HSBC Holdings plc (HSBA) Earnings Call Transcript & Summary

Okay. I think we can go on now. So first of all, a very warm welcome to everyone to Birmingham. It is great to see so many of you in person today. I'd also like to thank the many people who are dialing in on the webcast. You're all equally welcome. My name is Ian Stuart, and I've got the privilege of being the CEO for HSBC U.K. Now just doing some research. About a week ago and I'm saying, when was the last time we had people together here? And you might not believe it, but it was the 11th of June 2019. I can't believe it 3 years and a week. It feels like yesterday, we were on Level 10 and we did the presentation. I recognize quite a few faces were here. And I was just trying to just capture my thoughts on what's going on in the last 3 years. So I'm sure you were much better at being this, but we've definitely had Brexit, then had a global pandemic, we did all the work on bounce back loans, which we'll touch on today. We've had COP26. We've had a lot of issues on supply chains, few issues on geopolitics, a war, now going to inflation. We've got a war on talent, and we've got a shareholder challenge. So it's been a pretty busy 3 years. But the good news is we're a really resilient team. We remain a confident team and you're going meet many of the team today, so I hope you enjoy. But what I left you with in June 2019, and I did go back and check my notes, and we left you with the message that we really did want to grow HSBC U.K. And we did that with a degree of confidence, and I hope never arrogance. There's no place for arrogance in this business, but definitely with a degree of confidence. And I think that position remains exactly the same today, and we're going to talk about that over the next few hours. But let me just give you one health warning before I go there. And you all know this, but I think it's worth stating it for the record. We are operating in very uncertain times. The Fed increased rates yesterday by 75 basis points. That was the largest increase since 1994. That could put pressure on sterling. That impacts supply chains for many of our customers. In the last hour, we've got rates up another 25 basis points in the U.K. Now having said that, it's definitely a tailwind for us. And it's quite a big tailwind. And again, you'll hear about that later today. We still remain in limbo on Brexit. Brexit is a big issue for a lot of our customers, and we're not through that. And the best I could say on geopolitics right now is that it's uncertain. That's about as positive as I could be on geopolitics. And there's certainly no sign of the war abating in Ukraine. So please, as we go through this, and I do remain very confident about our long-term plans, you've got to see it in the context of what we're operating around. However, as I've said, we think we've got a really good long-term plan, and I do remain confident about that. I think our growth story holds good, and I'll explain why that is the case. And really importantly, we've got a group who want us to grow. And again, we'll touch on that. I think we're really important for the wider growth aspects. I never underestimate the international angle of HSBC. And that's really important for us in the U.K. as well. We've got an amazing Commercial and Retail book, which is behaving really well and both are growing. And Stuart -- Stuart, you have to get used to that. That's my first apology for the day. If you get confused in anyone's name, if you just shout out Stuart, you are guaranteed to get an answer somewhere, okay, because there's a lot of us around. And then one other point is that we know the U.K. is competitive, and you will see that today. It's a really competitive market. For the avoidance of doubt, in my 43rd year in banking in the U.K., it's always been competitive. It's a really competitive market. But we think we're very competitive as -- and I think as you'll see, we're a pretty competitive team. And on the team, we've make quite a few changes to the senior team. But I'm absolutely delighted with the talent we've brought in, and you'll meet many of them today. The level of experience in this team is really deep, and I think we need that right now in the business. And I hope you see a bit of passion for the business as well. Colds and hay fevers apart. We're going to show you some really great stuff today. And when you get into the demos, and we've got 6 demos to show you, you'll start to see where the investment is going in the business. On our customers, our customers have been incredibly resilient in the U.K. and have been through a lot over the last while. But we need to deliver better for our customers. We're making improvements. But unless you're really good in the market today, the customer notices that and they expect us to be very efficient. So what to be done there? And we're going to keep investing in the business. And when our CFO, Claire, goes through some of the investments, you'll see material amounts of money going into making the U.K. business better. And hopefully, again, as I said, the demos will highlight that. We're also socially aware. I say to my team all the time, it's no longer good enough to be a big, safe bank. That is not good enough anymore in the U.K. You've got to be in tune with your local communities. And we've done some incredible things for the communities in which we operate. But you have to keep going, you must have a social agenda. And I think ours is strong, but again, it's work in progress. Our strategy is very simple. I really, really like our strategy. But you'd expect me to say that because we wrote it. But it's a really good strategy. I could put my strategy in front of my mother and she would understand it. And it's really good. And I think that's really important for us because we've talked to our people very openly about it all the time. And I hope when you see some of the -- and I know a lot of you are familiar with our strategy. But as we go through it in a bit of detail today, I hope you have the same feelings about it. So in summary, we're really looking forward to updating you today. We think it's a good story. And hopefully, by the time you leave today and hopefully on a train that's running on time, and for many of you who are zooming into us, you'll be confident about the business and as enthusiastic as we are about it as well. So let me just skip through a few slides here. You know the agenda. It's all in your packs. You know about opening up a world of opportunity, and you know me. So let's just go straight to the slides. And I'm not going to go through all these slides or for or you've got it in the past. But a couple of bits off of this one, 3 points in this slide that I want to mention. We want to capture some of the growth opportunities in the U.K., and we think we're really well positioned to do that. The second point is the international connectivity. Our biggest channel inbound is the U.S. and our biggest challenge outbound is Asia, and they're both really, really important. And finally, on this one, it is competitive. But we feel we've got a really good proposition for the market today. You've all heard about opening up a world of opportunity. And we see this as really important. It's very important for our people and we talk about it at every meeting. And you see the 4 pillars of our strategy there, and we talk about the pillars in going a little bit deeper. An important, too, here, I would say, for us right now is energized for growth. And we talk to our customers about our growth plans, and we talk to our people about it. It's really important that we've got a growth agenda because it sets the tone for the bank. And at the same time, we have to digitize at scale. And the reason we have to do that is because our customers expect nothing less. And unless you've got the tools, customers have got amazing choice, especially in the U.K., that can go elsewhere. I'm not going to talk about the transition to net-zero here, I'll mention it later, but that's nonnegotiable for us. You know our views globally on the transition to net-zero. Now society, I've touched on. And again, you can read the slide. I'm going to mention 3 things on society. We have given thousands of people -- it's over 3,000 people now who don't have a permanent address -- a chance to get their lives back on track by giving them a bank account. And if you ask the people in HSBC U.K. what they're most proud of, I would guess most people would say is we've given people a chance to rebuild their lives. There is no profit in that, none at all, but it sure gives people a chance to put their lives back on track and our people are very proud of it. On disability. What we're trying to do is we're going a step forward on disability, and that is we'll try to hire people with disabilities. So if you walk into some of our branches, you'll see people with Down syndrome welcoming you into the branch. And if you live with disability in your family, you will know how difficult that is to get your disabled child or your disabled relative into work. We're trying to give people a chance to come and work for an amazing bank. And again, our people are super proud about what we're doing there. And just finally, I think through the pandemic, we were incredible. And I can remember sitting in the Chancellor's office and he says, "You will stay open for business." And well, we all agreed. I took that on us, and I said, "We will stay open for business." And when Stuart Tait talks later about CMB, he'll talk you through bounce back loans, et cetera. But I'm really proud what this bank did through the pandemic. I think we behaved very, very well for the greater good. Now this is probably my favorite part of the presentation. And as you'll find out in a second, why. Okay, we are really important to the group. More important than we've ever been. And if you just look down that right-hand side, you'll start to understand why. But this is 2021. And these figures have all improved in Q1. So if you just look at what we are as a percentage of the group profits, we're 24% in 2021. We were 27% in Q1 of 2022. And you're a ring-fenced bank, so we don't have a big investment bank. So WPB, 31% of the group is here in the U.K., okay? And in CMB, it's 43%. So if we fail in the U.K., the group has a real problem. So we have no intention of letting the group down. And look at our returns. I mean our returns are 13.5%, that's post a very large pension surplus. If you didn't have the pension surplus, that will be 17%. So not only are we providing really good quality revenues and profits for the group, but we're supplying really good returns as well. And this tells me we're managing the business well. And without stealing other's thunder later, with a lot of opportunity. And this one, probably where I get really proud about the business. So today, if you look at our revenues today, our run rate is way ahead of 2019, okay? So we outperformed 2019 with a much lower cost base. So our jaws have got wider and wider. Now the way I describe this to my people is that we've been on [indiscernible] for 3 years. It's not done us any harm, but we've been on a low-fat diet, and know that we've got our cost base down to what I think is a very sensible level. The jaws are just getting wider. Now there's a point where you shouldn't push it too far, but we are in really good shape, and I'm delighted that the revenues are growing. I'm delighted that the costs are in check. And 2022, the costs are running at a lower level than in 2021. But this is a super chart about how this business is growing. Now this is a 9 plus 1. This is the detail of our strategy. And I've just taken this slide straight out of a slide I would use at any presentation I would do. And as I say, I really do like the direction of travel. And I can go through this, it could take me for hours. I won't. But let me just highlight a few things. you will want to talk about mortgages today, and Stuart will be delighted to talk to you about mortgages today. And we will tell you what our ambition is in this space. But today, we've got 3% of the buy-to-let market. When you come back here in maybe 18 months, 2 years' time, we will not have 3%, we will have a lot more than 3%, okay? There's so much opportunity for us to get there. That's going to be really important. We are going to give you a demo today on FX. We are after the FX market. We should be the #1 player FX globally. And you watch what happens when we show you the demo. I'm sure you'll be really excited about some of the investments. First Direct is a fantastic story in its own right. And Chris, the CEO of First Direct, is with us today. He'll give you an update on that, but we want to double First Direct. And why wouldn't you? It's a fantastic franchise. And international. Now there's a lot to happen in international. I've been talking about the corridors. We think the corridors are going to start opening up again, probably in November, December this year. And that's really important for us. So we'll start to get a much better flow of business coming in and out later. And it's been good. Do not get me wrong, it's been good, but we think there's a way to go on that. And we think we're uniquely placed. We think we've got the best opportunity in the U.K. to deal with that. So we feel we're in good space. And we're doing many more partnerships than we ever used to. And that's important for growth as well. This is just an important information for context. The #1 thing to take away from this is we have got space to grow. I hope in 4 or 5 years' time, we've got a lot less space to grow. But today, we've got a lot of space to grow. And that is really important for us. And it means that we can build into that space and grow out the business. There isn't rocket science there. It's just a really good opportunity to grow into that space. And again, trusted brand, strong network, all important, but the key here is we've got space to grow. If you let your customers down, it is so competitive, as you know, customers have got a choice, they'll walk away. And we've done some really, really good stuff on customer journeys, but you've got to keep investing in it. If you're not 2 clicks through, you could lose the customer. So we have got to make sure that we inspire loyalty. We've got a very loyal customer base, but we need more of that. And we need more new customers. We've got the systems and capabilities now to take on more customers. So we're not trying to take on more, and you'll hear about some of the acquisitions that we're doing in all our business sectors. But you need to make sure you'll look at your customers all the way through the journey, and that means investment. And here we are. So it's digital first. And some of the digital numbers you'll hear today are impressive. And that's our customers choosing that. The pandemic helped that, it's moved their customer behavior quite rapidly. So really, what you're trying to get to is a really smart bank in your back pocket, but you want it 24/7. Just think how you all behave yourselves. You want that 24/7. But if something goes wrong, you also want to know there's a human there when it matters. You don't need a human 24/7, but you need them when you want them there. And that is critical. But even if you've got all that, if your journeys are clunky, they don't work very well, then that becomes a problem. So 4 years ago, our mortgage journey was clunky. Really clunky. We're now #1 in mortgage journeys. So it can be fixed, but you've got to be dedicated to it. And this is really important as we go forward with our growth story. Two things quickly on this one. And this is us just being completely transparent here today. You've got to take your team with you. And you can see last year, we had a dip there. When you're really making difficult decisions around the business, we're making sure your cost base is right. You sometimes have a dip, and we've had a dip, but we have got a plan to move that back up. And next week, starting on Monday, I'm out on road shows, doing a lot of work with our people just so that they get the same story as you're getting today. So it's a lot of work, but we really do want to make sure our people are in good shape and enjoying the journey like we are. And then we've got our female leaders where all of it have been inclusive. And it's great. We've actually got today -- right here today, if you get a minute, we've got our interns here first day, here for 8 weeks. And the first thing I noticed today, 55 interns in 1 room, about 100 in the other, is how diverse they are. And it's fantastic. It really is good to see them. But as you're going to see today, probably about 45 of my team are senior women, okay? And they are very, very impressive. So this is where we are, and a lot more to do on that. But that -- we are very much a diverse organization, both customer-wise and people-wise. Sorry, going back. What's that? I beg your pardon. So transition to net-zero. This is nonnegotiable globally for us. It's really important, but it's also an opportunity. And I actually personally feel a little bit uncomfortable talking about it as an opportunity because people expect us to help with the transition, and that's the critical piece. We aren't going to say to customers, "We're leaving you." We're not going to do that. But if they don't have a transition plan, that conversation is going to get more difficult as time goes on. We will work with the transition. And that means we need a lot of innovation, but we're going to play a part. And the $1 trillion that we've talked about, the $1 trillion? Just on that. Okay, we're just on that as we speak just now. I just checked that number earlier today. We're on that. But we've got a huge amount to do here. But let me give you -- and especially for people dialing in from overseas. There are 29 million homes in the U.K. that have got to be retrofitted. And today, the average cost of a retrofit is about GBP 25,000. Now that will come down. But you do the math, [ GBP 29,000 ]. We need innovative solutions to fund that -- so it's really important for us. Never mind all the infrastructure, electric cars, et cetera. It's a massive opportunity for us as a bank. So we're excited about the opportunity, but we're more excited about playing our part properly. So just in summary, a quick summary on slides here. We know it's important to play our part in our society. And the U.K. is small. I mean it's a small island crowded with people. We are expected to play our part and we absolutely will. We delivered a really good performance in 2021, but you could easily explain it by saying, "You know what, there was a lot of your accrued impairments. You've written those all back. Have you really got as good a business as you thought you had?" I would say yes, and I think 2022 will show that, and it's off to a very good start. I think we're really well positioned. We don't have to go out and look for new things. We are really well positioned, that's right in front of us, and we're very focusing in those. And for those who think this is just too competitive an environment, there's too many players, I understand why you might think that. But you know what? I don't think it's been any different in all the time I've been in the U.K. I will pause there and take a few questions. If there's no questions, I'll move on as well.

[indiscernible] No questions? Yes. Thank you for letting me down. In the front, microphone, you will. Because people will not hear you.

So, you've talked about the growth at least a couple of times over your intro. And you've given us a couple of examples where you think you're kind of lagging or you're not in a -- you're not rightsized in the U.K. market. Can you give us kind of a more sense of where those aims are, maybe broadly by business? I understand we're going to talk hours about kind of things in detail. But just to set the picture for us?

Sure. So I mean, you will get a lot of detail from Stuart and Stuart. But let me just give you a couple. If you look at unsecured, when I think about unsecured, I intuitively go to cards. And we've got quite a good market share on cards. But when you take out, Marks & Spencer Bank, our share is actually quite small. So -- and we have had our own sort of, I would call them restrictive rules in place. You can only have one card in the HSBC Group and all these sort of things. We've managed to get our arms around that. So cards would be definitely an area we think there's opportunity. I think unsecured lending in general is an opportunity for us. FX. We've been losing market share in FX the last few years. We think global wallet will be really important. But we will have to cannibalize the book a little bit, which I'm fine with, I think we have to do that to get the growth. In the commercial bank space, and I know Stuart will go into this in some detail, we have got a fantastic commercial banking franchise. We're #1 in large corporates, we're #1 in MME. But if you see what we're doing with Kinetic to make it much easier for customers to join us, that should be the growth engine in the small end for some time to come. So it doesn't really matter which part of the business you look at. I haven't even spoken about wealth here. I mean the wealth market in the U.K. is so fragmented, but we'll give you one statistic today on wealth, what we've done with the opportunity to invest in funds on your phone, and it's a really important start for us. So yes, I mean, everywhere we go, there's an opportunity. And when you get on mortgages, now I will not steal Stuart's thunder. I mean, there are so many different opportunities within the mortgage world for us to expand. We don't even play in some of the key areas, buy-to-let, case in point. Yes...

Just interested in how you think the U.K. bank sector is viewed from a political point of view at the moment. Obviously, talk creeping in about possible remuneration on central bank reserves being reduced or removed altogether. Just wondering, are you view this part of the solution or the problem these days?

[ Joe ], I think that's a great question.

