Group’s investment in its associate China Bohai Bank (Bohai). The 2021 comparative has been restated for consistency to reclassify the $300 mill ion impa irment from Other impa irment w ith in Underly ing profit which has resulted in the restatement of Underlying basic earnings per ordinary share (cents) ![]() 478 Standard Chartered – Annual Report 2022 Supplementary informat ion Supplementary financial informat ion 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. 2022 Corporate, Commercial & Institut ional Banking $mill ion Consumer, Private & Business Banking $mill ion Ventures $mill ion Central & other items (segment) $mill ion Total $mill ion Transaction Banking 3,801 124 – – 3,925 Trade & Working capital 1,315 56 – – 1,371 Cash Management 2,486 68 – – 2,554 Financ ial Markets 5,728 – – – 5,728 Macro Trading 2,962 – – – 2,962 Credit Markets 1,696 – – – 1,696 Credit Trading 506 – – – 506 Financ ing Solut ions & Issuance 1,190 – – – 1,190 Structured Finance 408 – – – 408 Financ ing & Secur it ies Serv ices 620 – – – 620 DVA 42 – – – 42 Lending & Portfolio Management 525 37 – – 562 Wealth Management 1 1,801 – – 1,802 Retail Products 1 4,054 13 – 4,068 CCPL and other unsecured lending – 1,194 22 – 1,216 Deposits 1 2,052 (9) – 2,044 Mortgage & Auto – 635 – – 635 Other Retail Products – 173 – – 173 Treasury – – 5 343 348 Other (11) – 11 (178) (178) Total underlying operating income 10,045 6,016 29 165 16,255 2021 (Restated)¹ Corporate, Commercial & Institut ional Banking $mill ion Consumer, Private & Business Banking $mill ion Ventures $mill ion Central & other items (segment) $mill ion Total $mill ion Transaction Banking 2,793 93 – – 2,886 Trade & Working capital 1,390 57 – – 1,447 Cash Management 1,403 36 – – 1,439 Financ ial Markets 4,899 – – – 4,899 Macro Trading 2,216 – – – 2,216 Credit Markets 1,790 – – – 1,790 Credit Trading 437 – – – 437 Financ ing Solut ions & Issuance 1,353 – – – 1,353 Structured Finance 491 – – – 491 Financ ing & Secur it ies Serv ices 387 – – – 387 DVA 15 – – – 15 Lending & Portfolio Management 725 34 – – 759 Wealth Management 1 2,224 – – 2,225 Retail Products 1 3,360 (3) – 3,358 CCPL and other unsecured lending – 1,271 1 – 1,272 Deposits 1 863 (4) – 860 Mortgage & Auto – 1,036 – – 1,036 Other Retail Products – 190 – – 190 Treasury – – – 698 698 Other (12) 24 4 (128) (112) Total underlying operating income 8,407 5,735 1 570 14,713 1 Following the increased strategic importance and reporting of Ventures to management, this has been established as a separate operating segment. In 2022 prior periods have been restated 2 Following a reorganisat ion of certa in clients, there has been a reclassif icat ion of balances across products. ![]() 479 Standard Chartered – Annual Report 2022 Supplementary informat ion Insured and uninsured deposits SCB operates and provides services to customers across many countries and insured deposit is determined on the basis of lim its enacted with in local regulat ions 2022 2021 Bank deposits $mill ion Customer accounts $mill ion Bank deposits $mill ion Customer accounts $mill ion Insured deposits 28 60,008 90 62,095 Current accounts 8 16,373 10 19,182 Savings deposits – 26,973 – 30,866 Time deposits 20 16,599 80 11,825 Other deposits – 63 – 222 Uninsured deposits 36,795 460,221 38,357 480,360 Current accounts 22,425 144,931 25,599 160,519 Savings deposits – 90,937 – 116,466 Time deposits 6,870 176,090 5,223 142,756 Other deposits 7,500 48,263 7,535 60,619 Total 36,823 520,229 38,447 542,455 UK and non-UK deposits SCB operates and provides services to customers across many countries and insured deposit is determined on the basis of lim its enacted with in local regulat ions. 2022 2021 Bank deposits $mill ion Customer accounts $mill ion Bank deposits $mill ion Customer accounts $mill ion UK deposits 4,163 38,557 3,078 31,686 Current accounts 903 8,955 1,711 11,210 Savings deposits – 420 – 306 Time deposits 1,004 6,760 112 7,666 Other deposits 2,256 22,422 1,255 12,504 Non-UK deposits 32,660 481,672 35,369 510,769 Current accounts 21,530 152,349 23,898 168,491 Savings deposits – 117,490 – 147,026 Time deposits 5,886 185,929 5,191 146,915 Other deposits 5,244 25,904 6,280 48,337 Total 36,823 520,229 38,447 542,455 ![]() 480 Standard Chartered – Annual Report 2022 Supplementary informat ion Supplementary financial informat ion Contractual maturity of Loans, Investment securit ies and Depos its 2022 Loans and advances to banks $mill ion Loans and advances to customers $mill ion Investment securit ies – Treasury and other elig ible B ills $mill ion Investment securit ies – Debt securit ies $mill ion Investment securit ies – Equity shares $mill ion Bank deposits $mill ion Customer accounts $mill ion One year or less 60,132 208,691 42,269 47,193 – 35,240 508,125 Between one and five years 3,630 52,563 482 63,523 – 1,576 10,281 Between five and ten years 411 18,067 – 20,078 – 7 694 Between ten years and fifteen years 92 13,305 – 12,921 – – 598 More than fifteen years and undated 184 65,104 – 15,720 4,037 – 531 Total 64,449 357,730 42,751 159,435 4,037 36,823 520,229 Total amortised cost and FVOCI exposures: 39,519 310,647 Fixed interest rate exposures 36,218 170,609 Floating interest rate exposures 3,301 140,038 2021 Loans and advances to banks $mill ion Loans and advances to customers $mill ion Investment securit ies – Treasury and other elig ible B ills $mill ion Investment securit ies – Debt securit ies $mill ion Investment securit ies – Equity shares $mill ion Bank deposits $mill ion Customer accounts $mill ion One year or less 63,741 215,065 21,493 42,653 – 38,121 533,319 Between one and five years 2,921 57,690 532 79,081 – 322 7,009 Between five and ten years 143 16,744 – 24,214 – 3 861 Between ten years and fifteen years 1 14,493 – 7,436 – – 687 More than fifteen years and undated 151 65,711 – 16,716 6,598 1 579 Total 66,957 369,703 22,025 170,100 6,598 38,447 542,455 Total amortised cost and FVOCI exposures: 44,383 298,468 Fixed interest rate exposures 40,618 155,948 Floating interest rate exposures 3,765 142,520 Maturity and yield of Debt securit ies, alternat ive tier one and other elig ible b ills held at amortised cost One year or less Between one and five years Between five and ten years More than ten years Total $mill ion Yield % $mill ion Yield % $mill ion Yield % $mill ion Yield % $mill ion Yield % Central and other government agencies – US 2,208 1.58 5,437 1.41 6,317 1.32 4,498 3.47 18,460 1.90 – UK – – 85 1.98 60 0.50 47 0.90 192 1.26 – Other 3,599 2.71 9,659 1.98 3,541 2.24 44 4.00 16,843 2.19 Other debt securit ies 4,752 4.53 2,869 5.07 1,454 4.09 15,144 3.55 24,219 3.96 As at 31 December 2022 10,559 3.29 18,050 2.30 11,372 1.96 19,733 3.53 59,714 2.82 One year or less Between one and five years Between five and ten years More than ten years Total $mill ion Yield % $mill ion Yield % $mill ion Yield % $mill ion Yield % $mill ion Yield % Central and other government agencies – US 270 1.72 5,609 1.33 6,476 1.28 3,418 3.00 15,772 1.68 – UK – – 49 2.67 114 0.81 52 0.91 215 1.26 – Other 1,813 1.17 6,366 1.32 1,485 1.56 – – 9,665 1.33 Other debt securit ies 2,033 5.64 1,877 4.51 1,696 3.08 10,067 0.95 15,673 2.28 As at 31 December 2021 4,116 3.41 13,901 1.76 9,771 1.63 13,537 1.47 41,325 1.82 The maturity distr ibut ions are presented in the above table on the basis of contractual maturity dates. The weighted average yield for each range of maturit ies is calculated by div id ing the annualised interest income for the year by the book amount of debt securit ies at that date. ![]() 481 Standard Chartered – Annual Report 2022 Supplementary informat ion 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 il it ies used to prov ide funding to the Financ ial Markets bus iness • Financ ial instruments measured at fair value through profit or loss are classif ied as non- interest earning • Premiums on financ ial 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 il it ies for the per iods ended 31 December 2022 and 31 December 2021 under the revised defin it ion 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 ion presented in these tables would be sign ificantly d ifferent had such balances been determined on a daily basis. Average assets Average assets 2022 Average non-interest earning balance $mill ion Average interest- earning balance $mill ion Interest income $mill ion Gross yield % Gross yield total balance % Cash and balances at central banks 19,700 54,503 765 1.40 1.03 Gross loans and advances to banks 29,576 42,953 853 1.99 1.18 Gross loans and advances to customers 61,480 306,880 10,168 3.31 2.76 Impairment provis ions aga inst loans and advances to banks and customers – (5,867) – – – Investment securit ies – Treasury and Other El ig ible B ills 5,564 25,924 630 2.43 2.00 Investment securit ies – Debt Secur it ies 23,618 140,977 2,836 2.01 1.72 Investment securit ies – Equ ity Shares 4,152 – – – – Property, plant and equipment and intang ible assets 8,821 – – – – Prepayments, accrued income and other assets 142,599 – – – – Investment associates and jo int ventures 2,152 – – – – Total average assets 297,662 565,370 15,252 2.70 1.77 Average assets 2021 Average non-interest earning balance $mill ion Average interest- earning balance $mill ion Interest income $mill ion Gross yield % Gross yield total balance % Cash and balances at central banks 23,612 55,991 92 0.16 0.12 Gross loans and advances to banks 22,335 45,953 490 1.07 0.72 Gross loans and advances to customers 56,582 307,552 7,574 2.46 2.08 Impairment provis ions aga inst loans and advances to banks and customers – (6,013) – – – Investment securit ies – Treasury and Other El ig ible B ills 4,891 21,082 302 1.43 1.16 Investment securit ies – Debt Secur it ies 22,778 134,843 1,788 1.33 1.13 Investment securit ies – Equ ity Shares 4,581 – – – – Property, plant and equipment and intang ible assets 8,869 – – – – Prepayments, accrued income and other assets 111,564 – – – – Investment associates and jo int ventures 2,330 – – – – Total average assets 257,542 559,408 10,246 1.83 1.25 ![]() 482 Standard Chartered – Annual Report 2022 Supplementary informat ion Supplementary financial informat ion Average liab il it ies Average liab il it ies 2022 Average non-interest bearing balance $mill ion Average interest-bearing balance $mill ion Interest expense $mill ion Rate paid % Rate paid total balance % Deposits by banks 17,039 27,241 433 1.59 0.98 Customer accounts: Current accounts 51,375 132,709 1,480 1.12 0.80 Savings deposits – 131,571 832 0.63 0.63 Time deposits 11,586 152,118 3,021 1.99 1.85 Other deposits 52,962 5,094 110 2.16 0.19 Debt securit ies in issue 6,720 60,559 1,169 1.93 1.74 Accruals, deferred income and other liab il it ies 147,814 1,065 44 4.13 0.03 Subordinated liab il it ies and other borrowed funds – 14,994 570 3.80 3.80 Non-controlling interests 312 – – – – Shareholders’ funds 49,873 – – – – 337,681 525,351 7,659 1.46 0.89 Adjustment for Financ ial Markets fund ing costs (463) Financ ial guarantee fees on interest-earning assets 80 Total average liab il it ies and shareholders’ funds 337,681 525,351 7,276 1.38 0.84 Average liab il it ies 2021 Average non-interest bearing balance $mill ion Average interest-bearing balance $mill ion Interest expense $mill ion Rate paid % Rate paid total balance % Deposits by banks 18,486 27,402 136 0.50 0.30 Customer accounts: Current accounts 51,104 120,477 462 0.38 0.27 Savings deposits – 141,714 386 0.27 0.27 Time deposits 9,590 141,652 1,306 0.92 0.86 Other deposits 45,068 7,715 42 0.54 0.08 Debt securit ies in issue 6,288 59,135 566 0.96 0.87 Accruals, deferred income and other liab il it ies 115,477 1,149 53 4.61 0.05 Subordinated liab il it ies and other borrowed funds – 16,525 497 3.01 3.01 Non-controlling interests 343 – – – – Shareholders’ funds 51,307 – – – – 297,663 515,769 3,448 0.67 0.42 Adjustment for Financ ial Markets fund ing costs (97) Financ ial guarantee fees on interest-earning assets 99 Total average liab il it ies and shareholders’ funds 297,663 515,769 3,450 0.67 0.42 Net interest margin 2022 $mill ion 2021 $mill ion Interest income (statutory) 15,252 10,246 Average interest-earning assets 565,370 559,408 Gross yield (%) 2.70 1.83 Interest expense (statutory) 7,659 3,448 Adjustment for Financ ial Markets fund ing costs (463) (97) Financ ial guarantee fees on interest-earing assets 80 99 Adjusted interest expense used to fund financ ial instruments held at fair value 7,276 3,450 Average interest-bearing liab il it ies 525,351 515,769 Rate paid (%) 1.38 0.67 Net yield (%) 1.32 1.16 Net interest income adjusted for Financ ial Markets fund ing costs and Financ ial guarantee fees on interest-earing assets 7,976 6,796 Net interest margin (%) 1.41 1.21 ![]() 483 Standard Chartered – Annual Report 2022 Supplementary informat ion Volume and price variances The following table analyses the estimated change in the Group’s net interest income attributable to changes in the average volume of interest-earning assets and interest-bearing liab il it ies, 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 il it ies. 2022 versus 2021 (Decrease)/increase in interest due to: Net increase/ (decrease) in interest $mill ion Volume $mill ion Rate $mill ion Interest-earning assets Cash and unrestricted balances at central banks (21) 694 673 Loans and advances to banks (60) 423 363 Loans and advances to customers (17) 2,611 2,594 Investment securit ies 228 1,148 1,376 Total interest-earning assets 130 4,876 5,006 Interest-bearing liab il it ies Subordinated liab il it ies and other borrowed funds (58) 131 73 Deposits by banks (3) 300 297 Customer accounts: Current accounts and savings deposits 18 1,428 1,446 Time and other deposits 157 1,635 1,792 Debt securit ies in issue 27 576 603 Total interest-bearing liab il it ies 141 4,070 4,211 2021 versus 2020 (Decrease)/increase in interest due to: Net increase/ (decrease) in interest $mill ion Volume $mill ion Rate $mill ion 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 ies 158 (888) (730) Total interest-earning assets 510 (2,556) (2,046) Interest-bearing liab il it ies Subordinated liab il it ies and other 