Standard Chartered PLC (STAN) Earnings Call Transcript & Summary

So welcome back to the banks. And I am really, really pleased to be hosting Bill Winters, Standard Chartered's CEO for the last 8 years. And he's seen everything, I think, in that time one way or the other, some of those, sort of things you might have chosen not to see. But Bill, thank you for joining us.

So I understand you're just back from China. So reading the paper, looking at the media here, I assume everyone's sat around doing nothing when you got there.

Yes. I was -- I've been to China a few times this year. And so I was in Beijing and Shanghai and saw the establishment as it were. And then this trip was actually in Guangzhou and Shenzhen. And actually, my first meeting on Monday morning in Guangzhou was with Guangzhou automotive. They'll put out 1 million electric vehicles this year. I mean, we're -- I mean if you're a banker like me or maybe an investor like you, you're easily impressed by robotics and things like that because we don't see too much of that in our business. But this -- I was seriously impressed. And of course, we know the company extremely well and we know their strategy from the nickel and cobalt mines in Indonesia and Congo, [ extruded ] batteries through to the -- to manufacturing, obviously, then assembly and highly automated. I got in the back -- I got to hop in the back of one of these little things. Nice 4-door sedan, drives a little bit better than my Tesla, a little bit better UI, totally automated if you choose and if you're allowed, retail price then like USD 24,000. I said, okay, well, the next day, of course, the Europeans put up the barriers. And I understand why, the onslaught -- and Guangzhou automotive is only the third biggest EV manufacturer. We also went to BYD, which is the biggest, who sells 3 million vehicles a year. So I'm -- the Greater Bay Area, Guangdong province is a hive of activity. I've -- I haven't seen anything like it since I was there last time, which was before the pandemic. So what are they doing? Well, they're investing massively. They obviously have a particular investment model, which is not like Silicon Valley or Wall Street, it's much more state-directed capital. But -- for example, I spent -- I had dinner with the guys who run Shenzhen Capital. They've got -- they made 1,700 private equity investments. The managers get [indiscernible]. I mean they're professional investors. Many of them have worked in a purely private sector companies, others have spent their careers there but they fund companies, they're measured by their returns. If they don't get decent returns, they get fired. If they get decent returns they get paid. Is it capitalism? It sounds like capitalism to me. Is it state money? Yes, it's state money. But obviously, they bring private money and they are typically a 25% investor. So that ecosystem of funding innovation is phenomenal and it's going full bore. And these companies are obviously benefiting from an industrial policy in China, you can love it or hate it but it's clear. And EVs certainly are at the heart of that, together with a handful of other things, AI and quantum computing and electronics more broadly. So no, maybe I'll take a step back because the real question is, is China hitting the wall. My short answer would be, it's possible that China hits the wall but I think it's very unlikely. I think as far as I can understand the psyche of the leadership of China, they are very keen to have sustainable economic growth that serves their population, serves obviously for continuity of leadership in China and they're very keen to avoid the mistakes of the West, as they see them. And the mistakes that they see are inequality, which is obviously quite a big problem. And we've seen the political and economic manifestations of that in the West. They're keen to avoid that. And they're keen to avoid the reinforcing doom loop between the conventional credit cycle, which nobody has figured out how to do away with yet and the financial cycle. So make sure that as we hit the downturn in credit markets, it doesn't affect the financial system because we know that the severity of economic downturn is multiplied by 5, 10, 15x when credit flows over to banks or the finance system [indiscernible]. So they more or less extinguished the shadow banking sector. They've obviously kept their banks reasonably well capitalized and low risked and they're keeping the commercial property market from collapsing. Had this been the U.S. or Europe, commercial property prices would have dropped suddenly by 50% to 60%. You would have had a washout, you would have had a bunch of banks go bankrupt. You would have had a massive recession, like, it's not like we haven't been through this a few times in my 40 years in banking. I can probably count globally 3 or 4 times and locally another 30x that this has happened. Now is China going to succeed in bleeding the pain out over a longer period of time to avoid the worst of that sort of accelerated recession, we'll see. I'd say jury is out. But I'd be pretty optimistic. My sense talking to the leadership in China and I've met with -- I would say doors wide were open for Standard Chartered Bank in China. That's for sure. And whether it's in Guangzhou or in Shanghai or Beijing, we're meeting with the senior most officials in the country. And they are not panicking, right? They're not agitated. They're not deeply concerned about what they read in the Financial Times, should they choose to read it or The Wall Street Journal or the New York Times or whatever. So that's not to say that it's going to be easy or -- and -- but that is to say that the challenge will probably extend for some period of time as they push things through. But at some point and I guess it's going to be 12 to 18 months from now, confidence will have bottomed. FDI will have picked up. House and commercial real estate prices will have shown signs of increase. Demand will have picked up and there's a big building demand for housing that's being held back by the concern the prices could fall further. And like has always happened in markets, you'll see a bounce back and we'll be back to normal at some point in time. Probably still eking at a 5% growth rate GDP this year, which is not bad in the overall scheme of things, although it's obviously less than we might have liked in the year after the COVID reopening. Again -- so I'm okay with China structurally. I'm okay with China economically but I'm not naive to think that there aren't risks. At some point you'll ask about commercial real estate and our exposures but I'll let you put that one to me.