[indiscernible]

Thank you. [indiscernible] introduced here. And that's your [indiscernible] by the way. That's what I get for trying to be funny. I think we're in a better place than we were. I think post the pandemic, I think we really learned and we engage with MPs all the time and trying to tell in what we are trying to do. In fact, Stuart and I were with ministers from the Department of Trade yesterday. Again, just trying to see how important trade was for this country. But I'm under no illusions, I would always say we're working on thin ice. I mean politics, as you know, is a very interesting game. I would never take it for granted. So we are nonpolitical. We're just trying to do the very best thing for our customers. But we've had to work very hard in the corridors of power over the last 2 years. And Westminster has been like a second home to me. So -- but I wouldn't say it's always easy by any standards. But I think -- we had a conversation about 3 weeks ago on bounce back loans, because I was getting quite interested in some of the rhetoric around that. And of course, we've got the data. We know exactly where we are on bounce back loans, and just correcting people around the facts, and it's always easier in hindsight, isn't it? I mean, if we went back and did bounce back loans again, we'd probably do it slightly differently. But at the time, it was really, really difficult. And I've got no criticism of the government at all. They made decisions, fast decisions, at point in time, and we were there to support that. So -- but yes, it's always challenging. We have to just go with the flow, but we try and influence it in the best way we can. Yes. Can you just pass the microphone back, please. Thank you.

It's Manus Costello from Autonomous. Last time we met, you were talking about current account share of about 12%. And you were saying that, that was your natural market share, the way that you viewed it. It's obviously increased. I would assume there's some pandemic-related effects that are going on in there. So my question is, now you're over 15%, do you think your natural market share has increased or do you think that as we normalize, you'll actually see some of that liability share in the overall opportunity is kind of where it was 3 years ago?

There's 2 or 3 different ways to answer that question. Again, I will not steal Stuart's thunder. He will explain that in a second. But there's interesting things going in the market. Most people have more than 1 current account and watch out for the statistics on First Direct because First Direct is really interesting in that most people bank with First Direct. They don't have one part of their banking, they have all their banking. But the guys will give you a really good update on that later. I'm not ducking the question, but it wouldn't be fair to steal the thunder for later. Yes, come to a second. Can we get a microphone here, please? Can we pass it back. Thanks. Cutting back on cost, you see, we only got 2 mics in the room.

It's Jason Napier from UBS. I think most of the investors we talked to are fairly comfortable with the outlook for retail credit risk collateralization and so on. Can you give us a sense of what the lost content looks like in the commercial and corporate book and amidst headlines around Northern Ireland and Brexit and trade corridors and all those good things? How you contextualize the tails in the outlook for credit risk in there?

Yes. Again, I'm not going to duck the question. I'll give you a couple of headlines, but you're going to have Julia later, who will give you really good details on it, and Stuart will tell you a few as well. But at the macro level in the U.K., we are fortunate. We've got a slightly different book at HSBC. It's a slightly more affluent book. And it's interesting because we get asked a lot, "How is your book behaving?" It's benign. I mean it's really quiet. Now at some point, it's got to normalize. It has to. But at the moment, it's definitely quiet. And Julie, as I say, will give you more details on that. And it's a question I do get asked a lot though, because people are -- especially politicians, "Oh, what's actually happening?" Very little. And -- but there's been a lot of buildup of cash, as you know as well. And I think this morning, we're sitting on -- I think it was about GBP 110 billion at the Bank of England. That was part of the question earlier, what are you going to do with this? So there's a lot of cash in the system. You're going to ask the question, back to you. Can we just pull the mic back from the gentleman. Thank you.

Ed Firth from KBW. At a group level, you've obviously been going through this huge restructuring program, and I guess a big chunk of that has been in the U.K. as well. I should know, but I don't know the precise numbers, but I assume you're spending some chunk of that. The guidance is that that's coming to an end now and that actually going forward, there's much less restructuring to do, which, I guess, externally seems could be argued to be quite strange because it seems to be there's a lot going on in terms of what you've been describing to us in terms of digital transformation and all the work you still got to do. So I'm just trying to -- it would be interested to get your feedback from the sort of frontline. Are you now -- do you now feel that the bank is getting to the state it needs to be and that actually, going forward, there is much less restructuring to do? Or was it just big chunks of stuff that are not happening? Or how do you see that from your perspective?

First of all, I think that's a terrific question. And again, [indiscernible] will tell us if we've got it right. I think the view around the executive table was, you can't keep having huge one-offs. And it's been disciplined. So even as recently as last week, we were talking with various subjects like, no, at the end of 2022, that is it. And the other thing as well, we're going to change, is that we're not going to talk about adjusted PBT anymore. It's going to be reportable. That's it. So you're -- and I like that. I think that's good old-fashioned banking. And I'm talking about positive jaws today. I don't hear people talking about jaws anymore. I think it's a great discipline in your bank. But I think on the investment -- I mean, if you ask [indiscernible] today, you'd say, "Oh, I've only had even more money to invest." And we're investing in kind of $1 billion a year in this bank. At some point, you've got to get the balance right and giving yourself time to then get the right products in front of the customer and then generate the revenue to pay for it. But the view of the group at the moment is, "Look, we've spent a lot of money. We've got to look after the shareholders. We've got to get the benefit of that and push forward." But 2 years from now, we can -- we maybe need to do something else. And if everything goes to the cloud, you might change things again. So I think we've got about right, actually. It puts discipline into the bank. And I think there's more discipline on costs in HSBC Group than has ever been before. Again, not a bad thing in my view. I'll go 1, 2, and I think we'll probably have to call it there. Yes, we'll get a microphone to you. I'll come to you next, okay, and I'll take a breather.

It's James Invine here from SocGen. Ian, you mentioned the 3,000 bank accounts for homeless people is one of your proudest achievements. What more do you think you can do on financial inclusion? Because there are a lot of people who are excluded, who because of a bad credit record or maybe they don't want to borrow GBP 5,000 for a year, they want GBP 250 for a month. So what more do you think you can do in that area?

We have to do more. So we would wrap it all up towards financial health. And the key -- and that goes through different phases. So financial health for you might be very different financial health for somebody else that you might meet walking back to the station tonight. And we've got to play a role on both. And right now, the most important bucket we've got in financial health is under resilience. Because a lot of people over the next, I would say, 12 months, are going to find it very, very difficult. And we've got to be there to support them. In fact, this morning, and you might be aware or you might not, there's our new dear CEO letter out from the regulator this morning saying, "You must behave through this period." When I read it this morning, I thought, "Well, we're ahead of that." We have to be ahead of that. And we've got a part to play. Now that doesn't mean we can sort everything. I mean, your point there about GBP 250 for 3 or 4 months, we're not good at that. We're not set up for that. And it's frustrating sometimes that we can't be more active there. But I think we are doing some great things, and we're doing a lot -- we try and focus on education. And I think that's been really, really good some of the work we've done. We cannot get financial education on the curriculum -- the education curriculum. We have tried. And if you've got children in this audience and test it. I've got 4 children, and trying to teach them on financials is actually really difficult because it's like a lot about that when the time comes. Children pick up from the age of 4, that's the data we got, from the age 4, on financials. So we should be teaching them in schools much earlier. Just on an agreement with the scouts, the Boy Scouts because we couldn't get through the education curriculum. So the 650,000 boys in the scouts now get a badge on financial education. So we have to be very creative to get to the kids, because it's all about financial health. Okay. Thank you. There's one more. Yes, gentleman, about you saw it.

It's Aman Rakkar from Barclays. I just -- at HSBC Group level, you've got few home markets. You've got Hong Kong, the U.K., Mexico, the U.S. I was just interested, from your position, is there any observable synergy from your position of being part of a group structure with so many kind of key markets? I'm thinking primarily about your retail franchises. Is there any overlap or synergy or extra value that the group can derive from holding those?

Yes. I can ask the question in so many different ways. And look, with the Ping An debate just now, it's a really big one [ just now, the Ping An ]. I love being part of a big group. And I didn't have it in any other bank. And I've worked a few banks. It's the first time you see the revenue flows. So inbound, as I said earlier, the biggest inbound for us is in the commercial bank site from the U.S. And outbound is Asia bound mainly. But the Middle East, actually, we've got 3 really big parts of the bank today: Asia, the Middle East and the U.K. are the 3 big hubs as it were. And they're really important. We work really closely with them. And then there's a lot of global products. So FX that you'll see later today, that is a global product. Trade is a global product. And that's really exciting for us. And the group is -- one of its -- I didn't even mention the word and I apologize, I probably should have. One of the great things about this group is collaboration. I mean, it is beyond anything else I've ever seen. And people really are delighted to help. And I've not been in Hong Kong for a couple of years. But when I go to Hong Kong, I will spend a lot of time with customers out there who are investing in the U.K., and I've got to know the families really well. I was in Dubai earlier this year. All they talk in Dubai was about Saudi and about -- and world investments. And Stuart and I are going up to tying ties in a couple of weeks and we're spending 2 days working with people who are inward investment into the U.K. Now you might say it's not your job. I see it, it's absolutely my job. Shaking hands and go saying, "Look, we want to help you as you arrive in the U.K." That's my job. And it's really exciting. I mean you might Just think it's all politics. It's not. There's a lot of money moving into the U.K. at the moment. But don't underestimate how well we work with our colleagues across the group. We were all together last week, and it was great. It is a genuine benefit. And maybe that's an opportunity to just mention Ping An for a second, very important shareholder to us. We're hugely respectful of Ping An. But we've done a lot of work on this, and we don't -- are you buying the drinks now? I'm sorry, you're buying the drinks for me? So an expensive one today. So that might have [indiscernible] don't say too much. It's -- we've done -- we've done a lot of work on it. And Ewen's here today. Ewen Stevenson is here, he's in the building. So he'll happily talk about it later. It doesn't matter how we cut it. We can't see the value of breaking it. And I personally cannot say it. It's worked so much to us that it would be really painful for us. So we think best to stick together. There's things we can do, of course, those things we can do it best, to stick together. I'm going to pause there. Thank you very much. I'm going to hand you over to Stuart Tait, he's going to tell you all about commercial banking, which is a great story in the U.K. Thank you very much. Speak to you later. Thanks for the applause.