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 ies in issue 65 (335) (270) Total interest-bearing liab il it ies 150 (2,142) (1,992) ![]() 484 Standard Chartered – Annual Report 2022 Supplementary informat ion Supplementary people informat ion #### Supplementary people information Global 1 2022 2021 2020 % change Full-time equivalent (FTE) 83,195 81,904 83,601 1.6 Headcount (year end) 83,266 81,957 83,657 1.6 Employed workers (permanent) 82,319 80,605 82,084 2.1 of which female 37,259 36,644 37,245 1.7 Fixed-term workers (temporary) 947 1,352 1,573 (30.0) of which female 429 637 768 (32.7) Non-employed workers (NEW) 13,962 13,845 11,632 0.8 Non-outsourced NEW 2 5,873 6,130 5,765 (4.2) Outsourced NEW 3 8,089 7,715 5,867 4.8 Headcount (12-month average) 82,987 82,736 84,740 0.3 Male FTE 44,709 44,033 45,198 1.5 Headcount 44,734 44,045 45,210 1.6 Full-time 44,683 44,002 45,172 1.5 Part-time 51 43 38 18.6 Female FTE 37,642 37,240 37,969 1.1 Headcount 37,688 37,281 38,013 1.1 Full-time 37,551 37,138 37,860 1.1 Part-time 137 143 153 (4.2) Undisclosed 4 FTE 844 631 434 33.7 Headcount 844 631 434 33.8 Full-time 843 630 433 33.8 Part-time 1 1 1 – National it ies 131 132 131 (0.8) Posit ion type 2022 2021 2020 % change Executive and non-executive director 14 13 13 7.7 of which female 6 4 4 50.0 Management team and their direct reports 5 131 116 129 12.9 of which female 43 33 41 30.3 Senior leadership 6 4,422 4,227 4,196 4.6 of which female 1,420 1,299 1,236 9.3 Rest of employees 78,844 77,730 79,461 1.4 of which female 36,268 35,982 36,777 0.8 Employment type 7 2022 2021 2020 % change Business FTE 30,589 30,921 35,071 (1.1) Business headcount 30,619 30,940 35,093 (1.0) Business female headcount 15,794 15,997 18,079 (1.3) Support services FTE 52,607 50,983 48,530 3.2 Support services headcount 52,647 51,017 48,564 3.2 Female support services headcount 21,894 21,284 19,934 2.9 ![]() 485 Standard Chartered – Annual Report 2022 Supplementary informat ion Region 2022 2021 2020 % change Asia FTE 69,329 67,840 68,357 2.2 Asia headcount 69,364 67,870 68,385 2.2 Asia female headcount 32,033 31,470 31,610 1.8 Asia employed workers headcount 68,585 66,968 67,449 2.4 Asia fixed-term workers headcount 779 902 936 (13.6) Asia full-time headcount 69,257 67,774 68,300 2.2 Asia part-time headcount 107 96 85 11.5 AME FTE 8,905 9,372 10,694 (5.0) AME headcount 8,921 9,373 10,695 (4.8) AME female headcount 3,918 4,100 4,652 (4.4) AME employed workers headcount 8,813 8,999 10,139 (2.1) AME fixed-term workers headcount 108 374 556 (71.1) AME full-time headcount 8,917 9,369 10,691 (4.8) AME part-time headcount 4 4 4 – EA FTE 4,962 4,691 4,550 5.8 EA headcount 4,981 4,714 4,577 5.7 EA female headcount 1,737 1,711 1,751 1.5 EA employed workers headcount 4,921 4,638 4,496 6.1 EA fixed-term workers headcount 60 76 81 (21.1) EA full-time headcount 4,903 4,627 4,474 6.0 EA part-time headcount 78 87 103 (10.3) Age 2022 2021 2020 % change < 30 years FTE 13,826 14,063 15,979 (1.7) < 30 years headcount 13,836 14,069 15,984 (1.7) < 30 years female headcount 7,397 7,623 8,409 (3.0) 30–50 years FTE 61,651 60,891 60,881 1.2 30–50 years headcount 61,691 60,919 60,912 1.3 30–50 years female headcount 26,870 26,583 26,641 1.1 > 50 years FTE 7,718 6,949 6,741 11.1 > 50 years headcount 7,739 6,969 6,761 11.0 > 50 years female headcount 3,421 3,075 2,963 11.3 ![]() 486 Standard Chartered – Annual Report 2022 Supplementary informat ion Supplementary people informat ion Talent management 8 2022 2021 2020 % change Global voluntary turnover – FTE 12,645 10,214 6,001 23.8 Global turnover – FTE 14,388 13,160 8,088 9.3 Global voluntary turnover rate (%) 15.5% 12.6% 7.2% 22.9 Global turnover rate (%) 17.6% 16.2% 9.7% 8.6 Male turnover FTE 8,021 7,332 4,386 9.4 Male (%) 18.2% 16.7% 9.8% 9.0 Female turnover FTE 6,230 5,736 3,673 8.6 Female (%) 16.8% 15.6% 9.7% 8.0 Asia turnover FTE 12,501 11,004 6,588 13.6 Asia (%) 18.4% 16.4% 9.7% 12.1 AME turnover FTE 1,046 1,454 1,046 (28.1) AME (%) 11.7% 15.4% 9.8% (23.9) EA turnover FTE 841 703 454 19.6 EA (%) 17.7% 15.5% 10.2% 14.6 < 30 years turnover FTE 4,137 3,712 2,561 11.5 < 30 years (%) 30.5% 26.1% 15.0% 17.2 30–50 years turnover FTE 9,303 8,144 4,765 14.2 30–50 years (%) 15.2% 13.5% 8.0% 12.7 > 50 years turnover FTE 947 1,304 762 (27.4) > 50 years (%) 13.1% 19.3% 12.1% (31.8) Average tenure (years) – male 7.1 7.2 7.1 (1.4) Average tenure (years) – female 7.6 7.7 7.6 (1.3) Global new hires – FTE 17,432 12,660 8,639 37.7 Global new hire rate (%) 21.0% 15.3% 10.2% 37.3 Male new hire FTE 9,683 6,758 4,963 43.3 Male (%) 21.7% 15.2% 10.9% 43.2 Female new hire FTE 7,384 5,580 3,423 32.3 Female (%) 19.6% 14.9% 8.9% 32.2 Asia new hire FTE 15,441 11,387 7,591 35.6 Asia (%) 22.4% 16.7% 11.0% 33.9 AME new hire FTE 934 431 366 116.7 AME (%) 10.2% 4.3% 3.3% 135.8 EA new hire FTE 1,056 842 682 25.5 EA (%) 21.9% 18.2% 15.1% 20.5 < 30 years new hire FTE 7,673 5,857 4,020 31.0 < 30 years (%) 54.7% 39.6% 22.6% 38.2 30–50 years new hire FTE 9,357 6,514 4,433 43.7 30–50 years (%) 15.2% 10.7% 7.3% 42.3 > 50 years new hire FTE 401 290 186 38.7 > 50 years (%) 5.4% 4.2% 2.9% 30.4 Roles filled internally (%) 37.3% 40.8% 39.6% (8.6) of which filled by females (%) 41.0% 42.8% 41.1% (4.1) Absenteeism rate 9 (%) 1.4% 1.6% 1.3% (12.9) ![]() 487 Standard Chartered – Annual Report 2022 Supplementary informat ion Learning 10 2022 2021 2020 % change Employees receiv ing tra in ing (%) 99.5% 99.4% 99.5% 0.1 Employees receiv ing tra in ing for personal development (%) 91.6% 91.7% 91.5% (0.1) Female (%) 90.0% 91.2% 89.9% (1.3) Senior leadership (%) 6 94.9% 96.2% 94.5% (1.4) Average number of train ing hours per employee 36.6 37.6 31.8 (2.6) Female 35.2 36.9 30.3 (4.6) Male 37.7 38.0 32.0 (0.8) Employed workers 36.8 37.6 31.9 (2.2) Fixed-term workers 21.9 34.0 27.3 (35.8) Average cost of train ing per employee ($) 11 743 708 567 5.0 Work-related Health & Safety 2022 2021 2020 % change Fatalit ies 12 1 0 1 – Fatalit ies (rate per m ill ion hours worked) 0.01 0 0.01 – Major in juries 12,13,14,15 21 24 23 (12.5) Major in juries (rate per mill ion hours worked 16 ) 0.11 0.13 0.12 (15.2) Recordable work-related injuries 17 83 79 84 5.1 Recordable work-related injuries (rate per mill ion hours worked 16 ) 0.44 0.43 0.45 2.8 Work-related ill-health (fatalit ies) 0 0 0 – 1 Excludes 453 employees (headcount) from Dig ital Ventures ent it ies (Autumn, Cardspal, TASConnect, Zod ia, Solv, Appro). Excludes 331 Person of Interest (headcount) following a recategorisat ion of worker types from 2022, i.e. independent non-executive directors, advisers, external auditors and regulators. Percentage change refers to the percentage change from 2021 to 2022 2 Non-outsourced NEWs are resources engaged on a time and materials basis where task selection and supervis ion is the responsib il ity of the Bank, such as agency workers. References to total number of colleagues in this report include employees plus non-outsourced NEWs 3 Outsourced NEWs are arrangements with a third-party vendor where the delivery is based on a specif ic serv ice or outcome at an agreed price, irrespect ive of the number of resources required to perform the service. These resources are not considered as the Group’s headcount 4 The disclosure of gender informat ion is not mandatory in some markets 5 Management Team (MT) and colleagues who report to them, excluding admin istrat ive or executive support roles (personal assistant, business planning managers). Includes Group Head of Internal Audit 6 Senior leadership is defined as Managing Directors and Bands 4 (includ ing Management Team) 7 As part of the ongoing execution of its refreshed strategy, the Group has reorganised its reporting structure with the creation of a third client segment, Ventures, in 2022. Prior periods have been restated for a meaningful comparison 8 Turnover 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 population is not shown due to small population size. In 2022, we have updated turnover and new hire metrics based on average 12-month FTE and prior periods have been refreshed accordingly 9 Represents health and disab il ity related absence, includ ing quarant ine and vaccinat ion leave in respect of COVID-19. Excludes Korea 10 Learning metrics exclude non-employed workers (NEWs). Train ing for personal development is defined as all train ing exclud ing mandatory or role specif ic tra in ing 11 Average cost of train ing per employee includes cost of learning management system 12 Includes commuting 13 Per UK HSE definit ion 14 Most common types of major in jury are fractures (21%) 15 2022 includes 1 contractor/vis itor. 2021 includes 4 contractors/vis itors. 2020 includes 1 contractor/vis itor 16 2022 hours worked = 188,758,285 hours worked. 2021 hours worked = 184,997,097. 2020 hours worked = 185,313,634 17 2022 includes 18 contractors/vis itors. 2021 includes 23 contractors/vis itors. 2020 includes 14 contractors/vis itors ![]() 488 Standard Chartered – Annual Report 2022 Supplementary informat ion Supplementary sustainab il ity informat ion #### Supplementary sustainability information Pillar 1: Business Employees trained in environmental and social risk management FY’22 FY’21 FY’20 Employees trained 1 4,944 1,280 1,604 1 Employees targeted for train ing are those in client-facing roles and relevant support teams. For 2022, this figure also includes our ESRM e-learning Environmental and social risk management FY’22 FY’21 FY’20 Number of transactions reviewed 550 547 402 Number of clients reviewed 1,170 786 688 Client exits due to non-compliance with Posit ion Statements 14 4 Equator Princ iples Project finance mandates Project-related corporate loans Project-related refinance 4 Project advisory mandates 6 Cat A 1 Cat B 2 Cat C 3 Cat A Cat B Cat C Cat A Cat B Cat C Total 2020 4.0 8.0 – 2.0 1.0 – – – – – Total 2021 8.0 12.0 3.0 1.0 6.0 – – 1.0 – – Total 2022 6.0 7.0 1.0 2.0 3.0 4.0 – – – – 2022 Sector A B C A B C General Manufacturing 1.0 Infrastructure 2.0 3.0 1.0 2.0 3.0 3.0 Oil and Gas 1.0 1.0 Power 3.0 3.0 Region Americas 1.0 2.0 1.0 Asia Pacif ic 4.0 2.0 1.0 1.0 2.0 Europe, Middle East & Africa 1.0 3.0 1.0 2.0 2.0 Designat ion 5 Designated 1.0 4.0 1.0 1.0 Non-designated 5.0 3.0 2.0 3.0 3.0 Independent Review Yes 6.0 7.0 1.0 2.0 3.0 1.0 No 3.0 1 Cat A or Category A are projects with potential sign ificant adverse env ironmental and social risks and/or impacts that are diverse, irrevers ible or unprecedented 2 Cat B or Category B are projects with potential lim ited adverse env ironmental and social risks and/or impacts that are few in number, generally site-specif ic, largely reversible and readily addressed through mit igat ion measures 3 Cat C or Category C are projects with min imal or no adverse env ironmental and social risks and/or impacts 4 In line with Equator Princ iples 4, Standard Chartered now reports those transact ions that trigger project-related refinance 5 Designat ion is split into designated and non-designated countries. Designated countries are deemed by the Equator Princ iples to have robust env ironmental and social governance, legislat ion systems and inst itut ional capacity designed to protect their people and the natural environment. Non-designated countries are countries that are not found on the list of designated countries. The list of countries can be found at www.equator-princ iples.com 6 Standard Chartered did not partic ipate in any project advisory mandates that triggered the applicab il ity of the Equator Princ iples in 2022 ![]() 489 Standard Chartered – Annual Report 2022 Supplementary informat ion Pillar 2: Operations Environment Units Footnote 2022 2021 2020 2021–2022 % change Measured Scaled Up Measured Scaled Up Measured Scaled Up Reporting coverage of data Offices reporting No. of offices 875 – 838 – 756 – 4 Net internal area of occupied property m 2 930,327 946,234 976,520 998,571 933,132 1,050,414 (5) Green lease clause inclus ion % 1 85 – 85 – 85 – – Occupied net internal area where data is collected % 98 – 98 – 89 – – Headcount No. of employees 2 83,266 80,318 81,957 74,316 83,657 2 Annual operating income from 1 October to 30 September $ mill ion – 15,863 – – – 15,233 – GHG emiss ions Scope 1: Scope 1 emiss ions (combust ion of fuels) tCO 2 e 2,027 2,071 2,834 2,902 3,589 3,988 (29) Scope 2: Scope 2 emiss ions (purchased electric ity – locat ion based) tCO 2 e 46,345 47,363 80,835 82,761 102,477 113,870 (43) Scope 2 emiss ions (purchased electric ity – market based) tCO 2 e 3 41,492 42,403 73,016 74,906 – – (43) Scope 1 & 2 4 : Scope 1 & 2 emiss ions (locat ion based) tCO 2 e 48,372 49,434 83,669 85,662 106,066 117,858 (42) Scope 1 & 2 emiss ions (UK and offshore area only) tCO 2 e – – – – – – – Scope 3: Category 1: Purchased goods (Other) tCO 2 e 5, 6 – 380,732 – 330,224 – – – Purchased goods (global data centres) tCO 2 e 7 – 706 – 43,132 – 29,562 (98) Category 2: Capital goods tCO 2 e 5, 6 – 34,496 – 47,217 – – – Category 3: Fuel-and-energy- related activ it ies tCO 2 e 8 – – – – – – – Category 4: Upstream transportation and distr ibut ion tCO 2 e 6 – 20,300 – 20,949 – – – Category 5: Waste generated in operations tCO 2 e 9, 10 – 498 – – – – – Category 6: Business travel (air travel) tCO 2 e 11 – 39,107 3,410 3,654 31,617 33,930 970 Business travel (miscellaneous other than flights) tCO 2 e 5, 6 – 2,654 – 4,994 – – – Category 7: Employee commuting tCO 2 e 10, 12 – 61,917 – – – – – Category 8: Upstream leased assets tCO 2 e 13 – – – – – – – Category 9: Downstream transportation and distr ibut ion tCO 2 e 14 – – – – – – – Category 10: Processing of sold products tCO 2 e 15 – – – – – – – Category 11: Use of sold products tCO 2 e 15 – – – – – – – Category 12: End of life treatment of sold products tCO 2 e 15 – – – – – – – Category 13: Downstream leased assets (corporate real estate) tCO 2 e 10, 16 – 8,594 – – – – – Downstream leased assets (leased aircraft) tCO 2 e 10, 17 – 1,671,867 – – – – – Category 14: Franchises tCO 2 e 18 – – – – – – – Category 15: Investments tCO 2 e 19 – 58,500,000 – 45,200,000 – – 29 Total scope 3 tCO 2 e 60,720,871 45,650,190 63,492 Total scope 1, 2 and 3 tCO 2 e 60,770,305 45,735,852 181,350 ![]() 490 Standard