Well drawn, let's [indiscernible] a broader piece. So you've got over $1 billion of domestic China revenues. It's obviously 1 leg of an awful lot of your network business, which is the essence of Standard Chartered. So it's really important for you but there's credit risk in China and that's manifesting in the CRE portfolio. But just how do those play out for you?

Yes. Look, we have a -- certainly in terms of market share an infinitesimal domestic business. But when you get to key areas like in wealth management, for clients that are inclined to invest in international product, we have a very meaningful market share and a super brand. Now that's a tiny market right now because Chinese investors have been precluded from putting material savings into international product, non-RMB product. And that's easing. It will ease slowly but it is easing. And starting with the Greater Bay Area Wealth Connect, which is very early stages. But we are extremely well positioned for that. And the bulk of our onshore growth, certainly bulk, I won't say the bulk but half of our onshore growth has come from that client segment and that product line. We've also had some really interesting forays into things like consumer credit and business banking, small business, which are areas that have been relatively neglected by banks. And we got -- our most successful partnerships globally have been with Chinese e-commerce platforms, including Ant Financial, who are -- have highly sophisticated credit scoring mechanisms that we've come to understand quite well. And we've extended that model into JD.com and WeBank, WeBank more on small businesses. So we have had some good credit growth in China and is performing quite well. So I think as we indicated at the half year, there's been a small increase in delinquencies on some of those portfolios but still well within our expected loss ranges and returns are still very attractive. So yes, so we have an onshore business, which is good, where there's tremendous growth opportunities but that's only 1/3 of our China franchise, 2/3 of our China franchise is everything related to cross-border transactions. So the China opening up story. And that's the internationalization of the RMB. It's obvious why China wants to internationalize the RMB. They want to reduce the cost of funds for Chinese corporations operating internationally. They want to make sure that they've got platforms in place to continue trading if tensions with U.S. or others become more acute. And that's the -- it's been a deliberate program for many years and it's continuing apace. When it comes to all things cross-border China, we are a leading portal. And maybe the leading portal, regularly recognized as a leading RMB bank globally. I think third year running by a number of the different surveys. Leading participant in the various Connect programs, so the Stock and Bond Connect money into China, Greater Bay Area Wealth Connect money out of China, [ savers ] money, obviously, this is what we do. We provide the plumbing, we're the only bank that has a license to operate the China interbank payment system, both from our Chinese bank and also our Hong Kong Bank, Bank of China does as well, the only foreign bank. So that's -- but even in [indiscernible], I think we're top 3 or 4 participant in the China interbank payment system. So that, that grew 60% in the first half of the year, it grew 36% last year and it's 2/3 of our China franchise. It's not a small number. It's a big percentage, it's [ now ] a big number for us. And I think the outlook is very bright. It's not GDP growth related. It's related to the willingness of the Chinese leadership to open up their capital markets. And at a time when they're stressed by geopolitical tensions and stressed by a, call it, a cyclical but also possibly structural downturn in FDI, the need to open up the capital markets is ever greater. And we are a prime beneficiary of that. So all in all, I'm quite excited about our China franchise.

And then just rounding out then, all Hong Kong, so -- is 25% of revenues for you, so you're probably the most diversified bank in this way, geographically but it's a big market. You -- it's hard to tell whether it's a growth market anymore because all the pieces have shifted as well as the characteristics of Hong Kong, it's different from when you went last time. So onshore loan growth looks weak, offshore loan growth looks very poor but signs are that wealth management is more robust. Is that fair?