That's quite a phenomenal performance, and you started with no questions and then you had to close it off. That's really impressive. Well, I'll just put water. I just want to say thank you. Thanks for your time. I know you have a choice what you do every day, where you spend it, and you've chosen to spend it with us this afternoon. And especially for those that are dialing in, I think many are in Asia. And having just returned from Asia myself, thanks for giving up your evening, your early evening and quite late evening. It's very much appreciated. I may have met some of you before. Actually, there are 1 or 2 faces I recognize, and I would have met you in Hong Kong a few years ago. I was running the commercial banking business for Asia for the past 5 years. And I just want to say, I remember that session very well. It wasn't half a day. I think it was 3 or 4 days. And so there were a lot of discussions, a lot of visits and things. And there were some comments made either through the Q&A or in the breaks outside, that actually shaped our thinking, and it's not too much of a stretch to say it actually shaped our strategy. And I hope we can achieve the same today by talking with you and exchanging views. It's incredibly, incredibly valuable. I've never worked in the U.K. The question earlier about international, the value of the group. I joined the Hong Kong and Shanghai Bank in 1984 in Singapore. I've spent my whole career moving around different countries. This is my first time in this market. I came here 6 months ago. And I have to say, having spent time in Asia, Middle East, North America group head office, I'm really surprised at the optimism, the opportunity, the pace and intensity that's in our customer base, but also in our employees. I think when you sit in certain parts of the world that assumes more dynamic, more fast pace, you believe that's where all the action is. But I can assure you it's not. It's here as well. So it's been a really good pleasant positive surprise. And I am feeding that back to my colleagues in Asia and elsewhere, just so that they know this is more balanced across the group, the opportunities than people may sometimes realize. So very excited to be here to get my chance at last to work in this market. Excited to be in a growing business, and it is a growing business, and excited to still be at the heart of the bank because commercial banking is at the heart of the organization. And we see 2 home markets, not several. You can define them how you wish. Hong Kong and the U.K. So if you're in a core business in a home market, I'd argue you're not just at the heart of the bank. In fact, you're at the heart of the heart, and that's what we're about to talk about. 2021, Commercial Banking in the U.K. delivered GBP 2.7 billion of revenue and GBP 2.1 million of profit. The important point here is that revenue, that profit came across the segments and across the products. And if you think about our clients and the clients of the group, our clients sit in the middle of the spectrum. We have -- we got technical problems or are we okay? Yes. Sorry, let me move the slide. There we are. A little bit of context. I saw people looking, I thought something is going wrong here. So thank you for that prompt -- but our clients sit in the middle of the spectrum of the group. So we've got the large GB clients on one side, retail on the other. So by definition, our clients are buyers and users of the products and services of the 2 other businesses in the group. And they do that internationally. So if you put that all together, I think it explains why our strategy, our key goal is to maximize the revenues across the group's businesses but also across the geographies. And that execution is supported by the fact that we're both global geographic and universal. We have the range of products and services that they need. And we can grow and stay with the company all the way. From a startup to a large-listed company, we're with them. As they expand geographically, they use more products and services. And I think you can only claim to be a true relationship bank if you can take a company from startup right the way to a large corporate. Finally, just as context, there are opportunities here that are new, they're emerging. I really believe in e-commerce and the platform economy, and we're going to demonstrate some of the things we're doing to tap into that shortly. Sustainable finance, clearly, there's strong demand. And thirdly, a little bit like Ian was saying about opportunity, there are headwinds. And it's at times like this that HSBC Group and Commercial Banking stands apart because if you're running a business, especially if it's international and you're probably in a global supply chain, even if you're a domestic company, who you're going to turn to for insight, advice, risk mitigation products? I think we're a very good choice for companies to turn to, to be able to run their businesses effectively when there are headwinds. So that was the context. Just as an overview, Commercial Banking in the U.K. is clearly a cost-efficient business. In fact, we are best-in-class amongst the U.K. banks. We've been investing heavily in technology and in people. The investment is largely done, this particular phase. Now we have to commercialize it. Our people have to make it available to customers in a way that they use it and we build the transaction accounts, for example. And we like transaction banking. Most of the investment went into cash and trade. We are #1 in transaction banking, but that obviously gives terrific annual fee -- annuity revenue for us. And we're building a digital SME bank. We have about 700,000 SME clients. Clearly, that needs to be digital. But it's not just about digitizing things. We're also streamlining and simplifying our procedures. And Stuart's very happy. We used to have nearly 70 reasons why our clients would go to a branch. We steered them there. And we're down, I think, to about 6 now. So we've taken out about 90% of the reason why we used to ask our customers to physically go to a branch. And technology and just through simplification, we've removed almost all of that. Some of it is not required, and that's where we're now at. So many companies will say to us, "I really like your network. I like your range of products and services. Your RMs are terrific. I just wish you are easier to deal with." And that's what we've been tackling. And actually, we got a very similar comment from our employees. "We like working here. We like the brand. It can be difficult to serve clients the best we know we can. " So that's where the investment has gone. That's much of the action that we've had underway. If there's a real standout for us beyond the global and the universal aspect, I would say it's the value of an incredible client base. When people join our companies from other banks, often the reason for joining us or one of the most positive aspects they see at the beginning is this rich, diverse customer base. It's a terrific platform for them to grow and for them to excel. It's a very diverse customer base as well. We cover all the sectors that you would expect. We have domestic customers as well as international, we have very small customers, startups. In the Commercial Bank in HSBC U.K., we also have large corporates. So FTSE 100 clients -- companies are actually in our customer portfolio. Now if you just look at the right-hand side of the diagram, you can see that about 2/3 of our revenue actually comes from the corporate base, from our mid-market and large corporate clients. And they are substantially international in their business. They either have their own overseas offices or they're very active buying and selling internationally. So that's a key component, of course, that we focus on. But we also recognize that SME clients, the business banking clients, are typically the fastest growing. And the pace of growth, as we've seen, just seems to continually accelerate. So small companies are growing faster than others. I was talking to a company a few weeks ago. In 2 years, they've gone from startup to GBP 100 million annual revenue, online business. It's staggering the pace. So if the time scale for a company to go from a startup to become a very significant business has shrunk, our response to that has been we need to shrink our organizational structure. Meaning, not so long ago, I can't imagine inviting an investment banking colleague to a start-up. Today, they want access to our SME clients, our business banking clients, our start-ups. It's terrific to have that sort of collaboration that Ian was talking about, where 2 parts of this company that couldn't have been further apart not so long ago work hand in hand. And we visit those start-ups and those fast-growth companies together. It's producing great results for us in the market. The clients are obviously very happy with that. And it's helping pull this very large diverse group, much more closely together. So just on the financial performance, you may want to go through this in more detail. I just want to say, as you know, we position the loan book prudently. We always have and we'll continue to do that. We raise the deposit before we lend. In 2021, we had net ECL releases. The real standout for me in there is the fee income, the noninterest income, and that's particularly strong. In 2021, that was driven by capital financing activity. So again, the Commercial Bank working with Global Banking colleagues, M&A advisory, ECMs and bond mandates, even some IPOs at that time. And it's that collaboration with GBM that comes shining through. Now if you think back to the earlier slide, we effectively have 3 segments: business banking, mid-market and large corporate. The high growth is in the mid-market segment. So seeing those companies grow, our revenues grow substantially. We stood up a team in 2021 on the investment banking side dedicated to mid-market companies. And there's a fairly rich vein of fever and fairly limited competition because the bulge bracket banks aren't active with those companies of that size, and their needs and demands are often beyond the capability, let's say, of a provincial accounting firm within the U.K. So that's particularly attractive area for us to play. In fact, our mid-market segment revenues in the first quarter of this year are up by over 20% for the total segment. However, that's all been very positive, there is subdued loan demand in the market. Companies have built up cash. Ian touched upon this. They've been able to repay debt. They may have put some CapEx plans on hold. So it has been relatively subdued over the last couple of years. Trade, the trade finance business, has actually kept it more buoyant. And that's particularly good for us, giving us strength in that area. We have maintained market share, but there was someone presenting just before me and others that would say that's not good enough. And we know that maintaining market share is not good enough for us. Our intent is to grow it and to work with Julia and the team in credit risk to train our RMs the best we can, identify the winners in the market and grow the loan book. We do need to do better. However, on a flat loan book, our margins have improved, and we're the best in the market on the net interest margin. And in the first few months of this year, actually, our NIMs have improved. So the quality of the book, I would argue, and the pricing is stronger than ever before. And as you can see on the right-hand side, a number of initiatives to really get some of the growth going. This isn't the full list of funds. As you might imagine, there are a number of people that have got ideas about fund -- various funds that can be set up. We just launched at the group level USD 1 billion fund for female entrepreneurs, which is getting a lot of attention here in the U.K. and other markets. But this gives you an idea of some of the management actions that are underway to drive and stimulate the growth where we see the greatest opportunities. So international connectedness, I've lived and breathed it all my career. I see several clients a week. I don't think I see a single client that doesn't want to talk about international business. And I was talking to someone recently about you might be a farmer in Lancashire and believe you're a very, very domestic business, but suddenly, you're seeing fertilizer price, animal feed price going up. You clearly now recognize you're more international than you might have realized before. The map on the left there is very telling. If you look at the top 10 outbound markets, those in red, for the U.K. Commercial Banking business, they're spread across the world. And I think there may be a perception that they all would have been in Asia, but the top 10 outbound markets for our client base are well spread across Asia, Europe and North America. We are set up in a way to drive that even further because when a U.K.-based RM works with a U.K. company and a colleague, let's say, in Vietnam, a U.K. company does business within Vietnam, the U.K. relationship manager gets recognition for the revenue that's earned in Vietnam. So it drives all the right behavior. In other words, for our relationship managers, it makes no difference to them and their performance whether that revenue is booked here or in another market around the world. That's what our customers expect of us. That's really what we're all about. And if I think back to time in Asia, 2 markets I would call out with great prospects would be India and Australia. And Australia is the one -- and I'm not Aussie, but Australia is the one that stands out, I think. It's always in our top 10 markets globally, both inbound and outbound. It may seem geographically remote, but it's phenomenally connected, it's international, and it's simply explained by everything they produce or much of it gets exported, and much of what they need is imported. So it's a very well-connected international market. On the inbound side, we manage 2,000 relationships of companies based overseas coming into the U.K. Ian said majority of that flow comes from the U.S., not Asia but from the U.S. So our international business looks both East and West. If you look at the bar chart there on the bottom right, sure, we're in a very strong position for Asia Pacific. We do win our large share of RFPs, and we recognize that companies may need to award business with other banks. So if a company is, let's say, based in the Americas, they may award the Asia business to us and the American business to an American bank. But if you look near the bottom of the chart there, you can see we at least hold our own supporting European and American domiciled companies when competing head on against the American and the European banks. So that's us -- our global model. We're also universal, as I touched on earlier. And what we're trying to show here is that we meet the broadest needs of our clients. And you can see the universal banking model of work. You can see the diverse sources of revenue that our customers generate for us, they're material, and you can see that they're growing, and that's really important. And there are new areas. Private debt going into companies, we now work with our asset management colleagues. They have institutional funds in the asset management funds. We may be full on credit exposure to a commercial banking client. We work hand in glove with asset management, and we put funds in together. Another example of cross line of business collaboration for the benefit of our customers. Now when we have the Asia investment -- investor week or days, I remember standing over cocktails, and we came to the conclusion that if you were really to summarize the group or at least Commercial Banking, we are effectively a cross-border transaction bank. That's how we sort of boiled it right down if you have to in a nutshell. So this is our transaction banking business for the U.K. We are #1 share for cash and for trade, but I would expect this to be further ahead of the competition than you see on the graph. Now the investments have gone in into technology. We have had some reorganizations, and we have to drive a greater gap between us and those close competitors. It's the global presence that allows us to deliver those transaction products effectively on the ground, working with the customer, working with their counterparts that makes the real difference. Technology can go so far, but it's amazing the difference when you're actually in that market, you can handle transactions quicker. You can give insight to what's happening at the other end of the transaction. So customer satisfaction. You'll see straight away on the graph there's 2 stories here. Of course, we're proud of the top story. That's the corporate space, large corporate, mid-market, #1 for NPS and improving, moving further ahead of the competition. But we don't see that on the Business Banking and the Small Business Banking side. Red line is Small Business Banking, starting to turn the corner. The story here is, as Ian mentioned, during COVID, we did the right thing. We said we'll support small businesses through an extraordinary time, whether they're our customer or not. So we stayed open through that period on the bounce-back loans for our existing clients but also the new clients. That, of course, required significant resource to be shifted from our core business to that activity. That's now complete. The loans are on the book. The resource has now gone back to our Business Banking clients, and we would expect to see shortly, because we're making the outbound calls, because we're giving advice to those customers, those scores should start to improve. And we're digitizing at scale, and we have to in a scale business. So scale obviously drives mobile adoption. You can see on the red line there, mobile log-ins versus desktop, a very different picture between the 2 of them. Of course, it improves client service, but it's the only way we can grow in a cost-efficient way. And we do have the ambition to scale up. And Kinetic, which you'll also see is a great example of putting in brand-new technology, it's digital only, it's mobile, and I see that as a large acquisition net for new companies to start doing business with us and that we can grow over the course of their lifetime. The right-hand side is important. Logons are increasing sharply. So they are active and they are transacting. They haven't just been onboarded. And we now have the largest range of loan products through Kinetic and the street in this space. Now we're just starting relatively small loans at the moment, but it's real concrete action, it's ring-fenced, and we will grow the lending activity. Final slide. We have brought sector expertise to our clients. We've largely mimicked what happens in the Global Banking segment, and we've seen clients really appreciate that. And that's bringing sector expertise not just to them from a central location, but actually, it's dispersed around the country. This is locally based sector expertise, which makes an incredible difference for customers of this size. This is how we get into the trusted adviser relationship. Every relationship manager wants to be a trusted adviser, and sector knowledge and insight enables us to do that. It enables us to find the best opportunities, who are the real winners out there, and this includes sustainable finance. Of course, it goes across the industry sectors, but we provided GBP 2.7 billion of sustainable finance last year. We're up 127% last year. Year-to-date this year, we're up over 5x. So we've got an accelerating growth in our sustainable financing. So I think that's a good place to close. We sit at the crossroads of world trade, is a phrase we used to use, and I think it's going to occasionally resurrect that. If you sit at the crossroads of world trade, maybe commerce is a better phrase because it's not just about trade finance. We sit at the crossroads of commerce. And it's at times like this when you have global insight of what's happening but also on-the-ground local insight. And you can put that together, capture it, put it in the hands of the relationship managers and make it available to our customers. That's how I think we stand out in conditions like this. So in summary, for me, 3 key points. We're executing on our distinct and sustainable competitive advantage, global and universal. We're utilizing the strength of the franchise, on-the-ground presence, deep local knowledge. And we're really fueling that by identifying and focusing on the key areas of growth opportunity. And by the use of data, we can also focus on the clients that show the greatest upside potential. So thank you. Q&A. Thank you.

Alastair Ryan, Bank of America. So it sounds like this whole ring-fencing has been quite hard work really because a lot of what you pointed out there is how great the group is, and we get that. We respect that. So how does it work in practice, that bringing the group to what is now a definitionally domestic business for you? How do you manage that complexity?

I'm not going to use the phrase it's definitionally domestic. But if you look at facts, figures I put up there, in practice, it's not. I've never worked in a ring-fenced bank, and I was expecting 6 months ago to come across a number of operational issues, clunky processes, maybe tripping up occasionally. But after 6 months, I frankly, honestly, don't feel from day-to-day business working with clients that I'm in a ring-fenced bank. I haven't had a single conversation with a client where they said "I wish you'd ring-fence differently. You don't handle the ring-fence as well as your colleagues. " FX transactions flow. We bring in the capital markets team. I mean that is an absolute genuine honest answer, which surprised me probably as much as my answer to you does. I don't feel it. We need the microphone, that one microphone. The lady in the middle, yes. Thanks. Maybe I should walk around.

It's Perlie from KBW. I'm just going to the point about crossroad of world trade, and obviously, I can see that's a very important part of your franchise. But with geopolitical events, not just war in Ukraine but a general more fracturing of politics between major powers and also people realizing the fragility of a just-in-time, highly globalized, highly connected supply chain, and obviously, I'm not suggesting that we'll go back from globalization. I don't think that's an option ever. But if there's sort of more inward traffic and more inwards investment and people want to have more inward-looking economy, how do you see your business in the context of that? I guess, do you -- have you seen it? And if you do see it, what's the impact on your business?

Yes. I think -- actually, we spent the last few years talking about supply chains and shifting because China isn't necessarily the lowest place to manufacture now. And people are looking to move things into Vietnam or Bangladesh. It's incredibly difficult to move the supply chain. People say, let's put a new factory up in Bangladesh. Takes years, so it's a difficult process, it takes time and it takes money, but it was already underway. There's an acceleration of it. But it's more different and often a single factory is part of an ecosystem. You can't just do it on your own. You have to bring other component manufacturers with you. But if I think back to when I talked about headwinds, it's at times like this that companies turn to us and say I'm not sure I can get that chemical from India anymore. I buy it from a middleman. If I don't get that raw material, my very viable business might suddenly be in trouble. Can you, HSBC, help me identify an alternative supplier? Or what we find is I buy from a middleman, I want to go direct to source. I don't know where that middleman is going to steer the business. There might not be the loyalty in the relationship. If I can go direct to source, if you can help me find them or 2 or 3 of them, I think my supply chain is more stable. So it's those sort of conversations, we call them opportunities, but that's what customers want to engage and talk to us about. And I think we do stand apart in that aspect. Same for sales. I mean a lot of people, the larger companies, and no doubt the others will follow, they want to sell direct to the consumer, how do I get to the Indonesian consumer. I have to go through traders, middlemen, distributors, and on it goes. I want to go direct, and that's where the platform economy comes in.

Martin Leitgeb from Goldman Sachs. I was just wondering if you could give us a bit of color in terms of the growth opportunity revenue-wise for the Commercial Banking business. I think on the retail side, Ian's comment on the ambition for mortgage market share. I think what we will hear later in terms of rate sensitivity. I was just wondering in terms of Commercial Banking revenues, how should we think going forward? I was just wondering on the interaction, higher rates and that growth opportunity, do you think there's also a flip side of higher rates here, in particular for your Commercial Banking client side, that this could essentially become somewhat of a headwind?

I think it's continuation -- thank you for the question. I think it's a continuation of 2021, where we saw growth across the segments, the different client groups and across the products and actually across the corridors. Not all of them that tried corridors. We're liquid. We are a little over 100 billion of deposits and about 65 billion of loans, so we're liquid. So we do get benefit from the rate rises, and we've been able to pass on interest margin as well, improved interest margins. So I think the book is positioned -- obviously, the benefit from the rate rises. I think we're well positioned to operate across the international markets. When you get a shift, like the previous question, that's when there's an opportunity to pick up new business. But of course, we've got to be -- and I don't mean to drift into credit risk because your question was about revenue. But we do need to watch for, and I touched on it earlier, viable businesses, looking at the financials, suddenly not being able to trade in a solvent way because they can't get key components or maybe they can't get workers. So if you translate that into revenue, we do need to be watchful of certain industry sectors that are potentially more stressed than others. There may be a hoarding of certain commodities, for example. But I think the outlook is breadth from the revenue sources. Don't see anywhere in particular whether that's going to slow down. I'm surprised coming here at the level of corporate activity. Companies are -- they're going from public to private. There's acquisitions. They're bringing in private equity, bringing in our asset management teams. That's all fee-driven. IPOs, very quiet at the moment. So that will [indiscernible] for a period of time. But I think breadth and I can't see an area that we would see materially slow down. We haven't seen it up until now.

Omar Keenan from Credit Suisse. I've got 2 questions, if I may. So the first question I wanted to ask is how do you assess the competitive threat of new entrants that are offering in particular, smart software or treasury services that might start picking apart particular elements of your relationship with your customers? I'm thinking some propositions like why is that, say that they're targeting the small business customers of banks where margins in that customer funnel might be a little bit higher. So in the context of what you guys said about FX market share, it would be helpful to get your thoughts on that. And secondly, just on deposit beta in the commercial bank, that's somewhere where the analyst community has a lot less visibility in terms of trying to figure out what's going on. So can you talk a little bit about your liability pricing strategy in the rising rate environment?

Yes. Okay. Thanks. First question, we do take the competition seriously. I mean Ian talked earlier about there is no room for arrogance. I think normally, we're quite a humble crowd. We don't want to be alarmist, but I think we can all see some of these organizations, these companies, these startups, they'll do something brilliantly, I mean absolutely brilliantly. But it's quite narrow, and that might be fine for some companies, particularly smaller companies, particularly at the outset. Our challenge is to bring the benefit of breadth and scope. So if you're running a smaller business at the outset, perhaps operating with 2 or 3 providers, if you can stitch it together and they're all brilliant, that's terrific. But is there a point where you're trying to run a company, you're trying to keep your administration down, is there a point where actually it's easier to deal with a smaller number of providers that can maybe offer the same? It might not be as brilliant -- it might not be as good as a collection of the very best of everything. But I was with a large-listed company last week, and I told them I'm meeting you. I said what would you be saying to the analysts and the investors today on the positive? And they said, it's -- and I'm going to contradict what I said earlier. They said it's the ease of coming to you. Because we already do quite a lot of things with you, when we need to do something new and different, there's almost a gravitational pull. We just come to you. It's the -- you understand us. You know us. We've already got systems integration. The challenge for us is if we can operate that well in the mid and large corporate sector, how do we bring that experience down to the smaller scale part of the business, that's the challenge. And that's why today we're going to show you Kinetic and Global Wallet and some of the other digital capabilities. On the deposit book, you asked about pricing. We have passed back on previous rate rises. We've stepped in on occasion, and we've passed on and we haven't on others. I know the rate rises have gone up today. I don't know the decision, but we've agreed with Ian, the ExCo, the Board effectively a mechanism to guide us how to respond as and when rates move. So there's a framework there. Now a decision is still made on the day, that's a guiding framework, is that what we want to do on the day. But we recognize, as time passes, the pressure to pass on those rates benefit is clearly there. There's an expectation we do it. Of course, we want our customers to be safe, sound and operating healthily as well. Is that -- was that the point of your question? Or have I missed my understanding of the word beta?

Can I ask perhaps a question another way? What level of interest rate do you think the market for deposits gets a lot more competitive than it is today?

I wouldn't know how to answer that because I think we look at it step by step. And I suppose by historic levels, rates are still very low. We've had a lot of funds sitting on noninterest accounts because companies may have thought what's the point, but then they become interest rate sensitive when they can start to see the benefit. I'm sure Stuart on the retail side will give maybe a very different answer, maybe a very similar answer. We are beginning to see some cash balances starting to flatten as cash was being built. So there are signs of corporates starting to use the cash. Now whether they're using it to cover operating expenses or whether they believe there's opportunities, not easy to see. But I have to be honest with you, I wouldn't be able to answer where is there a point where pricing has a change in the behavior. Thank you very much. Thanks for keeping me on track. Thank you. Thanks very much. Stuart?

