Standard Chartered CEO Bill Winters Talks Buyback, Stock Price Performances

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Standard Chartered shares higher in Hong Kong after the London based bank said that it would ramp up its multi billion dollar share buyback program, this as it reports a beat on second quarter pre tax profits driven by its wealth business. And I'm pleased to say that we're joined now by the CEO of Standard Charted, Bill Winters.

Welcome back to the program, Veil.

Let's start with that buyback one point five billion dollars, a plan to return at least five billion dollars to investors by twenty twenty six. Is there a times you could go beyond that target now that you've got results like these. Yeah.

We set a three year target of an excess of five billion. We've done two point seven billion in the first first year so far. So yeah, if we continue to perform well. What we've said to shareholders is we've got a strategy. We're pursuing the strategy. It's working quite well. Earnings are strong. We're managering capital very very directly and I take quite active and that's allowed us to return any surplus to shareholders.

And we said especially giving where our stock prices, which is not as high as we think it should be. We will buy.

Back as many shares as we can with surplus capital.

That's what we're doing.

If we keep on performing, of course, we can keep on buying back shares.

Yeah.

I think earlier in the A you described the stock price performances and I quote crap. So you're not still not happy with it.

No, of course not.

It's less crap than it was, but it's you know, we have a long way to go, and yeah, we have to ask a question why it certainly isn't that we're not performing well.

So the performances we can do better.

I will always recognize that we can do better, and we are doing better. But yeah, I think we're operating in a somewhat difficult environment and I think we need to be clear about just how differentiated Center Chartered is. And at the end of the day, we serve multinational corporations on their cross border needs and we serve affluent individuals.

We do that extremely well.

We got a fully scaled and quite a substantial position across Asian, Middle East and Africa, but also with more national corporations coming out of the Americas and Europe.

That's what we do.

We're doing it well, it's generating good returns.

We keep on going.

So do you have potentially a new target figure for the buyback target.

We haven't revised our We just set the five billion target in February. I mean, we're not going to find tune this thing every.

Three six months.

What we said was we'll do in excess of five billion, and we're on track to achieve that. And as I said, we'll keep on going if we can generate the strong performance.

Okay, I want to ask how your Fit for Growth plans going. So this is your plan to cut costs by one point five billion dollars over the next three years. Are you seeing much wage inflation?

For example, we have.

We obviously had a big spike in wage inflation last year. This year is much more subdued, and that obviously is getting back down to normal. The fIF for Growth really is a transformation program. So we've had cost cutting programs pretty much my whole time as Center Charter, and we'll continue to get more efficient. We're trying to do this one a bit different though, which is actually quite a bit differently, which is to look at every single one of our processes and say, how do we simplify this.

That requires investments.

So in addition to saving one point five billion a year, we said we're going to spend one point five billion upfront.

To achieve that everything is on track.

We've got over two hundred initiatives that we're pursuing.

Each one is quite small.

I mean, these aren't a big, big marquee projects, but collectively it makes a big difference.

Okay, there's still into these pre tax profits arise driven by your wealth business. Where are the biggest inflows geographically?

Biggest inflows for US are everything international, so what we call international banking, a big chunk from mainland China, investing in Hong Kong, investing in Singapore to a lesser extent, and investing in Dubai. But that's happening global Indians, so that the Indian wealthy population obviously growing very quickly. Again across Dubai, Singapore, Hong Kong are three big wealth hubs in addition to Jersey.

But also the rest of OSI in.

I mean, the wonderful thing about our footprint is that there's a rising upper middle class. They're saving, in many cases for the first time in their families histories, and people who had some wealth before, of course are becoming wealthier as these economies grow, and it just is playing right into our strengths.

I do want to come back to the China outlook, but on wealth, could you hire more wealth managers?

We are hiring more wealth managers.

We've had it about We've grown the number of wealth managers by about nine percent nine ten percent per year for the past three years, and we'll keep on going. We're focusing on the full spectrum, from the ultra high networth so private banking, through to our real sweet spot, which is the mass affluent, so you know, people that have material savings but aren't in the family office zone.