Chartered – Annual Report 2022 Supplementary informat ion Supplementary sustainab il ity informat ion Units Footnote 2022 2021 2020 2021–2022 % change Measured Scaled Up Measured Scaled Up Measured Scaled Up GHG emiss ions – Intens ity: By $m operating income Scope 1 & 2 emiss ions/ $m operating income tCO 2 e – 3 – 6 – 8 (47) Scope 1, 2 & 3 emiss ions/ $m operating income tCO 2 e – 12 – 36 – 35 (66) Environmental resource efficiency Energy 20 Indirect non-renewable energy consumption GWh/year 140 142 139 142 164 184 (0) Indirect renewable energy consumption GWh/year 23 24 27 28 13 14 (13) Direct non-renewable energy consumption GWh/year 10 10 12 12 15 17 (16) Direct renewable energy consumption GWh/year 1 1 1 1 1 1 29 Energy consumption GWh/year 21 174 177 179 183 192 216 (3) Energy consumption (UK and offshore area only) GWh/year 6 6 5 5 – – 24 Energy consumption/ Headcount kWH/ headcount/ year 2,094 2,129 2,229 2,233 2,260 2,544 (5) Water 22 Water consumption ML/year 265 385 256 384 363 483 0 % water consumption in regions of high or extremely high water stress % 23 0 – 30 30 – – (100) Water consumption/ Headcount m 3 / Headcount/ year 3 5 3 5 4 6 (2) Waste 24 Waste ktonnes/year 1 2 2 4 4 5 (54) Waste/Headcount kg/ Headcount/ year 17 19 28 43 43 65 (55) Waste reused or recycled % 35 – 32 – 23 – – Footnotes 1 Percentage of green lease clause inclus ion in all new and renewed leases with in the report ing year 2 Refers to the Group’s headcount as at 31 December 2022 3 Market-based data was first reported in 2021 and is unavailable for previous years. All aggregate and intens ity em iss ions figures use locat ion based data as their foundation 4 We use an independent third-party assurance provider to verify our greenhouse gas (GHG) emiss ions. In 2022, our measured Scope 1 and Scope 2 em iss ions, as well as waste and water consumption, were assured by Global Documentation Ltd, ensuring the accuracy and credib il ity of our reporting. All energy consumed in the UK is from verif ied renewable sources and therefore th is is zero 5 Emiss ions report ing for purchased goods (other), capital goods and miscellaneous travel other than flights for the period 2020 and 2021 was final ised dur ing 2022 and reported in our CDP submiss ion 6 Calculation of category 1: Purchased Goods, category 2: Capital Goods, category 4: Upstream Transportation and Distr ibut ion and Category 6: Miscellaneous travel is based on lagged data from the period 1 Jan 2021 to 31 December 2021. Estimated supplier emiss ions for 2022 expected to be ava ilable in Q2 2023 7 The decrease in emiss ions from data centers was due to the offset of REC’s (Renewable Energy Cert if icate) aga inst the total energy consumption. REC’s are a type of Energy Attribute Certif icate that represents the env ironmental attributes of the generation of a one-megawatt hour (MWh) of energy produced by renewable sources ie the proportion of power sourced from a national grid that is produced using renewable energy sources 8 Not relevant. We have no fuel or energy related activ it ies which are not already captured in Scope 1 or 2 submiss ion. Standard Chartered are a financial inst itut ion and as such we do not mine, refine, transmit or distr ibute fuels. there are therefore no losses in said activ it ies. We also do not generate power to sell to market. We only generate power from standby generators for our own consumption. Emiss ions from th is activ ity is covered under Scope 1 emiss ions 9 Emiss ions from waste extrapolated for whole company from measured office data us ing both landfill and recycled emiss ion factors from Commerc ial and Industrial Waste sourced from DEFRA 10 Emiss ions for Category 5: Waste generated in operations, Category 7: Employee Commuting and Category 13: Downstream Leased Assets was measured and reported for the first time in 2022 Pillar 2: Operations continued Environment continued ![]() 491 Standard Chartered – Annual Report 2022 Supplementary informat ion 11 Measured Scope 3 flight emiss ions are drawn from rel iable 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 ional w ith flight distance of less than 785km, labeled by the Department for Business, Energy and Industrial Strategy (DBEIS) as domestic flights, have been classif ied as short haul. All flights with distance flown ranging from 785 to 3,700km, labeled by DBEIS as short haul have been classif ied as med ium haul. All flights with a distance flown in excess of 3,700km are classif ied as long haul 12 Commuting and working from home emiss ions extrapolated for the whole company from a sample survey responses for a select ion of sites and countries, which examined distance/mode of transport and heating/cooling at home. The Calculation is based on the Homeworking Emiss ions Wh itepaper, EcoAct 2020 13 Not relevant. Scope 3 emiss ions from upstream leased assets are not relevant as they are included in Scope 1 and 2 emiss ions. The Group leases approx imately 70% of its portfolio, either whole build ing or part from Landlords 14 Not relevant. As a financial inst itut ion, the Group does not transport or distr ibute products on a mater ial scale. Most of our products are electronically distr ibuted using technology hosted in third-party data centers, disclosed under Scope 3 Category 1 15 Not relevant. As a provider of financ ial serv ices, our products are predominantly intang ible. Therefore th is is not a material source of emiss ions for our bus iness 16 Emiss ions der ived from real estate downstream leased assets ie those assets owned but not occupied by SCB. Measured and applied with energy use intens ity value to create a consumption in kWhs per annum and then multipl ied by country em iss ion factor 17 This is the downstream leased assets in the groups aviat ion portfol io. Scope 1 and 2 emiss ions have been included 18 Not relevant. The Group does not operate any franchises 19 These are financed emiss ions of our CCIB lend ing portfolio. Our financed emiss ions in 2022 are 58.5 MTCO2e, up from 45.2 MTCO2e in 2021. This was following the inclus ion of 3 add it ional transport sectors into the financed emiss ions calculat ion. For further details refer to the Measurement and progress of our financed emiss ions : sectoral deep d ives for further details. Our analysis currently covers 61% of the financed emiss ions of the CCIB portfol io with further sectors to be added to the analysis in future 20 We 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, empty land, car parks, unoccupied sites for business continu ity purposes, res ident ial propert ies, space occupied by automated teller machines, vaults and space sub-let to tenants are excluded from this extrapolation. Figures for renewable, non-renewable and total energy in GWh are rounded to one decimal place – therefore some discrepanc ies in rounded sum totals may arise. Total consumption figures have been verif ied 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 in these calculat ions can be found at sc.com/environmentcriter ia 21 This value represents the total energy of heating, cooling and electric ity consumpt ion globally. Total energy use is normalised to reflect periods of vacancy in certain sites during the reporting period 22 We measured data from 69% 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 23 Areas of high and extremely high water stress determined according to WRI Aqueduct tool. As accessed on 27 Jan 2023, these countries are South Africa, Saudi Arabia, Bharain, Oman, Qatar, UAE, Pakistan, India, Thailand, China, Egypt and Türkiye. This is a new reporting addit ion for 2022 24 We measured data from 92% 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 ional notes on env ironment data The emiss ions w ith in our inventory correspond to a reporting period of 1 October 2021 to 30 September 2022. This is to allow sufficient t ime for independent assurance to be gained prior to the publicat ion of results. Accord ingly, the operating income used in this inventory corresponds to the same period rather than the calendar year used in financ ial report ing. This is consistent with internat ional carbon report ing practice. We use an independent third-party assurance provider to verify our greenhouse gas (GHG) emiss ions. Our Scope 1 and 2 emiss ions are independently assured by Global Documentation, in accordance with ISO 14064. Read our environment reporting criter ia at sc.com/environmentcriter ia Read our independent assurance report at sc.com/environmentalassurance ![]() 492 Standard Chartered – Annual Report 2022 Supplementary informat ion Supplementary sustainab il ity informat ion Pillar 2: Operations continued Supply chain spend % of total third-party spend % 1,2 Number of first tier supplier organisat ions (with spend in 2022) # 1,2 Number of local suppliers (by payment market) # 1,2 Number of global 4 suppliers (by payment market) # 1,2 Top 10 sourcing locations by % overall spend Singapore 37 1,465 971 494 United Kingdom 14 818 512 306 India 11 2,229 2,038 191 Hong Kong 9 769 475 294 China 3 5 894 779 115 Korea 3 597 568 29 USA 3 266 144 122 United Arab Emirates 2 392 225 167 Malaysia 2 568 427 141 Taiwan 2 492 410 82 Regional spend Asia 74 9,059 7,312 1,747 Europe and Americas 18 1,639 997 642 Africa and Middle East 8 3,543 2,610 933 Regional spend Technology 44 1,544 1,310 234 Professional Services 18 2,125 1,914 211 Property 15 2,629 2,565 64 Marketing 11 1,858 1,764 94 Human Resources 7 1,417 1,299 118 Banking Operations 3 357 335 22 Travel 2 459 426 33 Office Supplies 1 828 795 33 Others 1 520 511 9 1 Please note that suppliers are counted by generic name (e.g. all DHL legal entit ies are counted as one DHL) 2 The same supplier may be used in more than one market 3 ‘China’ refers to the People’s Republic of China and, for the purposes of this document only, excludes Hong Kong Special Admin istrat ive Region (Hong Kong), Macau Special Admin istrat ive Region (Macau) and Taiwan, ‘Korea’ or ‘South Korea’ 4 Suppliers with payments in more than one market Pillar 3: Communit ies Charitable Giv ing Total ($mill ion) FY’22 FY’21 FY’20 Cash contribut ions 24 28 72 Employee time (non-cash item) 18 11 12 Gifts In Kind (non-cash item) 1 0 3 1 Management costs 5 5 4 Total (direct investment by the Group) 46 47 89 Leverage 2 5 2 7 Total (incl. leverage) 51 49 96 Percentage of prior year operating profit (PYOP) % 2 3 3 1 Gifts In Kind comprises all non-monetary donations 2 Leverage data relates to the proceeds from staff and other fundrais ing act iv ity ![]() 493 Standard Chartered – Annual Report 2022 Supplementary informat ion Pillar 1: Business Target Date Status 2022 Progress Sustainable Finance Mobil ise $300bn of Susta inable Finance 1 Jan 2021 – Dec 2030 Mobil ised $23.4 b ill ion, br ing ing the total facil itated s ince 2021 to $48 bill ion. Launch and grow green mortgages in key markets across our footprint Jan 2022 – Dec 2023 Green Mortgages were successfully launched in Vietnam, Korea and Malaysia. Green Mortgages are now live in a total of six markets includ ing Taiwan, Hong Kong and Singapore. Climate Measure, manage and reduce emiss ions associated with our financ ing v ia the implementat ion of our net zero amb it ion Jan 2022 – Dec 2022 Developed 2030 emiss ions basel ine and targets for Aviat ion, Sh ipp ing and Automot ive Manufacturers. Only provide financ ial serv ices to clients who are: By 2024, less than 80% dependent on thermal coal (based on % revenue); By 2025, less than 60% dependent on thermal coal (based on % revenue); By 2027, less than 40% dependent on thermal coal (based on % revenue); By 2030, less than 5% dependent on thermal coal (based on % revenue) Jan 2020 – Jan 2030 Through our Environment & Social risk assessment process we have ident ified cl ients who are currently >80% dependent on thermal coal and are engaging with them to understand their transit ion plans where appl icable. Progress will be closely monitored during 2023. Achieve emiss ions reduct ion in our most carbon- intens ive sectors of: 63% in Power (Scopes 1 and 2 intens ity); 33% in Steel Producers (Scopes 1 and 2 intens ity); 33% in Min ing (ex Coal) (Scopes 1 and 2 intens ity); 30% in Oil and Gas (Scopes 1, 2 and 3 intens ity) and; 85% emiss ions reduct ion in coal min ing (Scopes 1, 2 and 3 absolute) Jan 2020 – Dec 2030 We remain on track for a 2030 delivery. See page 81 for progress made in 2022. Measure and report mortgage emiss ions w ith a view to setting targets by 2023 Jan 2022 – Dec 2023 We completed emiss ions basel ine measurements for Singapore, Hong Kong and Korea. Commerce Bank 10,000 of our clients’ internat ional and domestic networks of suppliers and buyers through banking the ecosystem programmes Jan 2020 – Dec 2024 Enrolled 4,440 suppliers and buyers bring ing the total enrolled since Jan 2020 to 11,593. Impact Finance Double Sustainable Investing Assets Under Management across a holist ic propos it ion includ ing Mutual Funds, Exchange Traded Funds (ETFs), Bonds, Equit ies, Structured Products, Discret ionary Portfol io Mandates (DPMs) and Insurance Linked Plans (ILPs) Jun 2021 – Dec 2025 Negative market valuation and developing regulation around classif icat ion of sustainable assets resulted in required adjustments on our Sustainable Investing Assets Under Management (AUM). Although this required an adjustment to our AUM, we welcome the developing regulation around classif icat ion to ensure more stringent standards. Integrate ESG considerat ions in wealth management advisory activ it ies Jan 2021 – Dec 2025 We have started to embed ESG factors into stock selection as part of the advisory process. We include ESG train ing for our bankers and also seek to include ESG topics in some of our client events. #### 2022 Sustainability Aspirations ![]() 494 Standard Chartered – Annual Report 2022 Supplementary informat ion Supplementary sustainab il ity informat ion Pillar 2: Operations Target Date Status 2022 Progress People Increase gender representation to 35% women in senior roles Sep 2016 – Dec 2025 In 2022, the proportion of women in senior leadership roles has increased to 32.1%. This is up by 