This is why we deliberately did this. I'm actually called Brian, but we knew we had to try and keep the presentation simple, so we've just renamed ourselves Stuart for each of us. Well, actually, I know most of you see you know I'm not called Brian. My name is Stuart Haire. I lead Wealth & Personal Banking. 3 years ago, I led Retail Banking and Wealth Management, which is essentially Wealth & Personal Banking plus Private Bank for anyone who gets confused. And 3 years ago, I would have stood here and said to you we have an incredibly compelling franchise. We have uniqueness and real strength in our customer base. And we would have -- I would have said to you we have a massive market participation opportunity. And we're going to show some real tight management, of course, but investing where the bank needs to be invested in. And actually, this time I'm going to say the same things to you, but I'm going to say to you we've made a lot of progress, and I'm going to demonstrate that, I think, by the slides that I'm going to show. And now where we want to take the Wealth & Personal Banking franchise is to develop its sophistication, develop its breadth of offering, develop the complexity of needs that we can serve into our customers. But I know I have no right to do that if I don't get it right for the customers, and so that will remain my #1 focus. So we've now got a franchise which is a very resilient revenue and profit growth. You'll see that in the 2021 figures. And indeed, if we move forward into those published in Q1, you've seen a significant acceleration in our revenue growth. But we're not just growing our revenue by throwing costs into the machine. We're also bringing our cost down, materially restructuring and transforming the business, making consequential decisions like coming out of mortgages in Marks & Spencers or coming out of the current account market. So we can redistribute those costs to support or focusing on our strengths. We're increasing -- and I promised we would to Jason. I promised we would increase the cadence of digital delivery. And I hope not only to talk about that but you will actually see it. First of all, you'll see it for your customer, you're starting to see some of the benefits. But particularly over the summer, there's going to be some fantastic features and capabilities starting to come out to our customers, leveraging to the question before, leveraging a lot of the capabilities that were built in other parts of the world, notably Hong Kong, where we're actually utilizing the same underlying technology delivery capabilities that Jen will talk about to actually enable capabilities in the U.K. with localization. But it really helps us benefit in terms of bringing things to market. We have made improvements in customer service, but not enough of my customers would agree with that. So a big part of what I need to do is maintain the focus. COVID was a distraction, but it's not unacceptable to have a distraction. You can't grow your revenues, your balance sheet, your market share and not take your customers with you. Candidly, it's a [ Pyrrhic ] victory. It won't last. And then finally, and this isn't at the expense of customer service, this is to enable customer service. There are too many things in our organization that customers have to do rather than want to do, and they introduce cost and complexity into the organization. So we have been working with technology colleagues, with Jen and team, really to try to -- in the same way as Stuart mentioned, to really to try to go after that opportunity as well. So let me talk about the franchise. This looks a similar slide to the one 3 years ago. I have updated it, I promise. We've got 14 million active customer relationships, and I'll talk in another slide's time just a little different vignette on that customer view, which I think will surprise many of you, but it's been by deliberate design. But probably the most important chart on this slide is the bottom left there, and that's the opportunity that we have. I'll correct , I missed out pension. The 12% you may have seen before might have been a balance-led position, the 15.6% of CACI, so it's more of a stock position. We've grown our -- that said, we have grown our current account participation quite materially. But that means we've got even more opportunity in the cross-sells. Now we've moved our mortgage share since we last talked. We've stayed through the pandemic roughly flat across our unsecured range despite a significant deleveraging in the market and a supreme quality base. But now we can push on even further, and there's an even better chart on here when we talk about the wealth opportunity. But what it also shows is we can continue to deliver very diversified earnings. We are not a one-trick pony. We are not a building society. We are not a savings and loan shop. And increasingly, as we build sophistication into the product range, you'll start to see even more of that diversification of the revenue coming through. And we'll talk about that. So I wanted -- well, I'm going to the right-hand chart -- or the left-hand chart here, I want to maybe touch a little bit more on a different view. And I've actually stole it -- who's from Credit Suisse here? I think I've stolen this from you. Flattery. This doesn't surprise me, but it may surprise you. We have focused on re-aging our customer base. Now there's no special chemicals or cryogenics involved in that, as much as many of our customers would be delighted with that cross-sell. So what that's been about is deliberate targeting of different segments, both through the first direct brand, which Chris will talk about, but also through the main brand. We take about 1/3 market share in student current accounts and keep them with us. We also are deliberately targeting the [ student share ] market, which tends to have a younger and more affluent customer base in terms of transferring in. So what you see here is by Monzo with their -- I'm not sure they call them customers, I think they call them users. Our customer base tends to have a much higher percentage of Millennial and Gen Z. Additional to that, of all the banks, we have the most primary usage. So in other words, some people put their salary in. They continue to use other account for their primary usage of that account. They don't then take the primary usage of with one of another provider. And then finally, and maybe this is less surprising, we over-index in the affluence of our customer base. And what's interesting there is the superb choices that first direct made with regard to its acquisition 30 years ago, you see the affluence of that customer base really coming through as well, which by the way, also presents opportunity. In terms of the financial performance, it's been robust through the pandemic. We're obviously similar to sort -- you can see the swing there in the ECL line, which dominates the profit position. But what you'll start to see now is that profit position being delivered again. But actually, from the revenue growth, where you've really seen over 15% revenue growth in quarter 1. And I would suggest that arithmetic takes you to similar, if not better, as the quarters go on. What you also see in there are very disciplined cost performance. And it's fair to say that's due to very specific restructuring activity and transformation activity that we've undertaken, choices we've made so we can recycle costs into the areas where we believe we have the greatest value. And I'll talk about some of them. They are part of the 9 plus 1. What you've also seen, and see it in the next slide, me delivering on the promise that I made to you 3 years ago in terms of the market share opportunity that we had in mortgages. We've delivered on that, which has helped grow our assets and also significantly grow our deposits. So I would argue it's a strong, robust performance and the accelerators are to come. So let's talk about mortgages unless you'd rather skip this slide. I stood here 2019, and I said I would grow the mortgage book. I think we have. Some might argue we've grown it through price. Actually, some analysis by UBS shows we are not the price leader despite all the protestations of our competitors. We're upper quartile prices, but actually, we've grown that because of superior service, consistency of delivery. At times, we were one of the only providers open through the pandemic that support people and mortgage growth. And of course, a fantastic BDM network that supports our ever burgeoning share of the broker market. And that's where our growth comes from. So we've moved from 6.7% to 7.5%. And I would guide that, as I always have to say that we feel our natural share in this space is closer to 10%. What we have seen, though, is a real change in market pricing, and you see that in the bottom left chart, and this is open source. What you see are the Rangers and Celtic colors, and to our Asian friends, they're flags of football teams. The blue or green here, they are the customer rates, and then you see this massive steepening on the swap curves. And you can, therefore, see the compression and at times, having the market, having to readjust very quickly in terms of pricing. And what you're starting to see now is a greater rationality coming into the market. At no times did we lead the market down in those price points. We were reactive deliberately in quarter 1, quarter 2. We stepped off the gas to see -- and that had marginal effects on our volumes. But what we've done is we've always had that consistent upper quartile position and availability where others have struggled to charge just the fantastic opportunity that we have. Ian spoke of the buy-to-let opportunity. We used to only sell buy-to-let directly. At the turn of this year, we now introduced a vanilla buy-to-let offering into our broker channel. Imagine if we develop that offering with cashback, potentially even into limited companies as we build our experience, and it's no coincidence that we bring in a talented CRO who has expertise in this market. So we've got plenty of opportunity in our portfolio. But we're not complacent about that. We are a conservative lender, and we want to remain a conservative lender, but we believe it's propositional strength that will take us to continue that market share growth. And areas of proposition. We've talked about buy-to-let, but we also want to support the retrofit opportunity. We want to look at green mortgages. And we also want to make sure that through our first direct brands, we also start to offer nuanced products that can really help their customer base. But we also have other growth opportunities. We've often in the last 3 years majored, or you guys have asked questions about mortgages. But I want to convince you about this increasing sophistication of our range. We talk about unsecured. You can see here consumers rational deleveraging through the pandemic as they couldn't spend their money, but they were continuing to make money, they naturally paid down the expense of debt. That was across the market. We really didn't lose any market share through that time. But what you're starting to see now is the borrowing balances reincline. If you look at the credit card chart at the top, you see a marginal improvement in the balance levels. Most of that was transaction balances, but now we're starting to see the borrowing balances return as the economy returns. To some extent, it's natural. You're starting to see the opportunity for people to go on holidays buy other large items, get back on the heavier transportation, et cetera. So you're starting to see that leveraging coming back. But we don't have a divine right to win here. We have to invest in proposition that makes our offering more and more relevant. And there are three areas of investment that we're making. One is in data and decisioning. Data and decisioning is crucial in this space. You've got to make the right COGS. And I'm not talking about social media decisioning here. I'm talking about bread-and-butter quality risk-based decisions, taking account customers affordability, resilience, net fee income, et cetera, and taking the opportunity to grow in that. We've been building many, many more new scorecards that give us lift in terms of the customers that we can accept. We're going to continue that as we go forward. But we also know that we need to develop our digital capabilities. More than any other product in our range, unsecured lending is almost exclusively digital. And so therefore, we need to make it easy, intuitive and simple for that. And one product in the range that points to that is point-of-sale finance. And we'll be launching this month, with our M&S Bank, M&S Sparks Pay, which is a point-of-sale offering, first of all, online, but then it will be available at the till. And having built the capability with a third party with Jan and team support [ Divido ], that's going to then be extensible as a product offering to take to other retailers. So we think there's a fantastic opportunity not just to write the natural releveraging but also to start to take share. And we're actually starting to see that already with good growth, but again, very strong, even new vintage quality. Wealth. Now again, I've talked about wealth. I've talked about the plans. But here, again, I would talk to -- I think the question was, how does retail benefit from leveraging the capability? There's no more advanced wealth economy than Hong Kong. So imagine if I could bring the tools that have been invested in over many years from Hong Kong to the U.K. and make them relevant to the U.K. market with the U.K. tax regimes. And that's exactly what we've been working on, leveraging global platforms and building capability here. That means we don't need to go out inorganically and buy capability because actually it's resident within the group. And you can now start to see the benefits. The turn of this year, we launched our first mobile journey, a simple buy journey taking cash in the mobile app through into funds. In quarter 1, we were the #1 provider of new wealth accounts, the #1 provider. That be, AG Bell, [ Lansdown ] and all the other -- and all the banks. So without it being a Kevin Cosner film, but if we build it, they will come, particularly if we start telling them and they start to see the benefit and the performance through the assets that they're moving things into. But we've got much, much more to do. We want people to be able to interact with our funds. We want to look at brokerage platforms. We want to help people with retirement. And in there, we've partnered with fintech, Wealth Wizards, to actually build a retirement offering, which is actually a chatbot that helps talk you through how your retirement planning is going. And that wealth journey, you guys will get the chance. Oli will take you through what we're doing there. But it's more than just retail wealth in bringing together the private bank with the old RBB or RBWM, we're starting to look at the continuum, and this has been a conundrum in the U.K. For those customers have investable wealth of GBP 1 million up to GBP 10 million, how do you get an economic model to deliver high-touch service, but efficiently? And the way you do that is to utilize the same technology but bring it alongside some of our exceptionally capable people and strong relationship management skills. So we're starting to build out that capability for what we call the continuum so that you can lift as your wealth grows, you can move yourself into more sophisticated offerings. And then finally, in the high net worth space, we benefit materially from Asian wealth. The flow corridors of wealth. Asia wealth is not about wealth just in Asia. Asia wealth is about Asian wealth as it transfers around the world, making choices about which markets it participates. And we're uniquely placed, I would argue for that. Talking of being uniquely placed, international. 1 in 4 customers who have internationality about them, either a non-U.K. national, multi-country or nonresident come to HSBC. And we've not yet enabled quality journeys for them. So we're the natural destination for an international customer. And we're now going to be investing much, much more, and you've probably heard from Noel about International 3.0, really making that seamless for international customers because we know it hasn't been in the past. We know that through the work we had to do in global standards that perhaps it's been too clunky to be able to move from country to country. We're investing in that because we know it's our uniqueness, not just in the U.K., but in other countries as well. So we're really going to work so that we're not 1 in 4 of the international customers. We're 1 in 3, and we're delighting them with the service as well. And one way to delight them is to give them a proposition, which is really quite unique. And let me tell you a little bit about this global money proposition because it actually talks a little bit to what we're doing in the small business banking space. Imagine, I promised you in summer that I would give you a capability that allowed you from your mobile app as an HSBC customer to set up multiple wallets within about 2 or 3 clicks across 16 to 18 currencies. And I imagine I said you could put money into those wallets at the prevailing FX rates with one of the lowest loads and zero fees. And when I say lowest, I'm not talking about comparable to Barclays and the other High Street banks. I'm talking about the [ Revolut's and the Wise's. So you can move from sterling into ingots Actually, I'm not sure if we're doing ingots so I have to be careful, move from sterling into euros into sterling all with a relatively low loading. Top of the market loading and no FX fees, not just that I give you a card. And with that card, you can go on your holiday, you might not even have loaded your euro account, but if you then put that card into, say, a Spanish ATM, we'll move the money at that low loading rate into the euro account and it'll draw from the euro account. So you will be able to spend, take money out of an ATM like a local. You can provision it with a physical card that we won't charge you for or indeed, it would be part of your wallet on your Apple Pay. So spend like a local. And then we'll also allow you to, if you got a euro account, you could then transmit money and do remittance at that lower FX rate as well. So we're not building. It's built. We're just now testing it, and it will basically [indiscernible] go. So it must be real, and it will go live in the summer. And that points to digital. That's a digital capability. You do that by a few clicks on your mobile app. And the mobile app is where people bank now. You see that. And even here, we're mobile active. We do it every 30 days. If you do the comparisons to the U.K. -- other U.K. banks, I saw a few of them this week, we do it to 90 days. If you do a comparison to the 90 days at 65%, we have mobile active, and we're growing that every single day because we're a mobile-first bank with brilliant human interaction in the moments that matter. And our mobile NPS continues to grow. People love our mobile. People increasingly love our mobile offering. But there were some things we needed to fix. Our digital security and our reset journey was poor. End of quarter 1 this year, again, fabulous work from Jan and team and technology. We improved that, I would say, to parity with our opposition, which is fine. It's the front door of the bank. We need to keep it safe, but we can't make it so clunky. So we've worked on that with a digital security platform. We've built other capabilities that we talked about, buying funds, doing a mobile decision in principle for your mortgage. And also basic servicing gaps and acquisition gaps to be able to take out an account intuitively and simply. If you already got a current account, it's about four clicks to get your credit cards. It's about five for a personal loan. And that shows up then in our product penetrations. Basically, that tells you that unsecured lending is done digitally, except in extremis. And what you're increasingly seeing with current accounts is we're making everything go through the happy path. Do you know what a happy path is? It's the one that's easy and intuitive. But there are always going to be circumstances where people have different ID&V. Great example of that is the lion our 4,600 Ukrainian bank accounts that we've opened over the course of the last 3 months more than any other bank. And the reason for that is because we want to create accommodative policies for those people who have come to this country under severe distress. All of this is really about taking the existing bank and making it digital. I would argue digitizing the bank is a step beyond that, and you're going to see this in the breakouts. Imagine you had an app, which started to really personalize the offerings, the capabilities, helped your approach, helped you guide you in how you could manage your finances better. Would that not be great in a time where the cost of living is really starting to tighten in on you? That personalization is now there, and we're building out things like transaction enrichment, ports and micro savings to really help people engage with their finances. It's part of financial education, but it's also the ability to action on it. It's about building wealth and international capabilities, that mobile wealth offering continuing to develop that as well as that FX offering, I was telling you about, but making it easy and intuitive to digitally unload. And all of that within one app, not a spread of perhaps all of that within one app. The ability to spend, save and invest all in one place. Because we believe that starts to drive the customer agenda that I talked about at the start, and it is the customer agenda. And if you look at a chart like that in two ways, and I'm afraid from my team, I only look at the bottom piece here. HSBC Red brand is upper tenth in the market. And it's upper tenth in the market because too many things go wrong because we've not finished the job on some of the digitization. So for me, this is a source of acknowledgment that we can make progress. You can see the NPS is now at its all-time high. But the expectations have moved materially on. So this will remain our #1 focus. And how do you turn it around? You turn it around by building emotional equity in the brand, by standing for things that matter to people such as being a victim of domestic abuse, such as the support we give to the homeless or victims of human trafficking, but also iconic symbols. We signed up this morning Emma Raducanu to be a brand ambassador for us. But it's more than that because all of that, if you then have a bad experience or you get treated shabbily on the phone isn't enough. What we do -- additionally need to do is we need to make sure our channels are accessible. What does that mean? You answer the phone. And you answer the phone and solve the problem. It means your mobile banking has to be up, and it's not complicated to log in or reregister. It means that your branches are available, they have space and capacity to deal with you when you need them. And there our people within them are actually empowered to solve the problems. And that the everyday journeys that you need to go on are simple and intuitive and not complex and clunky and you don't fall out of them. And that you build products such as global money that actually stand out. And when you bring digital and customer together, I would argue there's no better case study than First Direct. So I'll hand over to Chris now to talk about First Direct.