Yes, well, I wouldn't say very poor but wealth is absolutely kicking back in. And we know why it was suppressed. Some of this [indiscernible] was COVID and well and more COVID, lack of Chinese visitors, et cetera. And clearly, there was a subdued period. But I'd say we're fully back, both in terms of new clients signing up, both Hong Kong locals and mainlanders. AUM, which has gone disproportionately into deposits in a slightly risk-off environment. And obviously, the actual wealth income, which is growing extremely nicely. So I'm -- I think that's a long-term growth story, especially with the GBA Wealth Connect program, which, over time, will solidify Hong Kong's position as the wealth management hub for China. Certainly for international products, if not for pure RMB products. And as Chinese savers seek to diversify as every group of savers does, as they become more wealthy, that will be a business that I think will grow for years to come. Hong Kong is also becoming a little bit less distinguishable from China in terms of our financial markets business, I think, part of the reason that we have the leading RMB business, well, in the world, is because we operate our Hong Kong and China business as a single business. We have one guy. He sits in -- well, I never know where he sits in, it's Hong Kong, Shanghai, Shenzhen, Beijing, I mean he's all around. But he's got a team that is -- and I just love this team. They are one team. And which means that they can facilitate the onshore offshore flows, absolutely seamlessly. I don't know why nobody else does it. I hope nobody is listening But it's actually not easy to do. And especially during the civil disturbances in Hong Kong, keeping everybody together as one happy team was always a challenge. But this team, they had no issue at all. So that -- yes, so my point is that it's hard to tell what's Hong Kong and what's China these days because they're growing together. But there is a pure Hong Kong retail business for sure and it's dominated in our case, by Wealth and is doing quite well. The business community in Hong Kong is coming back to speed, still a fraction of the international travelers, visitors that there were at the peak but that will come back. It's a fabulous city. And it is unique and you've all been there, most of you guys, I suppose, have been there, it's just a fabulous space to visit. And there will be a lot more back and forth with mainlanders. So people from Hong Kong are going to Shenzhen almost as frequently as people from Shenzhen are going to Hong Kong. That's a good thing because it makes both of them wealthier. So that -- I am very optimistic about Hong Kong and I'm very optimistic about our position in Hong Kong. And then we have this little digital bank in the form of Mox that is -- it's a pure Hong Kong player because it's pure mass market retail. Although interestingly, the demographic of the people who have signed up for this digital bank are not. It's not a bunch of 25-year-olds who are looking for coffee money. There are some of those. In fact, there's a couple of hundred thousand of those. But it's people who like an easy banking product and maybe who want to feel like -- I succumb to that myself from time to time. I know it's hard to believe but time to time I try to feel like and I take out my Mox card and I tell you, I can get served by any barista in Hong Kong with a flair that I wouldn't get with my Standard Chartered card. It's doing well.

So we're not writing off China or Hong Kong, just yet. I like that. Thank you. Right. Let's just step back up at a group level. The net interest margin, this has been quite the story over the last few years, as with many banks. And with a loan-to-deposit ratio of 60%, of course, low rates were a key constraint, so much improved. As we get into Q2 but there's still a couple of big drags on the margin. One is some hedges that you put on, which you've talked about come off fairly quickly. And the second is, you've been holding very high liquidity coverage ratio in a period of crisis, which has now passed. So can you dial those things down? Can you keep the margin moving from here?