1.4 percentage points from December 2021 (30.7%) and 7.1 percentage points since December 2016 (25%). Increase our ‘Culture of Inclusion’ score to 84.5% Jan 2020 – Dec 2024 In our annual MyVoice survey, 83.1% of employees reported posit ive sent iments around our culture of inclus ion. We rema in on track for our overall 2024 target. Embed an integrated health and wellbeing strategy to support build ing and re-sk ill ing a future-ready, diverse workforce Jan 2020 – Dec 2022 Progress has been made in multiple areas to embed the strategy. This includes global offerings such as flexi-working, our mental health app, a physical wellbeing online platform, an employee assistance programme, wellbeing toolkits, learning programmes on resil ience as well as a growing network of trained Mental Health First Aiders. In 2022, colleagues ind icated through the MyVoice survey that they feel better supported on their wellbeing needs than in 2021. However, globally, the levels of stress felt by employees increased in survey from the previous year. Create Divers ity & Inclus ion Supplier Plans for all our markets to support 40% of our newly onboarded suppliers being diverse Jan 2022 – Dec 2025 93% of our highest spend markets have Divers ity & Inclusion plans. As at December 2022, on average 37% of our newly onboarded suppliers were diverse. Grow our employee MyVoice score to the question “The way we operate day-to-day is aligned with our sustainab il ity strategy” from 2021 baseline of 84% to 88% 2 Jan 2022 – Dec 2024 Achieved a score of 84% in 2022. We are taking action to move towards our 2024 target of 88%. Support at least 50% of all employees to complete our learning programme on Sustainab il ity Support at least 70% of relevant employees to complete our Sustainable Finance train ing programme Jan 2022 – Dec 2022 15% of all employees completed our learning programme on Sustainab il ity. While this fell short of the 50% target we had set, we are pleased with the prelim inary progress g iven the voluntary- nature of the train ing. The learn ing programme will continue to be promoted during 2023 to continue to build skills and knowledge across the bank. The target of 70% completion rate was met for the Sustainable Finance train ing. On average, 95% of relevant employees completed this train ing programme across the three certif icates. Environment Reduce annual Scope 1 & 2 greenhouse gas emiss ions to net zero by 2025 Jan 2019 – Dec 2025 Achieved 2022 target of 49,434 tonnes of CO2 equivalent (tCO2e), a reduction of over 40% on our 2021 Scope 1 & 2 emiss ions of 85,000 tCO2e. Source all energy from renewable sources Jan 2020 – Dec 2025 All markets where clean energy can be purchased through Power Purchase Agreements (PPAs) and util ity compan ies are complete. Remain ing countr ies where we can buy Energy Attribute Certif icates (EACs) are 75% complete. Remain ing 25% to be completed by end 2025. Achieve and mainta in fl ight emiss ions 28% lower than our 2019 baseline of 94,000 tonnes Jan 2021 – Dec 2023 Reported 39,107 tCO 2 e and remain well ahead of our 28% flight emiss ions reduct ion target for 2023. Reduce waste per colleague to 40kg per year Jan 2020 – Dec 2025 We reduced the overall waste generated by 37%, and by 39% on a per employee basis to 19.2kg, achiev ing our target three years ahead of schedule. This was primar ily due to new ways of working which resulted in reduced employee presence in our build ings. Recycle 90% of waste Jan 2020 – Dec 2025 35% of waste was recycled in 2022. We remain on track with plans to introduce new vendors through partnerships in 2024. Offset all residual emiss ions from our operat ions (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 Achieved our 2022 target through our carbon credit purchases. ![]() 495 Standard Chartered – Annual Report 2022 Supplementary informat ion Pillar 2: Operations continued Target Date Status 2022 Progress Conduct and Compliance Tackle financial cr imes by contribut ing to developing typologies and red flags for financial flows, tra in ing frontl ine staff to ident ify potential suspic ious transact ions and partic ipat ing in public-private partnerships to share intell igence and good pract ices Ongoing The Group contributed to the development of typologies and red flags to assess financ ial flows and to tackle financial cr ime. We also engaged with offic ials on the financial serv ices regulatory environment, in particular on prudential, financ ial markets, conduct and financial cr ime frameworks. In 2022, we also launched the ‘Understanding our Financ ial Cr ime Risks’ course to train staff on the various impacts of financ ial cr ime. Develop and deliver a targeted outreach programme, includ ing through key internat ional platforms, aimed at safely and transparently reducing barriers to capital mobil isat ion for sustainable development Jan 2022 – Dec 2024 Continued to successfully engage via internat ional and reg ional platforms through 2022 to support our intent ion to scale up sustainable finance and reduce barriers to capital mobil isat ion. These platforms and engagements have promoted blended finance, sustainable infrastructure, carbon markets, transit ion finance, capacity build ing and susta inab il ity-related disclosures as key mobil isat ion mechanisms. Pillar 3: Communit ies Target Date Status 2022 Progress Communit ies Invest 0.75% of prior year operating profit (PYOP) in our communit ies Ongoing Contributed $51.2 mill ion to the commun ity in 2022, which represents 1.5% of PYOP. Raise $75m for Futuremakers by Standard Chartered Jan 2019 – Dec 2023 $14.7 mill ion was contr ibuted through fundrais ing and donations by the Group in 2022, taking the total to $78.7 mill ion in the last four years. Education: Reach one mill ion g irls and young women through Goal Jan 2006 – Dec 2023 We reached 93,268 girls and young women, which is below our year-end target of 115,000 girls. This brings the total reach from 2006 to 2022 to 827,297 girls and young women. In 2023 we will work to compensate for the lag in the past couple of years due to COVID-19 programme disrupt ions. Employabil ity: Reach 100,000 young people Jan 2019 – Dec 2023 105,014 young people partic ipated in employabil ity programmes. Th is brings the total to 218,144 young people reached from 2019 to 2022. Increase partic ipat ion for employee volunteering to 55% Jan 2020 – Dec 2023 Employee volunteering partic ipat ion rate was 39% in 2022. 32,706 of our colleagues volunteered for a total of 49,528 days. We have exceeded our 2022, 33% partic ipat ion target by 6 percentage points and have a plan in place to meet the 2023 55% partic ipat ion target. Concluded in the year Ongoing aspirat ions Achieved Not achieved On track Not on track 1 Business banking SME and Microf inance lend ing is the provis ion of finance to Development Ass istance Committee (DAC) lower and middle lower income countries as per the Organisat ion for Econom ic Co-operation and Development (OECD). The inclus ion of bus iness banking is linked to the “Access to Finance” sub theme with in the Group’s Green and Susta inable product framework incorporating Employment generation, and programmes designed to prevent and/or alleviate unemployment, includ ing through the potent ial effect of SME financ ing and m icrof inance. W ith the inclus ion of bus iness banking, the Entrepreneur (Lending to SME’s and Microf inance) asp irat ions would be double counted and these asp irat ions have therefore been ret ired 2 The wording of the question asked from colleagues in the MyVoice survey has been amended to reflect the redefin it ion ofthe Group’s Sustainab il ity Vis ion. Therefore, the wording in this Sustainab il ity Aspirat ion has been mod if ied to reflect th is change ![]() 496 Standard Chartered – Annual Report 2022 Supplementary informat ion Shareholder informat ion #### Shareholder information Div idend and interest payment dates Ordinary shares Final div idend Results and div idend announced 16 February 2023 Ex-div idend date 23 (UK) 22 (HK) February 2023 Record date for div idend 24 February 2023 Last date to amend currency election instruct ions for cash d iv idend\* 11 April 2023 Div idend payment date 11 May 2023 \* In either US dollars, sterling, or Hong Kong dollars Preference shares 1st half yearly div idend 2nd half yearly div idend 7 3 ∕ 8 per cent non-cumulative irredeemable preference shares of £1 each 1 April 2023 1 October 2023 8 1 ∕ 4 per cent non-cumulative irredeemable preference shares of £1 each 1 April 2023 1 October 2023 6.409 per cent non-cumulative redeemable preference shares of $5 each 30 January and 30 April 2023 30 July and 30 October 2023 7.014 per cent non-cumulative redeemable preference shares of $5 each 30 January 2023 30 July 2023 Annual General Meeting The Annual General Meeting (AGM) will be held on Wednesday 3 May 2023 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 in the 2023 Not ice 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 im results w ill be announced to the London Stock Exchange, The Stock Exchange of Hong Kong Lim ited and put on the Company’s website. Country-by-Country Reporting In accordance with the requirements of the Capital Requirements (Country-by-Country Reporting) Regulations 2013, the Group will publish addit ional country-by-country informat ion in respect of the year ended 31 December 2022, on or before 31 December 2023. We have also published our approach to tax and tax policy. This informat ion w ill be available on the Group’s website at sc.com Pillar 3 Reporting In accordance with the Pillar 3 disclosure requirements, the Group will publish the Pillar 3 Disclosures in respectof the year ended 31 December 2022, on or before 28 February 2023. This informat ion w ill be available on the Group’s website at sc.com ShareCare ShareCare is available to shareholders on the Company’s UK register who have a UK address and bank account. It allows you to hold your Standard Chartered PLC shares in a nominee account. Your shares will be held in electronic form so you will no longer have to worry about keeping your share certif icates safe. If you join ShareCare, you w ill still be inv ited to attend the Company’s AGM and you will receive any div idend at the same time as everyone else. ShareCare is free to jo in and there are no annual fees to pay. If you would like to receive more informat ion, please v is it our website at sc.com/shareholders or contact the shareholder helpline on 0370 702 0138 Donating shares to ShareGift Shareholders who have a small number of shares often find it uneconomical to sell them. An alternative is to consider donating them to the charity ShareGift (registered charity 1052686), which collects donations of unwanted shares until there are enough to sell and uses the proceeds to support UK charit ies. There is no impl icat ion 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 ion can be obta ined from the Company’s registrars or from ShareGift on 020 7930 3737 or from sharegift.org Bankers’ Automated Clearing System (BACS) Div idends can be pa id straight into your bank or build ing society account. Please register online at investorcentre.co.uk or contact our registrar for a div idend mandate form Registrars and shareholder enquir ies If you have any enquir ies relat ing to your shareholding and you hold your shares on the UK register, please contact our registrar at investorcentre.co.uk and click on the “ASK A QUESTION” link at the bottom of the page. Alternatively, please contact Computershare Investor Services PLC, The Pavil ions, Br idgwater Road, Bristol, BS99 6ZZ or call the shareholder helpline number on 0370 702 0138. If you hold your shares on the Hong Kong branch register and you have enquir ies, please contact Computershare Hong Kong Investor Services Lim ited, 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong. You can check your shareholding at computershare.com/hk/investors ![]() 497 Standard Chartered – Annual Report 2022 Supplementary informat ion Substantial shareholders The Company and its shareholders have been granted partial exemption from the disclosure requirements under Part XV of the Securit ies and Futures Ord inance (SFO). As a result of this exemption, shareholders no longer have an obligat ion under Part XV of the SFO (other than Div is ions 5, 11 and 12 thereof) to notify the Company of substantial shareholding interests, and the Company is no longer required to mainta in a reg ister 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 ited any d isclosure of interests made in the UK. Taxation No tax is currently withheld from payments of div idends by Standard Chartered PLC. Shareholders and prospective purchasers should consult an appropriate independent professional adviser regarding the tax consequences of an investment in shares in light of their particular circumstances, includ ing the effect of any nat ional, state or local laws. Previous div idend payments (unadjusted for the impact of the 2015/2010/2008 rights issues) Div idend and financial year Payment date Div idend per ord inary share Cost of one new ordinary share under share div idend 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 idend declared N/A N/A Interim 2016 No div idend declared N/A N/A Final 2016 No div idend declared N/A N/A Interim 2017 No div idend declared N/A N/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 idend w ithdrawn N/A N/A Interim 2020 No div idend declared N/A N/A Final 2020 20 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 Final 2021 12 May 2022 9.00c/6.894144p/HK$0.705772 N/A Interim 2022 14 October 2022 4.00c/3.675912p/HK$0.313887 N/A 1 The INR div idend is per Indian Depository Receipt. In March 2020, the Group announced the terminat ion of the IDR programme. The IDR programme was formally delisted from the BSE Lim ited (formerly the Bombay Stock Exchange) and Nat ional Stock Exchange of India Lim ited w ith effect from 22 July 2020 Chinese translation If you would like a Chinese version of the 2022 Annual Report please contact Computershare Hong Kong Investor Services Lim ited, 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong. 