Thanks, Stu. First of all, an apology. My name isn't Stuart. My name is Chris, and I'm the CEO of fd. And I've just got two charts here. I'm going to do two things. I'm going to talk to you about First Direct strategy, First Direct 2, and then I'm going to talk to you about how we're going to deliver on that strategy. But first of all, I'm going to tell you a little bit of a story. So fd famously launched a minute past midnight on the 30th of October 1989. So basically cockasnoop to a world in which everybody banked in a branch. You can ring up a bank 2 minutes past midnight that day. And as part of feeding out on our strategy and understanding our purpose, I talked to the original CEO of FD, a guy called [ Kevin Newman ] from his home in Southern California. Unfortunately, I'm in West Yorkshire at the moment. But yes, you can dream. And he talked about two things: Midland Bank had launched fd. And they've launched it because Midland Bank have been 20% market share bank and have gone down to a 15% market share bank. And it launched FD to be a 5% market share business for yuppies. For those of us who remember what a yuppy is. But he's only ever going to engage customers when there were no branches, if you had brilliant customer service, exceptional customer service, not customer service that's as good as banks, but as good as any business. Now what we're going to do with the strategy, fd 2 is deliver on what founding mothers and fathers are first direct set out to do because they delivered that brilliant customer service and continue, and my team continues to deliver it today, but we never delivered on that scale. We're a 2.2% current account business as we stand today. So we want to deliver out that scale. So our strategy, first direct 2 is to double the size of first direct, maintain the brilliance of that customer service and manage our cost to flat. And some of the stats here talk to that. Last year, we did 120,000 new current accounts. At points in time, during that year, we were 20%, 25% of the cash switching market in the U.K. So we've delivered a number which is higher than any number for the last 10 years, and we've been better this year. We delivered that by turning a 10-day journey into a 15-minute journey in terms of being able to download your fd debit card into your digital wallet and start transacting straight. In terms of the customer service, we continue to deliver, and the team continue to deliver that brilliantly. So we're #3 in the CMA rankings. In terms of the Institute of Customer Service, we got overtaken by Pets at Home during the pandemic, which I blame when everybody buy a dog. But I did the keynote speech at the Institute of Customer Services conference last year. And then in terms of managing costs, you can see that in the bottom stats there. We've seen the 38% reduction over the course of the last 3 years in the number of calls into fd as we've digitized and allow customers to self-serve. And we've seen an increase in the digital log-ons as a functional of that as well. We have 70% of fd's customers a primary bank with us, as Ian and Stuart have alluded to. And 75%, then digitally active -- the 65% mobile digitally active and then 10% of them through a desktop. So that, through the stats that I got there is talking to you about how we're delivering the strategy today. In terms of the channels and the pillars in which we deliver that, we have four: Grow, serve, amaze and our people. In terms of growth, we're going after younger customers to achieve that growth. Why? Because they open and switch current accounts. It's as simple as that. And we're changing the nature of our proposition to better support those customers. So with 95% mortgages. We're going to launch a credit -- build a credit card to allow our customer to build up that credit. And we've launched a regular saving product with a 3.5% interest rate to allow customers to build out that deposit. Building out functionality, which allows younger customers to engage to us. In terms to serve, digital is exactly where we are at. 94% of the customers we've taken on this year, and we've got 12.5% of the cash within market so far this year, are digitally active within the first 3 months of engaging with FD. So we continue to see strong growth for people who are -- to us, but we will always and we will continue to offer 24/7, 365 U.K-based call centers voice to voice. When you talk to fd, there's no press 1, press 2, press 7. You talk straight to a customer. And in the first half of this year, we've answered the calls in 11 seconds, and our abandonment rate on calls for the last 22 weeks has been under 5%. So we continue to deliver that excellence regardless of whether you want to engage digitally or over the phone. Amaze and Stuart alluded to this with the Red brand as well, and you're going to see it in the breakout. Tom and Mel are going to talk to you about fd Coach, allowing you to budget, allowing you to set pots and goals, allowing you greater insight about your money as we move people from fast money to slow money. We think there's a real opportunity in fd. So not just to be a bank for people who are managing their money in the student days of their lives but to take them on the longer journey to deeper financial services relationships. And finally, our people. Our people did brilliantly during the pandemic. We moved all our people out of call centers in West Yorkshire and Leeds and in Hamilton out to work from home. And they've delivered that brilliant service the whole way through, and they've earned the right the flexibility of where they work. So we've given that flexibility to our people. And the final thing, Linda, before Stuart and I answer questions is about purpose. We want to be a business of purpose as well as bringing customer service, as well as teeing great commercial returns to be a purpose. And we are following through the great work that HSBC is doing creating connections with shelter, and we're starting to do sconce from our people to shelter help line in Sheffield, which we've just announced this week. So creating greater connections around why people come to work as opposed to just what they do. So with that, I think it's over to some questions, presumably about mortgages.

So look happy to take -- I didn't even get finished. Got hands up.

It's Alistair on Bank of America. Well, it would be rude not to ask about mortgages. So how do you price them then? I mean there's a lot of -- everybody imagines what other banks are doing, but Lloyd's think that mortgage spreads settle at 75 basis points, and they look at swaps pricing. But I'm not saying they're right. Clearly, been a lot of -- but how do you think about that? I mean, you've got all these deposits. You're not actually funding in swaps really. I mean you've got cash. But where are you pricing it? Who's charging you what? What's the capital allocation? The risk weight just went up. So I mean you obviously got the cash and the capital to grow the market share to be whatever you want. But what are you thinking -- what's a good return because the yield on cash now is the yield on all sorts of things. So what's...

So I'll answer the question back to front, if I may. First of all, the perceived advantage we have in funding rates, we don't actually price in. So we want to make sure that we hurdle based on the swap rate plus a liquidity premium, which is a lot less now and the margin on top. We will take, obviously, the cost, but the broker introduced mortgage to small expenses and the prop fee to pay. And that's really the cost and the ECL performance has been exceptionally low. So you then work that through into cash flow and what types of return it's going to be above 10% or else clear, won't let me anywhere near it and Julia has to sign off the credit assumptions that sit within that pricing. That is as simple as we do it. We look at it from a -- the model is complex, but they are the component parts. Any other questions about mortgages? No, any questions at all? I've got one here and two in the middle actually. Maybe bring both mics to the middle and then I'll come over to left.

Can I ask two questions? One is on international wealth. First, you just talked about I can see why that would be a natural area you want to compete and given your footprint, et cetera. I just want to ask what a tax implication of this because we're at a time where there's a lot of focus on tax evasion and governments are increasingly trying to make sure they're collecting the right amount of taxes. And the U.K. tax was a particularly complicated, right, with resident and non-domicile, et cetera. So two things, how do you, a, make sure that you've got the system in place to make sure there is tax compliance? And b, help your customers to navigate this to make sure that they are not accidentally breaching tax rules by taking money out in the U.K. when they're sort of non-domicile and they're not meant to remittance, et cetera? So that's one. And secondly, very quickly, I've obviously heard a lot about your commitment to digital. I mean with a lot of fintechs, I mean it's no secret that they're more than happy to white label their service. I mean, sterlings -- et cetera. So how do you think about building your own versus buying some of the capability and there's obviously a lot of proven track record for those ones?

So let me answer the first one. So International Wealth, that's actually the core scale of an international wealth manager. It's to be able to support our clients to move in a responsible way. There are opportunities to move your wealth in a responsible way. We've had an awful lot of Hong Kong money buying properties in London, et cetera. But we are expert -- our teams are experts in helping to guide people. But we also have other offerings not that we would talk about here, but we've got the expat offering that can help with some hub offshore hubbing, et cetera. But that's part of our overall international wealth. And I think going into detail, Annabel Spring is incredibly well placed to talk about the global offering there. But the bottom line is we built the expertise in the U.K. over many years. And so therefore, that's how we feel comfortable in being able to provide that type of advice. That may or may not answer -- depends on individual circumstances, et cetera, et cetera, but it's an expertise that we've built up over time. On the second question, we will absolutely partner with fintechs where they have advantage, but we also, as I said, partner with our Asian -- through technology, we have global platforms that give us scale benefits as well. So we partnered with fintechs. For example, we've partnered with Bud in starting to develop some of the offerings. In fact, in the demo, effectively, it's underpinned by some of the Bud functionality. So do I want to go out and build fd again through sterling No, I don't. I have no advantage in that, but can I use fintechs to really augment our offering? Absolutely. I talked about Wealth Wizards, which is a fintech. It has to be housed in LV or Royal London. But actually, it's a separate fintech offering. They've been fantastic working with them as well. [ Divido ]. We've built our point-of-sale finance solution for M&A with Divido. Dan will actually talk about a number of our partnerships in the slides in a little while. There is definitely unit economic benefits you can get from working with good partners. Sorry, you sir.

It's Manus Costello from Autonomous again. I wanted to ask about first direct. So I was interested in the fact that you went back to the roots and you've come up with first direct 2.0. It feels like it's been an awfully long time coming up with 2.0, given that it's 30 years ago when the strategy was originally presented. . And if you look at that chart, which I think actually came from Morgan Stanley -- my research, looking at the footnote to correct the record. You're at the bottom of the age cohort, which has obviously flipped, I would have thought over the course of that 30 years. So the question I want to ask is, why did that happen? And what have you changed to ensure that, that opportunity, which seemed to have slipped through first direct hands over the last decade, let's say, is not missed again? What's actually practically changed? .

Well, it's a very good question. I think what's -- and again, I wouldn't want to be negative about any kind of previous management decisions here. But I think what fd got locked into is trying to find people that look like the people it had and to use service as a means of recruitment. And service is a fantastic retention so rather than necessarily recruitment. The number of people who have tried from fd who are primary banks in the first half of this year has been 5,000. So when you get into fd, you stay because of the brilliance of service. But I do think this is a complete real thing. Remember back in the day, fd strategy was to recruit yuppies. It was to recruit people who had wealth. And so going for an older cohort of people and professional people now because we want to grow the scale of the organization. And I think the world relative to the question about sterlings, is very much the fintechs have challenged us to be better, and we really want to grow that scale of customer. And we know that trying to find people who are in their 40s and 50s is a complete fool's errand. Last year -- the first half of last year, 20% of fd's customers that we recruited were under 35. 45% of them are under 35 in the first half of this year. And as I said, we're doing higher numbers. So we're changing the nature of where we communicate, but we're also changing the nature of our offer. So 95% mortgages, the credit build of credit card that I talked, changing the nature of the offer. The pricing that regular saver was very specific to allow younger customers to build up the deposits. So we're going after younger people, where we talk to them and then what we talk to them about is fundamental role.

Two questions on this side on check. Okay.

Omar Keenan at Credit Suisse. I just had a question about the global money proposition and I just wondered if you could elaborate on that a little bit given sometimes the devil can be in the detail of these things. And if it is a truly competitive proposition with what Wise and Revolut might offer, then it does imply that there might be some kind of self-cannibalization of revenues, which might be easier in an interest -- higher interest rate environment. I mean, you can take actions that could sort of maximize customer loyalty over a very long time. So could you just add a little bit of detail there?

You've actually answered the -- it's a great question and actually a great answer you've given in the question. We have to cannibalize because if not now, then it will eventually happen. The single most complained about product that, or offering that, we have by seniors in this bank is our FX offering for consumers. And I think the U.K. market has allowed two large a margin for too long. So to guide you on the economics to give you a bit more specifics, if we were to reduce the margins by 2/3, but triple the usage, then you're roughly net-net neutral in terms of your revenue performance. And we know even just in our own base -- even in our own customer base, even in our own ex-co, the amount of people that use these offerings. So if we give them no reason to use it and we actually offer a better zero fee -- loading on the FX for the lowest loading on the FX and zero fees, you don't even need a fee to get the cards, which other fintechs do, then we think we will more than win back that and also start to become an acquisition tool for us because it will start to offer something candidly, in the switcher market, just now people are giving out cash incentives. But if you offer a product like this, will it not start to win back audience for HSBC and it may well, I'm looking at the cameras, case of any competitors looking at may well stimulate their action as well. That answer the question?

Super clear.

You'll get a chance to play with it with Nathan in your break in Jen's section. Two more. I'll take one there. You've not asked one, so I think it's only polite. I've got three. Can I -- I'll do them quickly.

Just a quick question on the titled ambition. You've mentioned that you want to grow your market share to 5% from 3%. And I guess also expanding to the professional buy-to-let segments that you're not presently -- present in, sorry. Could you please just give us a little more detail around the regions in the U.K. that you're thinking about expanding your buy-to-let proposition, if any? And then how do you think about cost of risk in buy-to-let, especially moving from amateur to the professional segment?

Perfect. So this is about developing our sophistication. What I'd say with regard to, first of all -- actually, let me start by answering about the flow. So yes, stock-wise, we'd want to go from 3% to 5% in a relatively short order. That means we need to take about 10% flow, which is what we're doing in the residential. That's exactly where we want to be. And actually, we're not far off but now as we've opened up the broker market. And that's not in any of the more sophisticated offerings like professional landlord or -- sorry, a sophisticated landlord or professional landlord or a limited company. But effectively, it's a different underwrite. So you're learning as you go about the underwriting, bringing skills into the organization, bringing underwriting skills, looking at the type of data, et cetera, what types of frauds get occurred in there. So you don't want to go super fast and make some mistakes, but we're now on a nice curve where we're actually starting to get flow of 8%, 9%, 10% coming through. So just by the vanilla offering that we have just know the potential to get there. And as we build that flow and we build that expertise, we talk to the brokers, what do they expect? We look at what the competitors do, and we look at the different policies that they have. They tend to not be restricted by region in the U.K. There might be some regions we're a little bit more cautious about because of our internal house view on house prices, but we also have a high amount of cover. Your LTV cover on our buy-to-let product is always much, much higher than you would have for someone would go and live for themselves. And the underwrite tends to be about the rental yield. And so therefore, you're looking at the demand also in that market. So it tends not to be, but you tend to end up being a symptom of the local economics around having choices of regional concentration. And I guess, I've sort of maybe alluded to the answer on the more developed sophisticated offerings. Go one at a time, build our capability and our expertise rather than trying to do them all at the same time.

Super quick follow-up, sorry, if I may? Why wouldn't you buy any of the current competitors in the market?

Because -- I don't need to, number one. Second reason is I don't want to buy their historic mistakes. I have a fantastic organic growth opportunity in front of me. And if you buy anything, you're integrating systems, you're integrating historic complexity into your books. I don't need to. We'll never say never, and Ian will probably point to that at the end. If there was a fantastic opportunity that had great financials and fitted and moved us forward, we'd consider it. But it's not an act, we're not out there pursuing an inorganic opportunity. I'll quickly -- I promised two questions. Can we pick up in the break. Is that okay? We'll finish on this one, if that's okay?

[ Grace ], Barclays. Actually just building on the buy-to-let. So maybe over the long term, how do you see your weighting them between vanilla and the sophisticated or professional landlord? And I guess they're both quite different markets. So I'd say the sophisticated professional landlord market offering at the moment and the major players tend to have quite strong relationships with landlords and brokers. So how would you look to compete with that?

So we will be, over the next few years, much higher participation in the less sophisticated end. But bear in mind, the expertise that's housed in front of you with short take and the relationships that we have there. It's why we're both called Stuart because of the seamless integration of our two businesses. But the reality there is we have good relationships with those that build out professional landlord capabilities. Now we've not developed that yet. And we've been very careful in developing that. And we would work with our Chief Risk Officer, who may well talk about this space because she's got experience there just to make sure that we are doing it carefully. So I would guide you that we will -- as we have done with mortgages, we were relatively low LTV. We got more comfortable. We moved up. We've moved into buy-to-let. We're getting more comfortable, we'll do more there, all with a view to carefully managing prudently the risk and only lending where we've got expertise. I think that's us. Thank you all very much.