And you've got a target of over eighty billion dollars of net new money for twenty twenty four to twenty twenty six. Are you confident now that you're going to hit or beat that target.

We're very much on track.

So the guidance that we gave just just six months ago, we've already surpassed that. In terms of the early stages. It's been a good market. It's not been a perfect market, and obviously we've had challenges in some of the equity markets around the world, and so questions about how the tech sector will perform.

Et cetera.

But against the backdrop of a market which is i'd say neutral in terms of attractiveness, we're outperforming. So assuming the market stays neutral, I think we'll do very very well. If we have a very very difficult time in the market, it gets tough for a short period of time. But this is a long term story, and this you know, we've been growing it at nine ten percent for ten years, and we we cover that, and we'll cover that in our.

Earnings presentation in just a bit. That this is a long term, secular growth story.

It'll be volable from quarter to quarter, maybe even from year to year, but the trajectory is very clear and we're perfectly positioned for it.

You mentioned China Hong Kong. I wonder whether you're still staying on the sidelines when it comes to Hong Kong.

Mortgages, so.

Tooth stories about Hong Kong mortgages versus they're very safe. We've got very low loan to value and aggregate, so we've got zero concerns. Even with a somewhat soft residential property market in Hong Kong, and it is a little

Okay, we were talking about the stock price. What do you think it's going to take for it to be properly re rated by the market.

Well, that's a big question.

And the first story is for us is to keep on performing. So this performance today we'll add to that momentum. It's been if you can draw a line through the interest rate.

Effect of the COVID period, it's been a.

Good study performance story for five years. But obviously we have to demonstrate to the market that is sustainable in this kind of a rate environment. Everyone expects rates to come down probably starting in September. That will provide or present some sort of an interest rate headwind, but we've still guided to increasing that interest income because we can think we can offset the rate effect with volume growth and with mixshifts in our portfolio.

So I think, but we need to demonstrate that.

Second, I think that the world will need to recognize that we're not a proxy for Chinese GDP. We are a proxy for the degree to which China opens up to some degree. We've got a super business in China. We're helping connect China to the rest of Asia, to the Middle East, Africa to the rest of the world, and vice versa. Those trade links and investment links haven't gone away. In fact, they're extremely robust. But the market still sees China as an economic weak spot and is.

Concerned that that could spill over to our earnings.

Empirically, we're showing it doesn't, so I'm very hopeful as we just stick to our knitting focus on those things where we really make a difference, will perform, will generate the results, share price will follow.

So you're not a proxy for China GDP. You're London listed, but the business isn't predominantly about London. I do wonder whether you expect a lift to the valuation because of the boost from the lack of political uncertainty. Now, given Labor's electual.

Win, well, it's certainly good to have a stable government in the UK. I think they've, as the Chancellor has made clear, they've were working through some challenges fiscal and otherwise. But certainly all of the rhetoric to this point from this Labor government has been very supportive of a stable business environment. Which is not to say that that there's going to be giveaways or handouts.

There won't be.

We don't expect that at all, but predictability in and of itself is a good thing. The last government passed through a competitiveness objective, a secondary objective for the regulators to focus not just on financial stability but also on creating a competitive financial sector.

These things are working through the system, and.

Me thankly it's a highly sophisticated regulatory environment here, stable politically, that's a good environment for us to have a headquarters.

Okay, good, And just finally, Bill, you're in your tenth year now as CEO. You talk about the long term. You've said before you've got no plans of going anywhere, and I wonder whether it's your intention to see through this cost cutting and growth plan until at least their completion in twenty twenty six.

Yeah, i'd like to. I'd like to, but you know, you know how these things go. You live it from day to day.

But certainly all the actions I'm taking today are with a medium long term view. I've always tried to be that way. And we've got a fantastic team as Santa Charter, with a couple of new members and a couple of people that have been with us for a long time. So I'm quite sure that what we build in the coming years we can continue for some time to come.

But yeah, my hope.

Objective is to see if we can deliver the strategy well.

I hope to be discussing your ownings with you for many years to come. Bill into CEO Sander Charted. We thank you for joining us