二〇二二年年報之中文譯本可向香港中央證券登記有限公司索取， 地址：香港灣仔皇后大道東183號合和中心17M樓。 Shareholders on the Hong Kong branch register who have asked to receive corporate communicat ions in either Chinese or English can change this election by contacting Computershare. If there is a dispute between any translation and the English version of this Annual Report, the English text shall prevail. Electronic communicat ions 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 ions. You w ill need to have your Shareholder or ShareCare reference number to hand. You can find this on your share certi ficate or ShareCare statement. Once you have registered and confirmed your email communicat ion preference, you w ill receive future notif icat ions via email enabling you to submit your proxy vote online. In addit ion, as a member of Investor Centre, you w ill be able to manage your shareholding online and submit div idend elections electronically and change your bank mandate or address informat ion. ![]() 498 Standard Chartered – Annual Report 2022 Supplementary informat ion Shareholder informat ion #### Important notices Forward-looking statements The informat ion included in this document may contain ‘forward-looking statements’ based upon current expectations or beliefs as well as statements formulated with assumptions about future events. Forward-looking statements include, without lim itat ion, project ions, est imates, commitments, plans, approaches, ambit ions and targets (includ ing, w ithout lim itat ion, ESG commitments, ambit ions and targets). Forward-looking statements often use words such as ‘may’, ‘could’, ‘will’, ‘expect’, ‘intend’, ‘estimate’, ‘antic ipate’, ‘bel ieve’, ‘plan’, ‘seek’, ‘aim’, ‘continue’ or other words of sim ilar mean ing. Forward-looking statements may also (or addit ionally) be ident ified by the fact that they do not relate only to histor ical or current facts. By their very nature, forward-looking statements are subject to known and unknown risks and uncertaint ies and can be affected by other factors that could cause actual results, and the Group’s plans and objectives, to d iffer materially from those expressed or impl ied in the forward-looking statements. Readers should not place reliance on, and are cautioned about relying on, any forward-looking statements. There are several factors which could cause actual results to differ materially from those expressed or impl ied in forward- looking statements. The factors that could cause actual results to differ materially from those described in the forward-looking statements include (but are not lim ited to): changes in global, polit ical, econom ic, business, competit ive and market forces or condit ions, or in future exchange and interest rates; changes in environmental, geopolit ical, soc ial or physical risks; legal, regulatory and policy developments, includ ing regulatory measures address ing climate change and broader sustainab il ity-related issues; the development of standards and interpretat ions, includ ing evolv ing requirements and practices in Environmental, Social and Governance reporting; the abil ity of the Group, together w ith governments and other stakeholders to measure, manage, and mit igate the impacts of climate change and broader sustainab il ity-related issues effectively; risks aris ing out of health crises and pandemics; risks of cyber-attacks, data, informat ion or secur ity breaches or technology failures involv ing the Group; changes in tax rates, future business combinat ions or d ispos it ions; and other factors specif ic to the Group, includ ing those ident ified in this Annual Report and financial statements of the Group. Any forward-look ing statements contained in this document are based on past or current trends and/or activ it ies of the Group and should not be taken as a representation that such trends or activ it ies will continue in the future. No statement in this document is intended to be, nor should be interpreted as, a profit forecast or to imply that the earnings of the Group for the current year or future years will necessarily match or exceed the histor ical or publ ished earnings of the Group. Except as required by any applicable laws or regulations, the Group expressly discla ims any obligat ion to rev ise or update any forward-looking statement contained with in th is document, regardless of whether those statements are affected as a result of new informat ion, future events or otherwise. Please refer to this document for a discuss ion of certa in of the risks and factors that could adversely impact the Group’s actual results, and its plans and object ives, to d iffer materially from those expressed or impl ied in any forward-looking statements. Financ ial instruments Nothing in this document shall constitute, in any jur isd ict ion, an offer or solic itat ion to sell or purchase any securit ies or other financial instruments, nor shall it constitute a recommendation or advice in respect of any securit ies or other financial instruments or any other matter. Basis of Preparation and Caution Regarding Data Lim itat ions This section is specif ically relevant to, amongst others, the sustainab il ity and climate models, calculations and disclosures throughout this report. The informat ion conta ined in this document has been prepared on the following basis: i. certain informat ion in this document is unaudited; i i. all informat ion, pos it ions and statements set out in this document are subject to change without notice; i i i. the informat ion included in this document does not constitute any investment, accounting, legal, regulatory or tax advice or an inv itat ion or recommendation to enter into any transaction; iv. the informat ion included in this document may have been prepared using models, methodologies and data which are subject to certain lim itat ions. These lim itat ions include: a lack of reliable data (due, amongst other things, to developing measurement technologies and analytical methodologies); a lack of standardisat ion of data (g iven, amongst other things, the lack of internat ional coordinat ion on data and methodology standards); and future uncertainty (due, amongst other things, to changing project ions relat ing to technological development and global and regional laws, regulations and polic ies, and the inab il ity to make use of strong histor ical data); v. models, external data and methodologies used in informat ion included in this document are or could be subject to adjustment which is beyond our control; vi. any opin ions and est imates should be regarded as ind icat ive, prelim inary and for illustrat ive purposes only. Expected and actual outcomes may differ from those set out in this document (as explained in the “Forward-looking statements” section); vi i. some of the related informat ion appear ing in this document may have been obtained from public and other sources and, while the Group believes such informat ion to be reliable, it has not been independently verif ied by the Group and no representation or warranty is made by the Group as to its quality, completeness, accuracy, fitness for a particular purpose or non-infr ingement of such informat ion; vi i i. for the purposes of the informat ion included in this document, a number of key judgements and assumptions have been made. It is possible that the assumptions drawn, and the judgement exercised may subsequently turn out to be inaccurate. The judgements and data presented in this document are not a substitute for judgements and analysis made independently by the reader; ix. any opin ions or v iews of third parties expressed in this document are those of the third parties ident ified, and not of the Group, its affil iates, d irectors, officers, employees or agents. By incorporating or referring to opin ions and v iews of third parties, the Group is not, in any way, endorsing or supporting such opin ions or v iews; ![]() 499 Standard Chartered – Annual Report 2022 Supplementary informat ion x. whilst the Group bears primary responsib il ity for the informat ion included in this document, it does not accept responsib il ity for the external input provided by any third parties for the purposes of developing the informat ion included in this document; xi. the data contained in this document reflects available informat ion and est imates at the relevant time; xi i. where the Group has used any methodology or tools developed by a third party, the applicat ion of the methodology or tools (or consequences of its applicat ion) shall not be interpreted as conflict ing w ith any legal or contractual obligat ions and such legal or contractual obligat ions shall take precedence over the appl icat ion of the methodology or tools; xi i i. where the Group has used any underlying data provided or sourced by a third party, the use of the data shall not be interpreted as conflict ing w ith any legal or contractual obligat ions and such legal or contractual obl igat ions shall take precedence over the use of the data; xiv. this Important Notice is not lim ited in applicab il ity to those sections of the document where lim itat ions to data, metrics and methodologies are ident ified and where th is Important Notice is referenced. This Important Notice applies to the whole document; xv. further development of reporting, standards or other princ iples could impact the informat ion included in this document or any metrics, data and targets included in this document (it being noted that Environmental, Social and Governance reporting and standards are subject to rapid change and development); and xvi. while all reasonable care has been taken in preparing the informat ion included in this document, neither the Group nor any of its affil iates, d irectors, officers, employees or agents make any representation or warranty as to its quality, accuracy or completeness, and they accept no responsib il ity or liab il ity for the contents of this informat ion, includ ing any errors of fact, om iss ion or opin ion expressed. You are advised to exercise your own independent judgement (with the advice of your professional advisers as necessary) with respect to the risks and consequences of any matter contained in this document. The Group, its affil iates, d irectors, officers, employees or agents expressly discla im any l iab il ity and responsib il ity for any decis ions or act ions which you may take and for any damage or losses you may suffer from your use of or reliance on this informat ion. Copyr ight in all materials, text, articles and informat ion conta ined in this document (other than third party materials, text, articles and informat ion) is the property of, and may only be reproduced with permiss ion of an authorised signatory of, the Group. Copyright in materials, text, articles and informat ion created by third parties and the rights under copyright of such parties are hereby acknowledged. Copyright in all other materials not belonging to third parties and copyright in these materials as a compilat ion vests and shall rema in at all times copyright of the Group and should not be reproduced or used except for business purposes on behalf of the Group or save with the express prior written consent of an authorised signatory of the Group. All rights reserved. ![]() 500 Standard Chartered – Annual Report 2022 Supplementary informat ion Awards #### Main awards and accolades in 2022 AmCham CSR Excellence Awards by American Chamber of Commerce in Thailand • Standard Chartered Recognised – 12th Consecutive Year Asian Banking and Finance Wholesale Banking Awards • International Swift Init iat ive of the Year, Singapore • International Data Init iat ive of the Year, Singapore Asiamoney Best Bank Awards • Best International Bank, Bangladesh • Best ESG Bank, Hong Kong • Best ESG Bank, Vietnam The Asset Triple A Awards • Best RMB Bank in 21 markets • Best Bond Adviser, Vietnam • Best Green Bond, Vietnam • Best in Treasury and Working Capital, Taiwan The Asset Triple A Treasury, Trade, Sustainable Supply Chain, and Risk Management Awards • Best Transaction Bank, Malaysia • Best Service Providers for Cash Management in Sri Lanka • Best Service Providers for Trade Finance, Sri Lanka The Asset Triple A Sustainable Investing Awards • Best Sub-Custodian Bank, Phil ipp ines The Asset Triple A Sustainable Capital Markets Country Awards • Best Formosa Bond, Taiwan The Asian Banker Excellence in Retail Financ ial Serv ices Awards’ • Best Dig ital Bank ing Services, Hong Kong • Best Wealth Management, Ghana The Asian Banker: Transaction Finance Awards • Best International Supply Chain Finance Bank, Asia Pacif ic • Most Sustainable Transaction Bank, Asia Pacif ic The Asian Banker: The Excellence in Retail Financ ial Serv ices Awards • Most Recommended Retail Bank, Taiwan Asian Banking and Finance: Retail Banking Awards • Employer Award of the Year, Hong Kong • International Retail Bank of the Year, Hong Kong • ESG Programme of the Year, Hong Kong Aviat ion 100 M iddle East, Africa & Islamic Deals of the Year Awards • Bank of the Year, Middle East & Africa • Lease Deal of the Year, Middle East & Africa Bloomberg Businessweek Chinese Edit ion Financ ial Institut ion Awards • Bank of the Year, Hong Kong • ESG Sustainab il ity Bank of the Year, Hong Kong • Bank of the Year, Greater Bay Area • FinTech Bank of the Year, Greater Bay Area • ESG Sustainab il ity Bank of the Year, Greater Bay Area The Banker’s Bank of the Year Awards • Best Bank, Bangladesh Corporate Treasurer Awards • Best Transaction Bank, Hong Kong • Best Trade Finance Bank, South Asia • Best Cash Management Bank, Hong Kong The Dig ital Banker: D ig ital CX Awards • Best Transaction Bank for Dig ital CX, United Kingdom • Best Islamic Bank, Malaysia • Best Transaction Bank for Dig ital CX, Globally • Best Wholesale/Transaction Bank for Dig ital CX, Un ited Kingdom Global Finance World’s Best Islamic Financ ial Inst itut ions • World’s Best Islamic Financ ial Institut ion, Bangladesh The Dig ital Banker – Global Reta il Banking Innovation Awards • Winner – Outstanding Client Onboarding & Account Opening, India • Highly Acclaimed – Best ESG in it iat ive, India • Highly Acclaimed – Excellence in Metaverse Investment, India Euromoney Market Leaders Recognit ions • Corporate Banking Market Leader, Hong Kong • SME Banking (Market Leader), Hong Kong • ESG Market Leader, Hong Kong EMEA Finance Achievement Awards • Best Export Credit Agency Syndicated Loan and Best Structured Finance Deal Financ ial T imes Statista • Named one of Europe’s Climate Leaders ![]() 501 Standard Chartered – Annual Report 2022 Supplementary informat ion Forbes • World’s Best Banks in China Global Retail Banking Innovation Awards • Best Credit Card for BNPL, Singapore • Best Equity Trading Platform for SmartStocks, Malaysia Global Finance Sustainable Finance Awards • Outstanding Leadership in Social Bonds, Western Europe • Outstanding Sustainable Financ ing in Emerging Markets, Western Europe Global Business Review • Best Foreign Bank, Vietnam – Second Consecutive Year Hong Kong Business High Flyers Awards • Bank of the Year, Hong Kong Human Rights Campaign Foundation’s Corporate Equality Index • Received a Perfect Score, United States – Fourth Consecutive Year International Finance Awards • Best CSR Bank, Bangladesh • Best Dig ital Bank, S ingapore Korea Best Banker Awards • The Financ ial Superv isory Service Governor’s Award in the Best Social contribut ion Category MEA Finance Awards 2022 • Best Overall Wealth Management Service, Middle East – Second Consecutive Year Metro Media & Hong Kong Quality Assurance Agency • Corporate Sustainab il ity Award, Greater Bay Area Private Banker International Awards • Outstanding Private Bank for International Clients, United Kingdom Retail Banker International: Asia Trailblazer Awards • Best Retail Bank, Taiwan Singapore Business Review Technology Excellence Awards • Outstanding Artif ic ial Intelligence on Artif ic ial Intelligence capabil ity, Ind ia • Great Place to Work-Certif ied™ Taiwan Enterprise Sustainab il ity Awards: Corporate Comprehensive Performance • Foreign Companies Sustainab il ity Model Award – Sixth Consecutive Year Wealth Brief ing MENA Awards • Most Innovative Wealth 1 Management Model, MENA – Third Consecutive Year WealthBrief ing European Awards • CPBB Europe, Best UK International Clients Team, for the second year running • Best UK Private Bank Talent Management & Divers ity Wealth Brief ing Channel Islands Awards • Best Private Bank for ESG Investing World Economic Magazine • Best Retail Bank Taiwan 2022 by World Economic Magazine UN Women 2022 Phil ipp ines Women Empowerment Princ iples (WEPs) Awards • 1st Runner Up, Gender-Inclusive Workplace Category Vietnam Economic Times • Leading Foreign Bank Visa • Excellence in Consumer Credit Card Business, Nepal • Excellence in Vas Products, Nepal #### Diversity & Inclusion and employer awards Asiamoney • Best Bank for Divers ity & Inclus ion, Taiwan Brit ish Chamber of Commerce • Divers ity & Inclus ion Champion of the Year, Singapore Brit ish D ivers ity Awards • Highly Commended – Supplier Divers ity Programme of the Year, Europe and Americas Financ ial T imes • Listed as a Divers ity Leader, Un ited Kingdom – Third Consecutive Year Great Places to Work certif ied • Poland – second consecutive year • Sri Lanka – fourth consecutive year • United States HR Asia • Best Companies to Work for in Asia, Vietnam Newsweek • Top 100 places to work, US Retail Banker International: Asia Trailblazer Awards • Best Advance in Divers ity and Inclusion Init iat ives, Taiwan • Best Benefits, Wellness and Wellbeing Program, Taiwan Top LinkedIn Companies • Top Financ ial Inst itut ion, Singapore • Ranked 2nd Overall, Singapore – Second Consecutive Year WealthBrief ing European Awards 2022 • Best UK International Clients Team, CPBB Europe – Second Consecutive Year • Best Private Bank for Talent Management & Divers ity, Un ited Kingdom Bloomberg Gender Equality Index • Recognised – Seventh Consecutive Year Forbes • World’s Best Employer ![]() 502 Standard Chartered – Annual Report 2022 Supplementary informat ion Glossary #### Glossary Absolute financed emiss ions A measurement of our attributed share of our clients’ greenhouse gas emiss ions. AT1 or Addit ional T ier 1 capital Addit ional T ier 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 ia for inclus ion in Tier 1 capital. Addit ional 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 financial measure of h istor ical or future financial performance, financial posit ion, or cash flows, other than a financial measure defined or spec if ied in the applicable financ ial report ing framework. ASEAN Associat ion of South East As ian Nations (ASEAN) which includes the Group’s operations in Brunei, Indonesia, Malaysia, Phil ipp ines, Singapore, Thailand and Vietnam. AUM or Assets under management Total market value of assets such as deposits, securit ies and funds held by the Group on behalf of the clients. Basel II The capital adequacy framework issued by the Basel Committee on Banking Supervis ion (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 id ity, orig inally issued in December 2010 and updated in June 2011. In December 2017, the BCBS published a document setting out the finalisat ion of the Basel III framework. The latest requirements issued in December 2017 will be implemented from 2022. BCBS or Basel Committee on Banking Supervis ion A forum on banking supervisory matters which develops global supervisory standards for the banking industry. Its members are officials from 45 central banks or prudential supervisors from 27 countries and territor ies. Basic earnings per share (EPS) Represents earnings div ided by the basic weighted average number 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 ive A capital adequacy legislat ive package adopted by the PRA. CRD comprises the Capital Requirements Direct ive and the UK onshored Capital Requirements Regulation (CRR). The package implements the Basel III framework together with transit ional 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 ing package came into force in June 2019 with most changes starting to apply from 28 June 2021. Only those parts of the EU CRR II that applied on or before 31 December 2020, when the UK was a member of the EU, have been implemented. The PRA recently final ised the UK’s version of the CRR II for implementat ion on 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 ifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. Cash shortfall The difference between the cash flows that are due in accordance with the contractual terms of the instrument and the cash flows that the Group expects to receive over the contractual life of the instrument. Clawback An amount an ind iv idual 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 ings, industr ial property, medical centres, hotels, malls, retail stores, shopping centres, farm land, multi-family housing build ings, warehouses, garages and industr ial properties. Commercial real 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 and other disclosed reserves, elig ible non- controlling interests and regulatory 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 financial instrument, at which point all the remain ing outstand ing princ ipal and interest is due to be paid. Countercyclical capital buffer The countercyclical capital buffer (CCyB) is part of a set of macroprudential instruments, designed to help counter procyclical ity in the financial system. CCyB as defined in the Basel III standard provides for an addit ional cap ital requirement of up to 2.5 per cent of risk-weighted assets in a given jur isd ict ion. The Bank of England’s Financ ial Pol icy Committee has the power to set the CCyB rate for the United Kingdom. Each bank must calculate its ‘inst itut ion-specif ic’ CCyB rate, defined as the weighted average of the CCyB rates in effect across the jurisd ict ions in which it has credit exposures. The inst itut ion-specif ic CCyB rate is then applied to a bank’s total risk-weighted assets. ![]() 503 Standard Chartered – Annual Report 2022 Supplementary informat ion Counterparty credit risk The risk that a counterparty defaults before satisfy ing its obligat ions under a derivat ive, a secur it ies financing transaction (SFT) or a sim ilar contract. CCF or Credit conversion factor An estimate of the amount the Group expects a customer to have drawn further on a facil ity l im it at the po int of default. This is either prescribed by CRR or modelled by the bank. CDS or Credit default swaps A credit derivat ive is an arrangement whereby the credit risk of an asset (the reference asset) is transferred from the buyer to the seller of protection. A credit default swap is a contract where the protection seller receives premium or interest-related payments in return for contracting to make payments to the protection buyer upon a defined credit event. Credit events normally include bankruptcy, payment default on a reference asset or assets, or downgrades by a rating agency. Credit inst itut ions An inst itut ion whose business is to receive deposits or other repayable funds from the public and to grant credits for its own account. Credit risk mit igat ion Credit risk mit igat ion is a process to mit igate potent ial credit losses from any given account, customer or portfolio by using a range of tools such as collateral, netting agreements, credit insurance, credit derivat ives and guarantees. CVA or Credit valuation adjustments An adjustment to the fair value of derivat ive contracts that reflects the possib il ity that the counterparty may default such that the Group would not receive the full market value of the contracts. Customer accounts Money deposited by all ind iv iduals and companies which are not credit inst itut ions includ ing secur it ies sold under repurchase agreement (see repo/ reverse repo). Such funds are recorded as liab il it ies in the Group’s balance sheet under customer accounts. Days past due One or more days that interest and/or princ ipal payments are overdue based on the contractual terms. DVA or Debit valuation adjustment An adjustment to the fair value of derivat ive contracts that reflects the possib il ity that the Group may default and not pay the full market value of contracts. Debt securit ies Debt securit ies are assets on the Group’s balance sheet and represent certif icates of indebtedness of credit inst itut ions, public bodies or other undertakings excluding those issued by central banks. Debt securit ies in issue Debt securit ies in issue are transferable certif icates of indebtedness of the Group to the bearer of the certif icate. These are liab il it ies of the Group and include certif icates of depos its. Deferred tax asset Income taxes recoverable in future periods in respect of deductible temporary differences between the accounting and tax base of an asset or liab il ity 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 il ity Income taxes payable in future periods in respect of taxable temporary differences between the accounting and tax base of an asset or liab il ity that will result in taxable amounts in future periods. Default Financ ial assets in default represent those that are at least 90 days past due in respect of princ ipal or interest and/or where the assets are otherwise considered to be unlikely to pay, includ ing those that are cred it-impa ired. Defined benefit obligat ion The present value of expected future payments required to settle the obligat ions of a defined benefit scheme resulting from employee service. Defined benefit scheme Pension or other post-retirement benefit scheme other than a defined contribut ion scheme. Defined contribut ion scheme A pension or other post-retirement benefit scheme where the employer’s obligat ion is lim ited to its contribut ions to the fund. Delinquency A debt or other financial obl igat ion is considered to be in a state of delinquency when payments are overdue. Loans and advances are considered to be delinquent when consecutive payments are missed. Also known as arrears. Deposits by banks Deposits by banks comprise amounts owed to other domestic or foreign credit inst itut ions by the Group includ ing securit ies sold under repo. Diluted earnings per share (EPS) Represents earnings div ided by the weighted average number of shares that would have been outstanding assuming the conversion of all dilut ive potential ordinary shares. Div idend per share Represents the entitlement of each shareholder in the share of the profits of the Company. Calculated in the lowest unit of currency in which the shares are quoted. Early alert, purely and non- purely precautionary A borrower’s account which exhib its r isks or potential weaknesses of a material nature requir ing closer mon itor ing, supervis ion or attent ion by management. Weaknesses in such a borrower’s account, if left uncorrected, could result in deteriorat ion of repayment prospects and the likel ihood of being downgraded to credit grade 12 or worse. When an account is on early alert, it is classif ied as e ither purely precautionary or non-purely precautionary. A purely precautionary account is one that exhib its early alert characterist ics, but these do not present any imm inent cred it concern. If the symptoms present an imm inent cred it concern, an account will be considered for classif icat ion as non-purely precautionary. Effective tax rate The tax on profit/(losses) on ordinary activ it ies as a percentage of profit/ (loss) on ordinary activ it ies before taxation. Encumbered assets On-balance sheet assets pledged or used as collateral in respect of certain of the Group’s liab il it ies. ![]() 504 Standard Chartered – Annual Report 2022 Supplementary informat ion Glossary EU or European Union The European Union (EU) is a polit ical and economic union of 27 member states that are located primar ily in Europe. Eurozone Represents the 19 EU countries that have adopted the euro as their common currency. ECL or Expected credit loss Represents the present value of expected cash shortfalls over the residual term of a financ ial asset, undrawn commitment or financ ial guarantee. Expected loss The Group measure of antic ipated loss for exposures