More questions as a wrap-up. Two things, 5-minute break -- only now, but you can stretch your legs. You can stretch your legs as you go around the demos, but anybody else stretch legs now, do so. Come back at 5 past 3. And secondly, we last suggested train back in 19:10. There's a 20:10 train, both tickets are available and on both means we leave here about quarter to 7. So we leave about 15 minutes early. We get you a little bit earlier, okay? So that's the suggested train. So you don't need to worry about trains. Okay. [Break]

All right, everyone, I think we're ready to start. Good afternoon, and welcome back. I hope you've had some time to get some caffeine and take a good break because I've got about 50 slides to go through. All right? You're ready? Next year, I'm just kidding. I'm Jennifer Strybel, and I'm the HSBC U.K. Chief Operating Officer. And just in case you can't place my accent, I am a transplant from the U.S. I'm a native Chicagoan with about 30 years of banking experience, and I spent the last 4 years in New York City as the U.S. Chief Operating Officer. And just maybe to go back to your question about the international customers and the connectivity, I am that international retail customer. I have my U.S. accounts, I have my U.K. accounts in a matter of a few clicks, I can link them together through a global view, and I can transfer currency seamlessly. How do I do that? Through the power of technology. And that's what we're here to talk about and how technology can help support the business ambitions you've heard from Iain, Stuart squared and Chris. Digitization underpins all that we do. It's essential not only to the reshaping of our physical networks, but it's critical to the delivery of our customer outcomes. For the next 10 minutes, there are a couple of key messages I would like you to take away. Number one, HSBC U.K. is focused on streamlining and simplifying all that we do. We deploy technology solutions that are safe and resilient. We leverage key partnerships that help evolve innovative capabilities faster and cheaper. And through our activities and our supply chain we can drive down carbon emissions to help support our net 0 ambition. We are here to serve our customers. And from a technology perspective, we think about that with 3 core commitments: Number one, we want to deliver customer experience that is easy and safe. We drive solutions that support business priorities and create value for customers that is market differentiating. We've got some great examples to show you in the demos. Now Stuart talked about Global Money. Imagine being able to send, spend and convert currency into multiple currency all across the world via one account. It's a fantastic proposition, and I know it because I'm a global money customer. Why? Because the U.S. was the first market to roll it out. So I have the ability to not only test it, but use it as an active customer. And three, we enable capabilities through innovative solutions. Now while in HSBC, we look to build smart scalable solutions, we know we haven't cornered the market on innovation. So we look to leverage partnerships to deploy solutions at scale, speed and at a lower cost. Now to drive digitization and simplification, where do you start? And how do you know it's working? Well, our colleagues and our customers tell us where our processes and procedures make it difficult to do business with us. There's a couple of areas I'd like to highlight. When you apply for a banking product, you want to be able to self-serve when you want, where you want. So your digital registration becomes a critical component in that journey when selecting your banking products. Well, since we've simplified that registration journey, our Net Promoter Score has increased 27 points. And why? Because that journey allows for seamless straight-through processing with immediate access to your banking products. Now we've also simplified our account material, specifically terms and conditions. And I know you all get them and you all read every page, every word. My legal colleagues don't want me to say that, right? We've actually simplified our content by over 50% and we've made the language simpler so that people understand the products that they're buying easier. As Chris mentioned in First Direct, we've worked on their onboarding journey, and we've improved and simplified that journey from 10 days to 15 minutes. As a result, First Direct has seen a 24% increase in new account acquisitions. Stuart also talked about Commercial and Kinetic. Kinetic has an app score or an app rating of 4.8. So simpler is better. Now it's great to have new products and features that are easy to use. But if we do not protect our customers' money and data, it really doesn't matter. HSBC is a safe bank. How do we know that? I just told you. Actually, HSBC has been rated #1 for online security by [ which ]. In our industry, fraud and scans are running rampant and it's incumbent upon us to protect our customers. So what have we done about it? We've increased our customer warnings in our app pages, and we've added more customer care markers for our most vulnerable which passes additional data to our fraud decision engines when evaluating transactions that are being made from their accounts. We've also enhanced our ID verification capabilities through biometrics, and we've also launched our first fraud awareness app for businesses. It helps give the business owners information around fraud trends, App scans as well as current information to help them protect their business and their customer. On resiliency, if you want to bank anywhere at any time, your systems must be available. So in this area, we focused heavily on accelerating our adoption of public and private cloud, which allows us to address capacity constraints as the business grows, increasing our processing speed and analytic capabilities. The use of cloud also allows for easier integration with our partners and improved resiliency of our applications. Now to continue to drive these solutions, HSBC U.K. must continue to invest in technology. We will see a 20% increase in technology spend as a share of our total cost over a 4-year period. We will fund this through cost reduction initiatives and reinvesting back in the business through technology. Now while specific investment in the U.K. is critically important, we are also seeing increasing benefits from our global capabilities, particularly in cyber and the use of global platforms, such as our digital security platform and our mobile platform. Through the use of shared technologies, the economies of scale can be achieved through ease and speed of deployment and improved execution from shared learnings from other markets. Now all these activities I've described are all part of executing a multiyear technology strategy to ensure our bank is fit for the future. Our technology strategy, which is integrated within the HSBC U.K. strategy focuses on four key pillars, and it's focused on modernizing our architecture as well as our operating model. So when we think about speed, we think about focusing on improving our time to market and staying ahead of the competition. By streamlining journeys, reducing and consolidating platforms, demising legacy applications, we can actually increase our speed 3x faster than it is today. Through scale, the adoption of global platforms allows for faster and easier adoption of new products and services and ensure similar experiences for our customers as they bank around the world. Resilience. Making our services more secure and available so that if there is an issue, we can actually recover faster. People. A significant core component of all that we do, having the right people with the right skill sets in the right places. As we evolve our way of working into more of an agile construct, it is critically important we have the right skill sets and people closest to our customer-facing teams. In addition, technology is advancing, and we need to invigorate our technology culture by bringing in some of the best and brightest of our U.K. graduates into our technology centers. Starting in the fall of 2022, we will welcome 85 new technology grads into Sheffield, to help advance our technology capabilities. Now easy and simple tools are not just important for our external customers, it's important for our colleagues as well. So we've deployed Microsoft Teams and Office 365. Why do we think that's significant? Because getting over 200,000 colleagues on one tool will only increase our ability to innovate and drive change faster for our organization. Now leveraging partnerships. As we enhance technology solutions, HSBC U.K. will continue to leverage partnerships to complement our core technology and enhance the speed of which we can deliver services to our customers. We recognize that we don't need to reinvent the wheel, especially when there's best-in-class solutions out in the marketplace. It's how we leverage that expertise and integrate that into our core capabilities when we look to deliver customer outcomes. And in the security space, we leverage solutions to protect our customers from external threats. So we leverage our relationship with BioCatch. BioCatch allows us to learn how people interact with their mobile phone and their browser, how fast you type how quickly you move your mouse. So it's not as if I'm watching you through the camera, but I may be. Actually, their model once -- we have a good sound prediction model, we can actually determine if that's really you trying to attempt to access your account. With cloud data and analytics, we have multiple cloud relationships such as with Amazon, Google and Microsoft. And we leverage their strength based on their capabilities. So for Google, as an example, we use them for data analytics and machine learning. And we use multiple relationships because we want to balance our concentration and continuity risk and also reducing our cost to serve as we deploy our solutions to our customers. And from banking access, and Stuart brought this up, we leverage relationships like Divido and linking our retail interfaces with our banking products so that we can allow and make faster credit decisions for our customers. Now deploying new solutions that are easy to use and secure is definitely a key component of what technology does. But we also recognize that we play a critical role as well as our supply chain in how we reduce our carbon footprint in support of our transition to net 0. And there are many ways that we contribute to that. We focus on renewable energy, reducing energy consumption as well as paper consumption and through reducing carbon emissions within our supply chain. In renewable energy, the construction of our wind farm has commenced earlier this year and will start to generate power in Q1 of 2023. And reducing energy consumption, we've proactively replaced old high-consumption assets with more efficient ones like replacing boilers with heat pumps as well as replacing our light bulbs with energy-efficient LEDs across most of our U.K. office portfolio. Reducing paper, banks like to produce a lot of paper. Digitizing information helps improve the planet. Through several initiatives, we've reduced over 34 million envelopes that would have gone to the post. That avoids over 487,000 tons of carbon emissions. In our supply chain, we've asked our major suppliers to sign up for our Carbon Disclosure Program. This is a reporting program that actually evaluates and rates companies on their disclosures. To date, we've had over 50% of our major suppliers sign up. So I've told you a lot, and I've asked you to take away four things from my presentation: HSBC U.K. is focused on streamlining and simplifying all that we do; we deploy technology solutions that are safe and resilient; we leverage key partnerships to enable innovative capabilities faster and cheaper; and through our activities and our supply chain, we can drive down carbon emissions to help support our net 0 ambitions. So I'm going to stop talking and I'm going to show you. We have several demonstrations that you will walk through, featuring our innovative products and services. And what you will see is that these products and services are easy to use, they are innovative and market differentiating and globally scalable, which makes it faster to deploy around the world and ensures a similar customer experience when people travel and bank around the world. For the next 90 minutes, you will see 6 demonstrations across both retail and commercial. Each demonstration will last approximately 12 minutes, and we'll give you time to answer questions during those demonstrations. You should have a colored lanyard, which will indicate which group you're in. And we do have an HSBC representative that will help shepherd you through the demos. And I will walk around in case you have any additional questions from this presentation, but I do know we have time for questions at the end. So I wish you best of luck and enjoy the demonstrations. Thank you. [Presentation]

All right. Good afternoon, everyone. I hope you enjoyed the demonstrations. We are now in the home straight. You have myself, Julia Dunn, Chief Risk Officer of HSBC U.K. and then Claire is going to talk to you. She is the CFO for HSBC U.K. So you've heard from all my colleagues about all the amazing opportunities that HSBC U.K. has in front of them. I have one message and only one message that I'd like you to take away. And that is, we will embrace those opportunities, but only where we can do that safely and sustainably. I joined the bank 12 months ago. 18 months ago, I was group CRO for the second largest mortgage lender within the U.K. And I've made probably the most difficult decision of my career, deciding to take up the fabulous opportunities that HSBC has in front of them. But not only am I a Chief Risk Officer, I'm also a former regulator, I spent 12 years at the regulator. So I'm a sort of a glass half full person. And so I did some pretty significant due diligence on HSBC U.K. And I thought I would share it with you I'd tell you what I found because I think it is important for you when you look at HSBC U.K. to look at these 3 areas. So first of all, I found a well-diversified, high-quality loan portfolio. You've heard it from both the Stuarts low-risk retail secured portfolio with both portfolios performing well even during COVID. Secondly, what I saw was significant headroom in our risk appetite. I'm not used to a sea of green in risk appetite. But everywhere I looked I saw capacity within the risk appetite and overall, a low-risk sensible risk appetite. I saw robust and effective governance, both at ExCo level, at the risk management level and importantly, at the ring-fenced Board and group level. And then I took over a highly experienced, well-qualified risk team, many of whom have lived through the great financial crisis and also had performed well during COVID. So let me talk a bit more about our two portfolios. On the left-hand side, you will see our retail portfolio. Just look at the red portion, 91% mortgages, all secured, written at stressed rates. If you look at those stress rates -- if you look at the rate, 80% of that is on fixed and over 50% of those fixed rates are 2 years out. If you look at the smaller proportions, both credit cards and personal loans are performing better than market. On the right-hand side, you see our commercial portfolio, what do you see? You see a well-diversified portfolio across a broad range of sectors, with no single name concentrations and our NPLs stable. Now I could pass over this next slide, but given that there have been significant amount of questions already around mortgages, I do want to take a bit of time to talk about it from a risk perspective. So if you look at the top left and the average LTVs, if you look at it either on the stock figures or the flow figures, you see that HSBC U.K. is at the lower end, i.e., more risk averse. It becomes particularly interesting when you look at the bottom left which is our proportion of buy-to-let. And you've heard Iain talk about it, you've heard Stuart talk about it. But from my perspective, I grew a buy-to-let book from 20 billion to 40 billion and also, at the same time, reduce delinquencies by half. We are at 3% looking to go to 5%. If you look at our major peers and look at where they are 6x to 7x higher than we are. We talked about our plain vanilla proposition in the buy-to-let market and how we would safely grow into portfolio landlords and limited companies. There was an excellent question asked, well, aren't you going up the risk curve when you go into portfolio lending and limited companies. I would say it depends how you do portfolio, land lords and limited companies provided you continue to keep your strict risk criteria. So I'm not a big believer in top sizing. I am a big believer in having maximum LTVs, I am a big believer in using stress rates and not fiddling about like some of our competitors do and sticking to the strict ICRs. I welcome the PRA regulations in 2016 and I think they provide a good, stable foundation for this market. If you look at the top right, these are our delinquencies and arrears rates 0.4 versus 0.7 and absolutely stable. Let's look at our book as a whole and the credit quality distribution of our book, and this is the combined both retail and the corporate. 76% strong and good. And someone else about NPLs, you see we have 2% credit impaired at the other end. There remains significant headroom to our internal risk appetite and the overall risk profile is supportive of the growth strategy. And then if I summarize our overview of credit risk. Our portfolio has performed well during the COVID-19 pandemic. If you start with a higher quality retail book, what we saw was deposits and savings growing and the financial health of our customers on average on the retail side improved during COVID. On the wholesale side, and we did have questions earlier, we did see stretch in certain portfolios, particularly in the London hotel portfolio and on the retail side. The London hotel portfolio, as international travel has bounced back, we have seen occupancy rates and run rate go to back to pre-pandemic levels and run rates, we have seen a significant increase. For those of you staying in hotels, you will probably have seen that. We were asked about our first order impact to Russia and Ukraine, both on the retail side and on the commercial side. It is very, very limited and immaterial. But we are really watchful of the second and third order impacts. I fill my car up at the weekend. It's the first time it's a hybrid car, and it costs me more than GBP 100. We are seeing the impact of fuel rises coming through, but we are expecting some lag on that. We proactively put into our affordability calculators, the fiscal changes, i.e., the NI changes, the energy costs. And also, we have not used the ONS data. We've used our own transactional data, which is higher to ensure that it's fully taken account of in our affordability calculators. We've done that across both unsecured and secured. Others are relying on the stress rate. We are not taking a risk averse approach. We're particularly looking at the commercial sectors affected, agriculture, food, industrial conglomerates and automotive. But as you will all know, you cannot look at these sectors in isolation. So take, for instance, the agriculture sector. If you're an arable farmer today, actually, grain prices have gone up and fertilizer prices are coming down. They are passing on the prices through to their customers and they are a winner. But then vice versa, if you look at, if you're a livestock farmer, particularly in the pig industry, you're struggling because of the issues around CO2 and abattoirs. And your food costs have gone up. It's the same when you look at food and for those of you who deal with supermarkets, what you see is absolutely as expected, a move from the higher rent supermarkets more towards the middle end and the discounters are seeing increased activity. It's also important to note whether as supermarkets, they've hedged their fuel cost, particularly if they're reliant on freezer and frozen things. The economic outlook is uncertain. I don't need to tell any of you that. But what I can say is that we will continue to monitor it really closely. I spent time with both our commercial and our retail teams this week. We are not seeing, at the moment, any delinquencies coming through. The portfolio I showed you, the arrears levels, they're absolutely stable. But I can't sit in front of you today and say that they won't come through. We don't know what will happen in October, but what I do know is that it is likely to affect the very small proportion or the low end of our book on the retail side, and it will be very sector-specific on the commercial side. I talked about the 4 Cs of risk: Conflict, credit, COVID and climate. I could mention a number of others. The key now is that you have your most highly experienced risk teams there to meet the risks as they arise. It's really important that you continue to look at your early warning indicators, use stress testing, use scenario analysis and importantly, take action when needed. Going back to what I said at the beginning, we have a highly experienced and skilled risk team within HSBC U.K. So let me stop there. and go back to the one message that I wanted you all to take away. Yes, there are plenty of opportunities and HSBC U.K. absolutely will embrace them. but we will embrace them, and we will embrace them safely and sustainably. Thank you all very much.

So Julia, I had one thing you wanted me to take away from today. I've got three: Growth, costs and dividends. On growth, you'll have heard from the many, many Stuarts earlier that we have got a lot of ambition to grow as we do, sure, and that we can grow safely within our own risk appetite. We've also got the financial resources to support that growth. Our balance sheet is very much geared to a rates-up environment, and that's already playing through, and you'll have seen that in our performance March year-to-date. On costs, we've got a track record, now a good cost discipline, and we're going to maintain that. And at the same time, what that does is it gives us the capacity to keep investing in technology and digitization, some of the stuff that Jen took you through earlier. And finally, on dividends, we have become an important contributor of dividends to the group. We paid GBP 1.1 billion in respective our 2021 performance, and there's more to come. Moving on, there are a lot of numbers on this slide. The key things I'd like you take away are: firstly, our 2022 revenue is already above pre-COVID levels. That's down to two things: The continued growth in our balance sheet; and also the rising rate environment. On costs, you can see a reducing trend year-on-year from 2019 in through to Q1 '22. And if you put those two together, what you'll see is returns well above our cost of capital. This is a bit of a simplistic chart, but very much is a ring-fenced bank the vast majority, about 98% of our revenue comes from the 2 big franchises, CMB and WPB. We've got a small tail of revenue from GB&M, which is client FX revenues. Our headline 2021 revenue growth was up 3% year-on-year. We had a bit of an accounting order within that, which is Marks & Spencer profit share, where when you release ECLs, you pay it away through your fee income line. So underlying revenue up 5% year-on-year. And what was pleasing in that was that we got good growth across both businesses and across net interest income and fee income. Very much so 3/4 roughly of our revenue comes from net interest income. So if we have a look then at the balance sheet and how that stacks up, First off, and I know we talked about this earlier, we have a GBP 280 billion plus deposit base. That is a source of competitive advantage for us, but we don't take it for granted. We know we've got to keep investing in some of the stuff that you saw earlier on digitization and great customer journeys to maintain that stickiness of those customers and those deposits with us. On lending, we've had GBP 3 billion of growth from December '21 to March '22. That came across mortgages and CMB through lending and trade finance. Our unsecured balances were flat from December 21 to March '22, but that's largely dying to seasonality on credit cards where you get the sort of natural payoff in Q1. Overall, though, as you can see from the chart, credit card spend way back above pre-COVID levels, although our interest-bearing balances are still behind because our customers have built up those deposits and savings during COVID. In terms of where the growth is coming from, you heard it earlier from the Stuarts that on mortgages, we do have pockets where we have a lot of space to grow on things like buy-to-let, cashback mortgages, places where we haven't yet operated. And on commercial, as Stuart Tait said, it's around e-commerce. It's around sustainable finance, very much in line with our own journey to help our customers transition to Net 0. And we're also focusing on where we have the right to win, which is international. NIM, I think this is the slide some of you are interested in. So let me have a go. So if we look at the margin dynamics from Q4 '21 to Q1 '22, we had a big pickup in margin. And basically, a few dynamics going on there. First off, deposits, what we're seeing is lower pass-through than our planning assumption, which is 50% roughly. But we're also seeing some dynamics the other way, largely on this asset compression on mortgages, where it is a highly competitive market. but net-net, still NIM up positively. And as Stuart Tait referred to earlier, we've also seen a pickup in CMB margins as well. Most of the CMB loans are so on your price, so they're not sensitive directly to changes in rates. I've put a chart on the table here about NII sensitivity. I've highlighted the 100 bps parallel up shop. After today's Bank of England move, you can see that we are operating well within that territory now. So that's GBP 958 million of additional revenue. You should see that play through our results this year and into next. I know we keep going on about costs, but I do love them. Well, I love taking them out. Between December '19 and December '21, we have taken costs out by GBP 270 million or 7%. And as more and more of our customers are interacting with us digitally, that's enabled us to take out over 5,000 FTEs and over 110 branches and we announced 70 more this year. And at the same time, we are investing in technology and in digitizing upscale. I would say though, and I think Iain referenced it earlier, we're not done on cost because we know the more efficient we get, the more efficient our competitors are getting, but we also know the more efficient we get, the more capacity that gives us to keep investment back into technology and digitization. We're also very, very much committed to helping the group deliver on its cost commitment for next year of north to 2% cost growth. And do you want to sign us up to anything? We very much want to be towards the bottom end of that range. If we look at the balance sheet, as a ring-fenced bank, we have a fairly simple straightforward balance sheet. Customer loans and advances funded by customer deposits. We have minimal use of wholesale funding largely because we don't need it. However, it is diversification of funding sources and it gives us some tools in our armory. You can see from the chart here that we enjoy among the lowest funding costs of our peer banks. And again, that is a source of competitive advantage for us. Moving on then to capital. Our CET ratio of Q1 '22 was 13.6% versus a [ regmin ] of 10.6% -- now obviously, we also hold a prudent management buffer above that [ regmin ] number. We're also building capital ahead of the countercyclical buffer coming back on towards the back end of this year. However, even with those factors, it still leaves us room to grow. It still leaves us room to continue to pay progressive dividends. We said GBP 1.1 billion in relation to 2021 performance -- we paid a further GBP 175 million in relation to Q1 '22, and we continue at that pace. The other thing I've included on the slide here was quite an important regulatory change from 1 Jan '22 where we took a GBP 7 billion uplift in RWA. This was largely on mortgages, 2 things: the new PRA 10% mortgage floor and also IRB repair this change in the definition of defaults. So that took our average mortgage risk-weighted assets up to about 11%. That said, mortgages are still versus other products, still a relatively low-risk capital-light product. That's why we like them. So finally, on outlook, I'd start by saying for those of you into trigonometry, that I was not precise, not precise, they're directional. So in terms of the dynamics of the P&L and balance sheet, look, as Julia said, and I know we uncovered it earlier too, we are living in interesting times, and we're not blind to that. So in the 2.5 years since I've been at HSBC, we've gone from Brexit to COVID to war in Europe, inflation, cost of living, maybe [ psychization ]. So we know we've got to manage all that as a bank, and we've got to deliver good returns as we do that. However, as you've seen, our balance sheet is prudently positioned basing into all of this. And we're also geared to that rates-up environment, which gives us headroom to operate within. And we have the resource to grow safely. On costs, we've got to absorb inflation, no option, so we've got to keep getting on and doing that. We've got to keep transforming. And as Iain referred to earlier, this year is the last year of CTA, we have spent GBP 800 million cumulatively between '20 and '22 on CTA. That goes away. But on the other hand, it does give us a big cost savings tailwind this year and into next year because that is helping us transform the bank. Wonder if you asked a great question earlier about -- so how do we do that? How do we just ignore that, that happens? It is about cost discipline and cost management. But if I bring it to life a great example with the branch closures, where -- maybe in the past, we might have exited ahead of the lease expiring. You take a big break cost. You go on the expiration date, no cost. So it's things like that, that we can be very thoughtful about. We can be smart about it and just manage that number well. So when we put it all together, we do expect to generate very healthy returns over the coming years. We expect to pay a dividend to group, in the range of group as communicated to its shareholders at 40% to 55% ratio. Ideally around 50%, that may go up and down from 1 year to the next. So that's the range that we're targeting to operate within. So I hope that was helpful, and I'm going to invite Julia back on to the stage here to help me with any questions. And please put the hard ones her way. We will go to the gentleman behind you.

Alvaro Ruiz de Alda from Morgan Stanley. Maybe 2 questions for me on -- we've touched on it during the other sessions on sort of deposit sort of beta reading. From -- as you look forward with, obviously, with higher rates, at what point do you think they can -- we can start to see a change in mix in some of these deposits? Because presumably, during COVID a lot of your affluent customer bank, a lot of excess liquidity is built in there. It's not necessarily transactional accounts. At what point do you think you could see a change in mix? Are you seeing it? And how do you factor that in your budget? And related to that, I don't know if you can give us any sort of details on the structural hedge. I realize you've mentioned there's a natural hedge of -- but including natural hedge. I don't know if you can give us some details on the notion of the total and duration, et cetera?

Yes. So on deposit mix, and Stuart Haire can help me out here if needed. We're not seeing anything at the minute in terms of a migration of customer balances,[indiscernible]instant access or noninterest-bearing current accounts into higher-paying balances. That's not to say that, that might occur over time as customers want a higher return. What we would really like those customers to do, though, in that circumstance rather than take a different deposit is take one of our really great wealth products. So you would have seen earlier that we've now got funds on mobile and things like that. So it is about not to us having deposit products as an option for customers but also wealth products, which convert to fee income for us rather than net interest income. So at the minute, I'd say in summary, we're seeing nothing. In terms of that planning assumption, it's a very broad brush planning assumption in terms of a 50% deposit beta. You'll see that, that's not what's actually happening year-to-date. You can see that from our pricing tables for us and other competitors. So that NII sensitivity, there is room to maneuver when you do the detailed maths within that in terms of if we do have some migration of customers out of lower-paying products into higher-paying products because we are operating really comfortably within guidance at the moment.

Sorry, and one follow-up. Sorry, yes. And related to the [ fee product ] because if you're having sort of effectively excess liquidity in your deposits that costs you zero with the rates going very quickly to 2% or 3%, wherever they land, it's actually probably more problem to have the deposit than investment fund. At what point you make that decision sort of you manage one product versus the other, given the rate environment is changing very quickly?

I mean, it's a great question. Obviously, we need to balance all of these factors. I like us to make more money, but I want it to be sustainable. It's a bit like the example Stuart Haire gave earlier of Global money, why might we give away some margin if we think it's a sustainable forward revenue pool. So look, it's a great point and we will need to balance all of those considerations profitability for the bank, but also meeting customer needs. Your second question was on how we manage the structural hedge? Yes. So basically, what happens, and it was on one of the slides there in terms of the rough math of how we do it. Roughly, what happens is we first look at the economic hedges, the natural hedges within our balance sheet. The key ones being about GBP 100 billion of fixed rate mortgages, about GBP 20 billion of other fixed rate lending. And then offsetting that, we have share capital and equity, that's running about to GBP 20 billion. And then the rest is our noninterest-bearing current accounts of about GBP 130 billion. So your end-to-end net hedge position of about GBP 30 billion on the long end of the curve that we passed the market treasury, that's hedged by an average 5-year tenure. Now there are some nuances within that. There are some products that we hedge over, say, up to 2 years, but they don't really meaningfully move that number. So I think the good number to think about is a net GBP 30 billion hedge [ received fix ] that we pass to market treasury. Sorry, could you pass it to the gentleman behind you, please?

It's James Invine here from SocGen. And I think this is a question for Julia. It's about your approach to stressing mortgage borrowers for interest rate rises. That's one thing when base rates were 10 basis points but money market suggests that base rate could be over 3% reasonably soon. Are you then going to be adding on another big stress to whatever level the mortgage rates are at that point? I mean that feels like it's going to cut off a lot of new business if you're really sticking to that.

Yes. So I think it's a great question. So you'll be aware that we automatically have to stress under the PRA rules at 3% above SVR. And you will know that SVR has been significantly in excess of the pay rate. What we're seeing is SVR and the pay rate becoming more aligned. But your question is whether we're double counting on the 3% stress rate and the affordability that I talked about earlier. At the moment, we don't believe that we necessarily are, we are monitoring it really carefully. It isn't having a significant impact on our front book, but we will continue to monitor it. And we will continue to make the adjustments as we see them. So if we're seeing things come through either on the transactional data, we -- for instance, we saw the government support package. We will feed all of that through at the same time. So as we see things, we will put them through. But it's a great question.

Maybe let Richard guide in here. So I'm not going in the right order. Yes.

Tom Rayner from Numis. Sort of back on to sort of the margin sort of stuff. I mean, I think you've got about GBP 85 billion of surplus deposits at the moment on the side. I don't know how much of that sits at the Bank of England currently, but there's obviously growing pressure it seems on the government to think about how it remunerates or how the Bank of England remunerates those reserves. I mean, what do you think the risks are that you move to maybe a tiered system or even the remuneration gets removed completely? I know that's fairly controversial, but I don't think is impossible in this environment. And if we were to move to something like that, how would that sort of impact your planning assumptions?

It's a great question. I think we need to understand enough circumstance what those tiering rates would be. Just to clarify they [ might be ] have a deposit in Bank of England of about GBP 100 million. And it currently earns base rate, so that's one of the key drivers of the NII sensitivity.

It's Alastair. I'm going to ask you the opposite of, Tom, in the hope that the U.K. is not yet Banana Republic, and maybe we headed that way. And can I just -- so the GBP 958 million, I can't look away. I'm just looking at that number. And it's more than GBP 958 million at the moment because the deposit pass-through is less than 50%, meaningfully less based on what you're paying me on the savings account. And the market is pricing another 200 basis points by the end of the year. So we've done 100, we've got another 200. So I know it's odd to be confident that things can change. But wouldn't that take GBP 958 million x 1 and some 1.2 or 1.3 and then triple it. I mean how far -- how wrong is that as a starting point because you've got sort of GBP 3 billion of pre-provision profit. So that's the biggest number of the day, right?

So if I -- it's a great question. If I try and do the really, really, really dumb math on the 958. No, I got to go even worse than that. It is just very, very simplistic on the key drivers of that on the balance sheet if I ignore cost of funds, liquidity premium, anything like that at all. You know the hedge that we do to market treasury is a small amount, it's $30 billion. That rolls off 20% per annum, so you can figure out the repricing on that. To set that one aside, the key drivers of that interest rate sensitivity are basically -- we've got the GBP 1 billion or GBP 100 million of cash on deposit with the Bank of England earning base rate. And then we've got variable rate plan loans. We said the fixed rate were GBP 120 billion, so the variable rate is GBP 80 billion. And then we've got managed rate deposits, including yours, Alastair, of GBP 150 billion. So 100 bps parallel shift up in rates. You've got your GBP 100 billion of cash, you've got the GBP 80 billion of variable rate lending, and then you've got the 50% pass-through on the GBP 150 billion of managed rate deposits. The dumb maths on that gets you to plus GBP 1 billion versus our plus GBP 958 million. Now you can then go through the other bits of our balance sheet and take that from our start accounts, and you'll see what we're paying out on TFSME. TLAC, all of that sort of good stuff, but that's kind of directionally how that math works. Now the things that could go wrong in terms of, can we get GBP 3 billion of extra revenue if rates go to 3%. Deposit pass-through at 50% seems okay today, it cannot be maintained. The key thing for me is mortgage margins because within all of that NII sensitivity, we assume we can maintain asset margins on variable rate lending and on mortgages. You can see -- you'll are seeing it from our pricing from competitors' pricing that margins were very high arguably, it was unusually high at the front end of 2021 ahead of stamp duty and then because there is a big rush for customers to move house or buy houses. So that margin was maybe roughly over 150 basis points, and it's come right down today. So that won't have a big impact on our book this year because it's basically the new business that comes on this year or reprices off the back. But if not were to sustain, that would drive down margins going forward. But then all said in that, you're sitting on this big deposit book, a variable rate and managed rate book. And you know what is the pass-through on that. So what we're seeing at the minute is -- the net of those 2 is creating a big upside for us. But obviously, it's something we need to be very thoughtful and manage over time, but we are not giving you advice on your [ owned payments.]

It is Robert from Deutsche Bank. What last composition of your noninterest income is? And what is a high nominal GDP growth, low real growth outlook look like for the noninterest income line?

So high GDP, low growth. I mean there's a whole mix of stuff in there. And I think you can see some of it from the investor deck, you'll see some of it from our statutory accounts, these 2 Stuarts are probably well placed to talk to you about that. Actually, Stuart 2 answer?

So I'll talk about the WPB components. Higher GDP growth, you'll have interchange benefits. Obviously, that would start to flow through. You're also as we grow our assets under management, then you have the wealth element within that note. Now that's not linked to higher GDP or nominal GDP. The third element is the FX. And we've talked about our FX story, whereby we will narrow the margins, but up the volumes. And that's the primary sources of the fee revenue in the WPB line. So I could hand to Stuart. But ultimately, that depends a lot on the economic activity, whether it's going to be IPOs, whether there's going to be huge amounts of markets activity, et cetera. And that depends on the type of recovery and the type of economic sort of outlook as we look forward.

Well, there's a couple of dynamics there, too. One is what we're trying to do to basically democratize well, so get more wealth products into the hands of ordinary customers on their mobile, like me, they're great products. They're very simple and intuitive. And then the other piece is market sentiment because I think what we're seeing is clients are risk off at the minute. So there are some puts and takes in that, but structurally, we need to deploy more wealth products into the hands of more customers.

We -- so if we look at just inflation on its own and ignore what you're doing is a business from the retail and wealth perspective, it's a positive for your noninterest income line. And presumably, we're about to hear a negative side from the commercial.

More -- you would get more in the interchange line. Obviously, if you have the higher wealth activity that's less related specifically to inflation. But ultimately, you get more activity generally. So yes, on the WPB side.

Which is sort of where I was going to [ put the -- take the mic ]. But if I understand the question correctly, if there's higher GDP growth -- higher inflation on growth, what we are looking at -- Okay. So certain clients can pass on the high inflation. If there's a cost of goods, they can pass that on. Others can't. I think historically, we've always felt larger companies have got the power, they can pass that cost on. I think it's changed now. Just on some of the comments I made earlier. If you're a supplier of key components, chemical, electronic component, whatever it might be, I think power might have shifted to those companies, may be very small, maybe very niche. They can pass it on. What we saw over the last year or so when there was disruption in supply chains, you see a different dynamic in the relationship between buyer and seller. They seem far more willing to come together and resolve together who's going to carry that cost. Maybe it was an air shipment instead of a sea shipment. Are we going to split it? Are you going to take a certain cost side? I think there's more negotiation and there's a shift in the power if there is -- those effects coming through.