captured under an internal ratings-based credit risk approach for capital adequacy calculations. It is measured as the Group-modelled view of antic ipated loss based on probabil ity of default, loss given default and exposure at default, with a one-year time horizon. Exposures Credit exposures represent the amount lent to a customer, together with any undrawn commitments. EAD or Exposure at default The estimat ion of the extent to wh ich 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 ipal, so that exposure is typically less than the approved loan lim it. ECAI or External Credit Assessment Institut ion External credit ratings are used to assign risk-weights under the standardised approach for sovereigns, corporates and inst itut ions. The external ratings are from credit rating agencies that are registered or certif ied in accordance with the credit rating agencies regulation or from a central bank issu ing credit ratings which is exempt from the applicat ion of th is regulation. ESG Environmental, Social and Governance. FCA or Financ ial Conduct Authority The Financ ial Conduct Author ity regulates the conduct of financial firms and, for certain firms, prudential standards in the UK. It has a strategic objective to ensure that the relevant markets function well. Forbearance Forbearance takes place when a concession is made to the contractual terms of a loan in response to an obligor’s financ ial d iff icult ies. The Group classif ies such mod if ied loans as e ither ‘Forborne – not impa ired loans’ or ‘Loans subject to forbearance – impa ired’. Once a loan is categorised as either of these, it will remain in one of these two categories until the loan matures or satisf ies the ‘cur ing’ condit ions descr ibed in Note 8 to the financ ial statements. Forborne – not impa ired loans Loans where the contractual terms have been modif ied due to financial diff icult ies of the borrower, but the loan is not considered to be impa ired. See ‘Forbearance’. Funded/unfunded exposures Exposures where the notional amount of the transaction is funded or unfunded. Represents exposures where a commitment to provide future funding is made but funds have been released/ not released. FVA or Funding valuation adjustments FVA reflects an adjustment to fair value in respect of derivat ive contracts that reflects the funding costs that the market partic ipant would incorporate when determin ing an ex it price. G-SIBs or Global Systemically Important Banks Global banking financ ial inst itut ions whose size, complexity and systemic interconnectedness mean that their distress or failure would cause sign ificant disrupt ion to the w ider financ ial system and economic activ ity. The l ist 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 ions (G-SIIs). G-SIB buffer A CET1 capital buffer which results from designat ion 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 Important Institut ions (G-SII) buffer requirement. Green and Sustainable Product Framework Sets out underlying elig ible qual ify ing themes and activ it ies that may be considered ESG .This has been developed with the support of external experts, has been informed by industry and supervisory princ iples and standards such as the Green Bond Princ iples and EU Taxonomy for sustainable activ it ies. Hong Kong regional hub Standard Chartered Bank (Hong Kong) Lim ited and its subsid iar ies includ ing the primary operating entit ies in China, Korea and Taiwan. Standard Chartered PLC is the ultimate parent company of Standard Chartered Bank (Hong Kong) Lim ited. Interest rate risk The risk of an adverse impact on the Group’s income statement due to changes in interest rates. IRB or internal ratings-based approach Risk-weight ing methodology in accordance with the Basel Capital Accord where capital requirements are based on a firm’s own estimates of prudential parameters. Internal model approach The approach used to calculate market risk capital and RWA with an internal market risk model approved by the PRA under the terms of CRD/CRR. IAS or International Accounting Standard A standard that forms part of the International Financ ial Report ing Standards framework. ![]() 505 Standard Chartered – Annual Report 2022 Supplementary informat ion IASB or International Accounting Standards Board An independent standard-setting body responsible for the development and publicat ion of IFRS, and approv ing interpretat ions of IFRS standards that are recommended by the IFRS Interpretations Committee (IFRIC). IFRS or International Financ ial Reporting Standards A set of internat ional account ing standards developed and issued by the International Accounting Standards Board, consist ing of pr inc iples-based guidance contained with in IFRSs and IASs. All companies that have issued publicly traded securit ies in the EU are required to prepare annual and inter im reports under IFRS and IAS standards that have been endorsed by the EU. IFRIC The IFRS Interpretations Committee supports the IASB in provid ing authoritat ive gu idance on the accounting treatment of issues not specif ically dealt w ith by exist ing IFRSs and IASs. Income return on risk weighted assets (IRoRWA) Annualised Income excluding Debit Valuation Adjustment as a percentage of Average RWA. Investment grade A debt security, treasury bill or sim ilar 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 ing certa in exposures held off-balance sheet as adjusted by stipulated credit conversion factors. Intended to be a simple, non-risk-based backstop measure. Liqu idat ion portfolio A portfolio of assets which is beyond our current risk appetite metrics and is held for liqu idat ion. LCR or Liqu id ity coverage ratio The ratio of the stock of high-quality liqu id assets to expected net cash outflows over the following 30 days. High-quality liqu id assets should be unencumbered, liqu id in markets during a time of stress and, ideally, be central bank elig ible. Loan exposure Loans and advances to customers reported on the balance sheet held at amortised cost or FVOCI, non- cancellable credit commitments and cancellable credit commitments for credit cards and overdraft facil it ies. 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 itut ions includ ing secur it ies bought under Reverse repo. LTV or loan-to-value ratio A calculation which expresses the amount of a first mortgage lien as a percentage of the total appraised value of real property. The loan-to-value ratio is used in determin ing the appropr iate level of risk for the loan and therefore the correct price of the loan to the borrower. Loans past due Loans on which payments have been due for up to a maximum of 90 days includ ing those on wh ich partial payments are being made. Loans subject to forbearance – impa ired Loans where the terms have been renegotiated on terms not consistent with current market levels due to financial d iff icult ies of the borrower. Loans in this category are necessarily impa ired. 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 an unvested variable remuneration award, due to a specif ic crystallised risk, behaviour, conduct or adverse performance outcome. Master netting agreement An agreement between two counterparties that have multiple derivat ive contracts w ith each other that provides for the net settlement of all contracts through a single payment, in a single currency, in the event of default on, or terminat ion of, any one contract. Mezzanine capital Financ ing that comb ines debt and equity characterist ics. For example, a loan that also confers some profit partic ipat ion to the lender. MREL or min imum requ irement for own funds and elig ible liab il it ies A requirement under the Bank Recovery and Resolution Direct ive for EU resolution authorit ies to set a m in imum requirement for own funds and elig ible liab il it ies for banks, implement ing the FSB’s Total Loss Absorbing Capacity (TLAC) standard. MREL is intended to ensure that there is suffic ient equ ity and specif ic types of l iab il it ies to fac il itate an orderly resolution that min im ises any impact on financ ial stab il ity and ensures the continu ity of cr it ical funct ions and avoids exposing taxpayers to loss. Net asset value (NAV) per share Ratio of net assets (total assets less total liab il it ies) to the number of ord inary shares outstanding at the end of a reporting period. Net exposure The aggregate of loans and advances to customers/loans and advances to banks after impa irment prov is ions, restricted balances with central banks, derivat ives (net of master nett ing agreements), investment debt and equity securit ies, and letters of cred it and guarantees. Net zero The commitment to reaching net zero carbon emiss ions from our operat ions by 2025 and from our financing by 2050. NII or Net interest income The difference between interest received on assets and interest paid on liab il it ies. ![]() 506 Standard Chartered – Annual Report 2022 Supplementary informat ion Glossary NSFR or Net stable funding ratio The ratio of available stable funding to required stable funding over a one-year time horizon, assuming a stressed scenario. It is a longer-term liqu id ity measure designed to restrain the amount of wholesale borrowing and encourage stable funding over a one-year time horizon. NPLs or non-performing loans An NPL is any loan that is more than 90 days past due or is otherwise ind iv idually impa ired. Th is excludes Retail loans renegotiated at or after 90 days past due, but on which there has been no default in interest or princ ipal payments for more than 180 days since renegotiat ion, and aga inst which no loss of princ ipal is expected. Non-linear ity Non-linear ity of expected cred it loss occurs when the average of expected credit loss for a portfolio is higher than the base case (median) due to the fact that bad economic environment could have a larger impact on ECL calculation than good economic environment. Normalised items See ‘Underlying/Normalised’ on page 131. Operating expenses Staff and premises costs, general and admin istrat ive expenses, depreciat ion and amortisat ion. Underly ing operating expenses exclude expenses as described in ‘Underlying earnings’. A reconcil iat ion between underlying and statutory earnings is contained in Note 2 to the financial 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 ives A bilateral transaction (e.g. derivat ives) that is not exchange traded and that is valued using valuation models. OCA or Own credit adjustment An adjustment to the Group’s issued debt designated at fair value through profit or loss that reflects the possib il ity that the Group may default and not pay the full market value of the contracts. Perennial sub-optimal clients Clients that have returned below 3 per cent return on risk-weighted assets for the past three years. Physical risks The risk of increased extreme weather events includ ing flood, drought and sea level rise. Pillar 1 The first pillar of the three pillars of the Basel framework which provides the approach to calculation of the min imum capital requirements for credit, market and operational risk. Min imum cap ital 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 igants are not available. Pillar 3 The third pillar of the three pillars of the Basel framework which aims to provide a consistent and comprehensive disclosure framework that enhances comparabil ity between banks and further promotes improvements in risk practices. Prior ity Bank ing Prior ity Bank ing customers are ind iv iduals who have met certain criter ia for deposits, AUM, mortgage loans or monthly payroll. Criter ia vary by country. Private equity investments Equity securit ies 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 itut ional investors and used to fund investment strategies such as leveraged buyouts, venture capital, growth capital, distressed investments and mezzanine capital. PD or Probabil ity of default PD is an internal estimate for each borrower grade of the likel ihood that an obligor will default on an obligat ion over a given time horizon. Probabil ity we ighted Obtained by consider ing the values the metric can assume, weighted by the probabil ity of each value occurr ing. Profit (loss) attributable to ordinary shareholders Profit (loss) for the year after non- controlling interests and div idends declared in respect of preference shares classif ied as equ ity. PVA or Prudent valuation adjustment An adjustment to CET1 capital to reflect the difference between fair value and prudent value posit ions, where the applicat ion of prudence results in a lower absolute carrying value than recognised in the financ ial statements. PRA or Prudential Regulation Authority The Prudential Regulation Authority is the statutory body responsible for the prudential supervis ion of banks, bu ild ing societ ies, cred it unions, insurers and a small number of sign ificant investment firms in the UK. The PRA is a part of the Bank of England. Revenue-based carbon intens ity A measurement of the quantity of greenhouse gases emitted by our clients per USD of their revenue. Regulatory consolidat ion The regulatory consolidat ion of Standard Chartered PLC differs from the statutory consolidat ion in that it includes Ascenta IV, Olea Global group, Seychelles International Mercantile Banking Corporation Lim ited., and all of the legal entit ies in the Currency Fair group on a proportionate consolidat ion basis. These entit ies are cons idered associates for statutory accounting purposes. The regulatory consolidat ion further excludes the following entit ies, wh ich are consolidated for statutory accounting purposes: Audax Financ ial Technology Pte. Ltd, Cardspal Pte. Ltd, Letsbloom Pte. Ltd, SCV Research and Development Pte. Ltd., Standard Chartered Assurance Lim ited, Standard Chartered Isle of Man Lim ited, Corras i Covered Bonds LLP, Pegasus Dealmaking Pte. Ltd., Solv Sdn. Bhd., Standard Chartered Botswana Education Trust, Standard Chartered Bancassurance Intermediary Lim ited, Standard Chartered Bank Insurance Agency (Proprietary) Lim ited, Solvezy Technology Kenya Lim ited, Standard Chartered Trading (Shanghai) Lim ited, Tawi Fresh Kenya Lim ited. ![]() 507 Standard Chartered – Annual Report 2022 Supplementary informat ion Repo/reverse repo A repurchase agreement or repo is a short-term funding agreement, which allows a borrower to sell a financial asset, such as asset-backed securit ies or government bonds as collateral for cash. As part of the agreement the borrower agrees to repurchase the security at some later date, usually less than 30 days, repaying the proceeds of the loan. For the party on the other end of the transaction (buying the security and agreeing to sell in the future), it is a reverse repurchase agreement or reverse repo. Resident ial mortgage A loan to purchase a resident ial property which is then used as collateral to guarantee repayment of the loan. The borrower gives the lender a lien against the property, and the lender can foreclose on the property if the borrower does not repay the loan per the agreed terms. Also known as a home loan. RoRWA or Return on risk- weighted assets Profit before tax for year as a percentage of RWA. Profit may be statutory or underlying and is specif ied where used. See ‘RWA’ and ‘Underlying earnings’. RWA or Risk-weighted assets A measure of a bank’s assets adjusted for their associated risks, expressed as a percentage of an exposure value in accordance with the applicable standardised or IRB approach provis ions. Risks-not-in-VaR (RNIV) A framework for ident ify ing and quantify ing marg inal 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 ical market data not be ing available. Roll rate Uses a matrix that gives average loan migrat ion rate from del inquency states from period to period. A matrix multipl icat ion is then performed to generate the final PDs by delinquency bucket over different time horizons. Scope 1 emiss ions Arise from the consumption of energy from direct sources during the use of property occupied by the Group. On-site combustion of fuels such as diesel, liquef ied petroleum gas and natural gas is recorded using meters or, where metering is not available, collated from fuel vendor invo ices. Em iss ions from the combustion of fuel in Group-operated transportation devices, as well as fugit ive em iss ions, are excluded as be ing immater ial. Scope 2 emiss ions Arise from the consumption of ind irect sources of energy during the use of property occupied by the Group. Energy generated off-site in the form of purchased electric ity, heat, steam or cooling is collected as kilowatt hours consumed using meters or, where metering is not available, collated from vendor invo ices. For leased propert ies we include all ind irect and d irect sources of energy consumed by build ing serv ices (amongst other activ it ies) with in the space occupied by the Group. This can include base build ing serv ices under landlord control but over which we typically hold a reasonable degree of influence. All data centre facil it ies with condit ion ing systems and hardware remain ing under the operat ional control of the Group are included in the reporting. This does not include energy used at outsourced data centre facil it ies which are captured under Scope 3. Scope 3 emiss ions Occur as a consequence of the Group’s activ it ies but aris ing from sources not controlled by the Group. Business air travel data is collected as person kilometres travelled by seating class by employees of the Group. Data are drawn from country operations that have processes in place to gather accurate employee air travel data from travel management companies. Flights are categorised as short, medium or long haul trips. Emiss ions from other potential Scope 3 sources such as electric ity transm iss ion and d istr ibut ion line losses are not currently accounted for on the basis that they cannot be calculated with an acceptable level of reliab il ity or consistency. The Group does however capture Scope 3 emiss ions from outsourced data centres managed by 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 able to take possession of. All secured loans are considered fully secured if the fair value of the collateral is equal to or greater than the loan at the time of orig inat ion. All other secured loans are considered to be partly secured. Securit isat ion Securit isat ion is a process by which credit exposures are aggregated into a pool, which is used to back new securit ies. Under trad it ional securit isat ion transactions, assets are sold to a structured entity which then issues new securit ies to investors at different levels of senior ity (cred it tranching). This allows the credit quality of the assets to be separated from the credit rating of the orig inat ing inst itut ion and transfers risk to external investors in a way that meets their risk appetite. Under synthetic securit isat ion transactions, the transfer of risk is achieved by the use of credit derivat ives or guarantees, and the exposures being securit ised rema in exposures of the orig inat ing inst itut ion. Senior debt Debt that takes prior ity over other unsecured or otherwise more ‘jun ior’ debt owed by the issuer. Senior debt has greater senior ity in the issuer’s capital structure than subordinated debt. In the event the issuer goes bankrupt, senior debt theoretically must be repaid before other creditors receive any payment. SICR or Sign ificant increase in credit risk Assessed by comparing the risk of default of an exposure at the reporting date to the risk of default at orig inat ion (after consider ing the passage of t ime). Solo The solo regulatory group as defined in the Prudential Regulation Authority waiver letter dated 10 August 2020 differs from Standard Chartered Bank Company in that it includes the full consolidat ion of n ine subsid iar ies, namely Standard Chartered Holdings (International) B.V., Standard Chartered MB Holdings B.V., Standard Chartered UK Holdings Lim ited, Standard Chartered Grindlays PTY Lim ited, SCMB Overseas Lim ited, Standard Chartered Capital Management (Jersey) LLC, Cerulean Investments L.P., SC Ventures Innovation Investment L.P. and SC Ventures G.P. Lim ited. Sovereign exposures Exposures to central governments and central government departments, central banks and entit ies owned or guaranteed by the aforementioned. Sovereign exposures, as defined by the European Banking Authority, include only exposures to central governments. ![]() 508 Standard Chartered – Annual Report 2022 Supplementary informat ion Glossary Stage 1 Assets have not experienced a sign ificant increase in credit risk since orig inat ion and impa irment recogn ised on the basis of 12 months expected credit losses. Stage 2 Assets have experienced a sign ificant increase in credit risk since orig inat ion and impa irment is recognised on the basis of lifet ime expected cred it losses. Stage 3 Assets that are in default and considered credit-impa ired (non- performing loans). Standardised approach In relation to credit risk, a method for calculating credit risk capital requirements using External Credit Assessment Institut ions (ECAI) rat ings and supervisory risk weights. In relation to operational risk, a method of calculating the operational capital requirement by the applicat ion of a supervisory defined percentage charge to the gross income of eight specif ied business lines. Structured note An investment tool which pays a return linked to the value or level of a specif ied asset or index and sometimes offers capital protection if the value declines. Structured notes can be linked to equit ies, interest rates, funds, commodit ies and fore ign currency. Subordinated liab il it ies Liab il it ies wh ich, in the event of insolvency or liqu idat ion of the issuer, are subordinated to the claims of depositors and other creditors of the issuer. Sustainab il ity Aspirat ions A series of targets and metrics by which we aim to promote social and economic development, and deliver sustainable outcomes in the areas in which we can make the most material contribut ion to the delivery of the UN Sustainable Development Goals. Sustainable Finance assets Assets from clients whose activ it ies are aligned with the Green and Sustainable Product Framework and/or from transactions for which the use of proceeds will be util ised d irectly to contribute towards elig ible themes and activ it ies set out with in the Green and Sustainable Product Framework. Sustainable Finance revenue Revenue from clients whose activ it ies are aligned with the Green and Sustainable Product Framework and/or from transactions for which proceeds will be util ised d irectly to contribute towards elig ible themes and act iv it ies set out with in 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 ion”, “COVID-19 facil ity” or “COVID-19 response” wh ich have been approved by the Sustainable Finance Governance Committee. Tier 1 capital The sum of Common Equity Tier 1 capital and Addit ional T ier 1 capital. Tier 1 capital ratio Tier 1 capital as a percentage of risk-weighted assets. Tier 2 capital Tier 2 capital comprises qualify ing subordinated liab il it ies and related share premium accounts. TLAC or Total loss absorbing capacity An internat ional standard for TLAC issued by the FSB, which requires G-SIBs to have sufficient loss-absorb ing and recapital isat ion capacity available in resolution, to min im ise impacts on financial stab il ity, ma inta in the continu ity of cr it ical funct ions and avoid exposing public funds to loss. Transit ion r isks The risk of changes to market dynamics or sectoral economics due to governments’ response to climate change. UK bank levy A levy that applies to certain UK banks and the UK operations of foreign banks. The levy is payable each year based on a percentage of the chargeable equit ies and liab il it ies on the Group’s UK tax resident entit ies’ balance sheets. Key exclusions from chargeable equit ies and liab il it ies include Tier 1 capital, insured or guaranteed retail deposits, repos secured on certain sovereign debt and liab il it ies subject to nett ing. Unbiased Not overly optim ist ic or pessim ist ic, represents informat ion that is not slanted, weighted, emphasised, de-emphasised or otherwise manipulated to increase the probabil ity that the financial informat ion w ill be received favourably or unfavourably by users. Unlikely to pay Indicat ions of unl ikel iness to pay shall include placing the credit obligat ion on non-accrued status; the recognit ion of a specif ic cred it adjustment resulting from a sign ificant perce ived decline in credit quality subsequent to the Group taking on the exposure; selling the credit obligat ion at a mater ial credit-related economic loss; the Group consenting to a distressed restructuring of the credit obligat ion where th is is likely to result in a dim in ished financ ial obl igat ion caused by the material forgiveness, or postponement, of princ ipal, interest or, where relevant fees; filing for the obligor’s bankruptcy or a sim ilar order in respect of an obligor’s credit obligat ion to the Group; the obligor has sought or has been placed in bankruptcy or sim ilar protection where this would avoid or delay repayment of a credit obligat ion to the Group. VaR or Value at Risk A quantitat ive measure of market r isk estimat ing the potent ial loss that will not be exceeded in a set time period at a set statist ical confidence level. ViU or Value-in-Use The present value of the future expected cash flows expected to be derived from an asset or CGU. Write-downs After an advance has been ident ified as impa ired and is subject to an impa irment prov is ion, the stage may be reached whereby it is concluded that there is no realist ic prospect of further recovery. Write-downs will occur when, and to the extent that, the whole or part of a debt is considered irrecoverable. XVA The term used to incorporate credit, debit and funding valuation adjustments to the fair value of derivat ive financial instruments. See ‘CVA’, ‘DVA’ and ‘FVA’. ![]() Designed and produced by Friend www.friendstud io.com Printed by Park Communicat ions a cert if ied Carbon Neutral print company. Park works to the EMAS standard and its Environmental Management System is certif ied to ISO 14001. This publicat ion has been manufactured us ing 100% offshore wind electric ity sourced from UK w ind. This is a certif ied cl imate neutral print product for which carbon emiss ions have been calculated and offset by supporting recognised carbon offset projects. The carbon offset projects are audited and certif ied according to internat ional standards and demonstrably reduce emiss ions. The cl imate neutral label includes a unique ID number specif ic to th is product which can be tracked at www.climatepartner.com, giv ing deta ils of the carbon offsetting process includ ing informat ion on the emiss ions 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 ing 1% used to generate energy. This document is printed on Nautilus Superwhite 100% Recycled paper contain ing 100% recycled fibre. The FSC ® label on this product ensures responsible use of the world’s forest resources. © Standard Chartered PLC. 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 ies. Registered Office: 1 Basinghall Avenue, London EC2V 5DD. Telephone +44 (0) 20 7885 8888. Princ ipal place of bus iness 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 ile: +44 (0)20 7885 9999 Dig ital Annual Report sc.com/annualreport Shareholder enquir ies ShareCare informat ion website: sc.com/shareholders helpline: +44 (0)370 702 0138 ShareGift informat ion website: ShareGift.org helpline: +44 (0)20 7930 3737 Registrar informat ion UK Computershare Investor Services PLC The Pavil ions Bridgwater Road Bristol, BS99 6ZZ helpline: +44 (0)370 702 0138 Hong Kong Computershare Hong Kong Investor Services Lim ited 17M Floor, Hopewell Centre 183 Queen’s Road East Wan Chai Hong Kong website: computershare.com/hk/investors Chinese translation Computershare Hong Kong Investor Services Lim ited 17M Floor, Hopewell Centre 183 Queen’s Road East Wan Chai Hong Kong Register for electronic communicat ions website: investorcentre.co.uk LSE stock code: STAN.LN HKSE stock code: 02888