I am going to state that we are moving to the final Q&A. I know we'll probably run the same questions, but I'm pretty conscious. We're going to try and feed you before you got on trains, et cetera, and we don't want you complaining of not being fed. So, please put your hands together for Claire and Julia here. Thank you. Just my notes is here. We'll carry on with the question. I want to try and get the questions answered. So can I just go back out. I think the gentleman there -- can we get a microphone. Let's go along the line there, and I'll come back to in a second. Okay. Thank you.

Actually, I've got a question for Julia, who's running away. So I'll maybe grab her before she's gone. Yes. I mean I'm really struggling at the moment because every bank I speak to tells me there's no credit problems at all. And yet, look at your share prices for the sector tells us it's a massive problem. And if I look at things like GDP growth, I've never seen it falling at the sort of rate we're seeing it falling today. So I guess my question is, when you stress the book and look at the book, let's just assume there is a problem. Where should we be seeing that problem? Where are we going to see the first indicators? And I guess within that, at what rate -- and we can talk about rates go at 3%, 4%, 5%, but it's ludicrous. I mean if rates get to 5%, the economy is going to fall on its back. So at what level is -- what is that cutoff point that we should start to say to clients? Look, if rate expectations go to 3.5%, do we then say, look, that is a big problem now for the sector? Or is it 5% or is it 6%, but what is that level would be really good to hear.

So what I said to you is we are not seeing anything at the moment. And absolutely, we're not. I'm very happy afterwards to go through with you all the research and the portfolio management that we are looking at.

I mean, we have taken some [ fag ] overlay as we look forward to economic guidance overlay. It was originally a COVID provision. It's converted now into inflation provisions that we are carrying about GBP 450 million of provision on our balance sheet. So there's no relate for economic scenarios. I think where we'll see it in our book is in retail, there's very much a squeeze. There's a small cohort of clients. We'd be looking at people who are safe, fixed income workers, gate economy, that kind of thing. Customers that we know are on universal credit. So we do have some of those customers in our book. We've already taken a provision overlay against that. But very much they would be -- our book overall is often that performs really well, but it's just getting into those pockets where we would see some customers really stressed and things get worse.

Yes. So for me, I think it is at the lower end of the retail book, universal credit on squeezed affordability and lower -- sorry, higher LTVs, et cetera. On the commercial book, it's going to the sectors and having to look at it on a sector-by-sector basis and particularly looking at it at the SME. And whilst noting, and we haven't talked about government lending and B bills, much of that is government backed because it has been through the B bill scheme.

We'd also look at the short dated receivable finance book, people paying on a short-dated payable. And that's a really good early barometer for us.

Just one other thing -- just I want to quote this question really clear, but it would depend on your view on unemployment as well. I'm probably the oldest person in the room. So I remember the late 1970s, '80s, unemployment was very high. So it's a very different set of dynamics that we're playing with. We hear you. We hear you.

On what range do you think we'd then stop if it really gets difficult. I mean clearly, if it breaks to get to 10% and that's a problem.

Well, it's all time [indiscernible]

I think rates are going to go [indiscernible] things might go to 3%. I think as a brave show, it's going to go to 3%. But we could talk for hours about maybe in [indiscernible] what I can't...

On what level would it be a problem is what I'm saying? I can make my own view as to where it's going to go, but I'm just -- what I'm not clear on this from any bank really is what level is the problem level?

So I wouldn't correlate the problem level necessarily to where the base rates stay, I would put it more into where inflation goes. And so ultimately, inflation is going to constrain the cash flows, both of individuals, SMEs and then playing up into the corporate through the supply chain. I think if you were to sustain a 10% inflation level over a period of 2 years, you're starting to really into the affordability of individuals. And for those that have that and we're a bank that has less customers who have low net cash flow, so we'd be less exposed, but we would be exposed as well. It's inflation that's going to drive it.

Perhaps the duration as well.

Duration of inflation, I like that.

And just on that, we have converse -- I won't go into the detail. We have a lot of conversations as an executive team about do we buy into the figures that you're seeing banded around just now, the inflation is going to fall back very, very quickly in 2023. That's our view. That's just a view. I want to take the next question beside you. Thank you.

It's Aman Rakkar from Barclays. Two, if I could. Sorry if I've missed it, and I can probably work it out, but what ROE are you currently generating? And what ROE can we expect you to generate in the next couple of years if interest rates works and normalize around 2%, north of 2%?

If you're in the slide -- I'm sorry, let me just get back to -- So basically, we gave you -- there's 2 different ROEs that we work out, which is a bit complicated, one is pension adjusted and one is headline. We have a big pension surplus as a bank, and that's dilutive of ROE. But you can see basically for the full year, we were on a reported RoTE of 13.5% and adjusted of 14.7%. And then for Q1 of this year, it was adjusted of 19.6%. I'd say that was inflated by a couple of things. The key thing it was inflated by was deferred tax adjustments. So the change in the banking surcharge, so that basically gave us a bit of [ finally ] anomaly that you can see there that sort of mid- to high teens range.

Yes. I guess, normalizing for loan losses and deferred tax recharges in a higher interest rate environment. It's a kind of mid-teens ROE that we can expect.

I'll let you do the maths, [ all of it ]. Give me the drivers.

The second one was coming back to your point around mortgage margins. Just interested in to what extent deposit pass-through is related to mortgage margins, the tailwind that you're enjoying on the deposit side. Does that allow you as a business to compete more aggressively on the asset side? And I guess, is it a reasonable influence that as deposit rates rise and deposit margins contract, asset margins should widen from here?

I'll pick up that in the first and I'll be corrected by Claire. The reality is that we don't price for a cross-subsidization. So in other words, you're pricing always to create hurdling mortgages above the 10% capital cost. We've seen times where the market has behaved irrationally just by the speed of the swap rates going up over Q4, Q1. And therefore, at times, you might have had the few pounds written under that 10% but we've never sought to lead the market on that. However, if you look at it more structurally, undoubtedly, we would -- there is more money being made through the increased interest rates delivering them through the deposit products and less money because the pricing is [ narrower ] through the mortgage products. So there is -- on a structural level, your NII composition is now shifting more towards deposits than it was assets. To your question as to whether if deposits came back down, would the asset pricing come back up? That's where you're trying to create is balance the balance sheet as you can. And ultimately, you would have some of that hedging -- some of that hedge, natural hedge benefit. However, it's a very competitive market, and people have different funding structures, and so you have different impacts at any one point in time. What I would say is the outlook for the net interest margin continues to be positive. And as interest rates go up, maintains that positive trajectory, if interest rates start to come down depending on how people have structured out their balance sheet that will not necessarily come down as steeply as it came back up.

The other thing that I would add is 10% is rock bottom, RoTE on mortgages. Yet, that's kind of your bank's cost of capital. So for us to be well above that, mortgages need to be well above that. So it's kind of what we live with in the short run, while the market is behaving a bit oddly versus where we want to get back to over time.

Yes, sorry, go down here. So if you can just pass the microphone forward and then I'll come to the next. I'll come to you in a second, Joseph and I'll go there to ask the next, please.

Jason Napier from UBS. Two questions. Julia, I think you probably kick us off certainly. The first is you mentioned that you're operating below the risk appetite that management have set and that sounds like a good thing in this environment. But one of the issues we struggle with this investing market is to measure risk appetite. And what kind of embedded risk is in the loan book now? We kind of work on the assumption that the financial crisis caused everyone to reassess how much you want to run, and it's fallen. So the question is, how do you measure it? And how has that changed over time, the risk in the book. And then the second question, you mentioned you spent a lot of time in Westminster and presumably, some of the questions you've been asked is what's going on in the real economy? In the commercial book, before somebody defaults, what do you know about how things are going for the average commercial customer?

So let me take -- do you want to cover the commercial side of it? And so on risk appetite, you don't expect risk appetite to change, you expect risk appetite to remain the same through the cycle. And our risk has remained the same. Of course, it was tightened post the great financial crisis. But what I am seeing here is a very sensible, robust risk appetite with a very low risk and risk-averse approach that hasn't used the capacity within that risk appetite. What I am not seeing is a racy risk appetite in any way. I think it is at the same level as our peers, if not, slightly more risk averse than our peers. What I am seeing, which is different is the capacity. And that feeds through when you see some of the numbers, when you see the delinquencies, et cetera, they are well below. And that is -- I'd love to say that it's all about excellent credit risk underwriting. We have a very good credit risk team, but it's also because we've been risk averse.

Yes. On individual clients, in terms of early warning signs, I mean the vast majority of our book, and of course, where the largest exposures are, we've got relationship manager. And the key role of the relationship manager is to be really close to the management. And not just the management, but visit the premises, visit the factory, look at the inventory, whatever it might be. But also to have their ear to the ground [indiscernible] what's happening within that industry, within that region, are people trading with them? Are we seeing people stopping trading with a particular company through our own data and analytics? Can we see that suddenly there's a drop off in payments, drop off in a certain counterparty? So it's that general awareness, but that's not just say there aren't surprises. And I think one of the surprises that's come up recently is inventory mismanagement. Some companies have overstocked, some have understocked. And I think I've mentioned it 2 or 3 times today, who has key items for their viable business that suddenly they can't get access to? And that's where we need to help them. But it's a very broad is to the ground quite relationship approach.

I'll go get Joseph's question and I'll go there, I think I'll have to do this.

It's Joe Dickerson from Jefferies. Just going back to this point on the capacity that Julia mentioned in risk appetite. Have you looked at, say, over a 3-year view or n years, if that capacity was utilized, what the profit opportunity is? .

Yes. Well, it's -- I should really pass it to my risk and business experts. But we have -- we can get frustrated ourselves, and that frustration might turn into being good news in the next year, 18 months. But we do want to know -- in fact, when Julia arrived, I remember Julia saying to me, we've got to start taking some risk in some places. And it's built -- it was kind of built in this endemic in the business. I mean we -- you can see that in the numbers. You can see that in the balance sheet. So I wouldn't want to put a number on it because then you could say, well, you take bad risk because you could dive into somewhere where it's not your field of expertise, but.

For me and that WPB, where risk isn't actually constraining [indiscernible]. So if you look at the mortgage, but can you see a route to easily GBP 200 million plus [indiscernible] -- can you see to the market share gains. Without having said that, the risk appetite materially maybe marginally more than the 5% we're guiding on back to it and maybe take that up before we are comfortable with that. And when unsecured, recognizing the economic outlook and therefore, only staying largely within our own base where we're comfortable lending. You can easily see we have 5% with HSBC credit card but why can't we be 10%, 13%. So you can see the capacity that you can deliver over that. And really there, the constraints are about demand of what you can write in a year and the capacity to deliver it, and therefore, also the amount that you can lend in the technology environment or change without causing tripling disruption. So I don't genuinely set you against the opportunities we laid out. I don't see a constraint, my constraint was not based on risk appetite. So therefore the answer to your question is you pay to its capacity, is not about filling up the risk appetite, it's about the speed up delivery against the market share opportunity.

Sorry, Julia, go ahead.

So I come from a building society. I was the group CRO at the largest building society. It was a risk-averse safe building society. I was not used to having that much capacity. And when the risk appetite and you will know this is pretty common on the credit risk side across the major lenders. Where to -- on mortgages, higher LTV to [indiscernible] the more specialist propositions done properly and done safely. That's where the margin is.

Look, it's the last question, I think, in order of time, but please you go to the microphone.

It's John Cronin at Goodbody. Just coming back to the mortgages point and mortgage market share. You expressed the ambition earlier to get to a stock share of broadly around 10%, which is your natural share. Clearly, from a flow perspective, that's where you're running. But is there anything you can say in terms of time frames we should be thinking about in terms of getting to that stock share and how that dovetails with pricing strategies? I suppose while I'm thinking about particularly there is like your references earlier to both ROCE and return on risk-weighted assets being in a good spot at the moment. Like are there certain price points from a mortgage spread perspective or returns on risk-weighted assets perspective that you could point us to where you'd be willing to ramp up flow share beyond today's levels?

So thank you. I can actually point to the counter factor. We've taken volume out of our productive capacity in Q1 and Q2 because the pricing wasn't there for us. So we chose not to actively participate as much as we could. We had capacity in the operation. We could have taken more -- even when we saw some of our competitors didn't have that capacity. So there is -- we work under guardrails. Those guardrails guide us as to where our minimums are. But ultimately, the speed to the lever of the 10% will come from the market opportunity. Last year was a fantastic market, GBP 290 billion of gross lending in the U.K. market. This year, it looks like it's going to be GBP 265 billion. If we continue to take 10%, we'll never get to 10%, so we can definitely see opportunity, particularly as we expand our range into 12% to 15% per annum. And if you started doing the math on that, I could easily see it by 2026. But the pricing has to be there to be able to support it.

If the pricing was there, you'd ramp up and go beyond just upper...

We've always guided that. We want to move towards our natural share. We've got the productive capacity, both in terms of capital and funding to do it. We've got the processing speed to be able to do it. We're learning about new asset classes such as buy-to-let, where we can, as soon as we learn them, we've shown in the last 3 years, once we got comfortable with brokers, we went back on brokers, and we'll continue to work with that.

Thanks, I want to wrap up, and I'll just take a couple of minutes, so I need the screen. Sorry, that was a polite way of saying, would you mind moving on. So -- and I will just take 2 minutes to wrap up. But first of all, thank you very much for joining us today, and thanks very much to people on the webcast as well. We know you're busy people. So it's come and indulge us all day today has been great. And I hope you've enjoyed it, and I hope you've learned some new things about us as well. I was just going to go sort of run through these points. But actually, I've taken some notes today. So I'd rather just walk from my note, which you can read these things, and I may be closing in a couple of second. But just my bits that I picked out from some of the questions, I'll just start with CMB. There's always a lot of questions on WPB. I hope you get that CMB is really important to us, a really an important franchise. And when you're #1 in the market in large corporate and MME, we're playing a really important role in helping the U.K. recover from the pandemic. So if you need any more information on CMB, I'm sure Stuart will be delighted to speak to you on that. And the next thing was, I know that it was a good session on First Direct. First Direct 2.0, somebody asked today is taking you 30 years to do 2.0, I thought that was a really good point. It's taken us too long, but we're delighted with the progress and Chris, thanks for the presentation. It's a really exciting franchise. I signed in the FX, the global money presentation today. I think everyone I spoke to has really enjoyed global money. We're super excited about it. And I promise you, you will have the tool in your wallet before you go on holiday in August, okay? Stuart, you told me in July. I figured out, we [indiscernible] our customers to use it. So we watch this space. It's good. On the tech side, tech is much more important and critical, okay? It's much more important and critical. It's fundamental. If we don't get our technology right, be it safe and Jen gave you an update, it has to be safe. Our customers want safety. It has to be fast. It has to be reliable and it has to be easy. And if we don't deliver that over the next couple of years, we'll lose share. So we have to get that done. It's way more important and critical. It's fundamental to our business. I thought Julia gave a very good update on this. We're very transparent about capacity and scope to grow, but in a really smart way. And Julia has been a fantastic hire for HSBC U.K. So we're good. We've got good liquidity. As you all know, we've got plan to look at it and got strong capital. So if the market is right, we'll push on. We will absolutely push on. But don't forget the 4 Cs. And then I think there was a desire to get a little bit more transparency. There's just view that HSBC do not give you the transparency. And Claire gave you a lot of information today. In fact, we had a conversation about 2 hours ago too, I think we should give a little bit more today. I think you're getting on with an awful lot of information now when you go back to wherever you're going tonight. You've got a lot of information about how we are going to perform, fingers crossed, over the next year to 18 months. So I hope you've got that and you feel good about that. The point I was going to just close on very quickly. Great performance '21, '22 has continued. I think we're really well positioned. We've worked hard to get into that position, but we're well positioned. Very clear strategy, big growth play in society, and I think we're going to be really, really important to the group. And a final point is to say a thank you to my team today. I think you've been exceptional today. Our bank is only as good as the people that are running it, I can assure you. And to the people who presented today and all of the work that's going on behind the scenes and there are a lot of people in the room. There are a ton of work on that. Can I just say a heartfelt thank you. I think you've done a really good job in presenting our position today to the people here. Last thing is food and drinks on level 10. Don't miss your train, okay? You won't thank me if you miss your train. But if you need any more information, please come back to us. I hope you've enjoyed the day. Thank you for your time. Thank you very much.