Yes. I think there's a few moving pieces. Clearly, we're -- we've had a substantial increase in NIM and we'll have further with the final effects of rate increases passing through with or without a 25-basis point further increase from the Fed. I guess there will be a further 25 basis points but that's not in the quarter, it's not in the market, even though people are expecting it, I think. We do have the second of our 2 short-term hedges rolling off in March and that will support the NIM from here. The -- but the bigger story at Standard Chartered is that we actually had a relatively weak deposit franchise, if you went back 6, 7 years. We had a relatively low CASA proportion and relatively low treasury operating account proportion and a relatively high corporate term deposit and other wholesale funding proportion. And there was a time when we were a low-cost funder in many of our markets, so low-cost funder in dollars in many of our markets. But that time passed. And obviously, local banks became strong, funding markets became deeper and Standard Chartered, we were going throw our own problems, years ago. The -- so we've had a very deliberate effort to build up our current account and saving account business. The way to do that is through customer service, you can get somewhere with marketing, you can't get there with promotions. I mean, you can have some reward points and things. But basically, you have to have a good customer service or else the deposits don't flow into your bank. Having earned those deposits, we're very reluctant to send them away. So we are sitting with very high liquidity right now. And through the Credit Suisse and other challenges, we had deposit inflows and that's good for us to see. So yes, we're running with very high LCR right now. In part because we want to hold on to that quality deposit base that we've got. Second, it's not clear what the regulators are going to do in terms of the definition of what is a treasury operating account. So I think everyone is reasonably comfortable that a real retail deposit is sticky. You get into questions of whether wealth management or affluent or ultrahigh net worth deposits are as sticky and obviously, that was part of the Credit Suisse problem, big part, although I haven't seen regulators zeroing in too much on that one. But on the corporate side, where there's -- it's always been an unattractive source of sticky deposits but more attractive than wholesale funding. It's not clear yet what the [indiscernible] rules will be. So we want to make sure that we remain very, very liquid going into any redefinition that could come through that. And then the third leg is, the loan growth has been subdued. And part of that is our focus on returns and it's been a key platform for us to increase our return on risk-weighted assets, in particular, for our corporate business. And we've done that. And we've been quite successful in getting that up to an RoTE level that is well above cost of capital. But we continue to maintain a strong level of discipline and the lending market has been relatively subdued. So those things all lead to a high liquidity ratio, which, of course, you could do the math, it does flow through to a drag on RoTE at some point. The alternative of just running right at the [indiscernible] or right at the line, as we get into this period of uncertainty, possibly some credit stress is coming, although I can tell you, we haven't seen any signs of it outside of commercial real estate in China. The -- I'm okay being relatively cautious. But we can definitely retune that at the right time and in the right circumstances. We don't need to run with a 170% LCR. We don't need to run with the volume of [indiscernible] that we're running with today. And the market is not demanding it. Credit ratings are fine. And at the right time, with the right opportunities, we'll tighten that up.

Very clear. So let's touch on financial markets. So this has been, I guess, one of the standout stories in the last 2 or 3 years, the revenues were running about $5 billion in 2020. And if I annualize the first half of sort the trailing 12 months, it's about 30% higher, about $6.5 billion. So a really meaningful step up. Now oftentimes at other places in the past, that's been risk. What's the driver of that step-up in that business, which is now one of the leading revenue pools of the bank.

It's a really important business for us and it's right at the heart of what we have always referred to as our network business. Cross-border is -- network is cross-border. And obviously, cross-border frequently has an FX dimension to it. So again, if we went back 7 or 8 years, we had a world-class foreign exchange dealing operation, foreign exchange spot and forward, actually world-class. We had a almost nonexistent credit trading platform. We were relatively underdeveloped in the whole range of option products. And we had a commodity business that was -- that wasn't generating very much in terms of returns. We've done a few things organizationally. And then in terms of investment, we now have a first rate credit markets product. So we've taken what was always a leading capital markets and syndicated loan operation in our markets, regularly in the top 3 in the markets in which we operate, Asia, Middle East and Africa and have built out a trading operation to support that. The credit trading is tough. I've been around that business for probably 30 years. It's always been tough. I'd say Standard Chartered does it as well as anybody. It's still quite volatile. I should say, yes, is volatile. But volatile in a cyclical way, not in a you lose money from time to time, we don't have to lose money. The capital markets franchise is strong. The structured finance and sustainable finance franchise is extremely strong and that all feeds into a collective. We're also managing the bank's loan portfolio, credit portfolio much more actively with a dedicated credit portfolio management group, which feeds flow into that credit trading desk. And it's a symbiotic relationship. So we now have a really strong credit leg. It has not been wonderous this year or last year for the obvious reason. We're in the down part of a credit cycle, issuance volume has been low, et cetera. But we're there and we're ready -- we're poised for growth and we've not lost money during this very difficult time. Built out a very strong rates business to complement the FX business, that's been a stellar success. Obviously, the right time for that with the rate markets being very volatile. And it may -- I ran a business called credit and rates in JPMorgan in 1996. And it's hard to imagine having a business that isn't credit and rates but at Standard Chartered, we didn't have credit and rates. We had FX. It's a very, very different business. We now have credit, rates and FX. It's really good. The rates business is super. The option business is super, FX business and FX option businesses are super. And we've got a nice -- it's a small but nice strong contributing commodity business that can take advantage of the flows when they come. So there's a much better diversified business. So it's not just the 5% to 6.5%, it's a much higher quality at 6.5%, that was the case. Much more internalization of flows. So the big chunk of the driver has been capitalizing on the flows coming out of our trade and cash business that we are only partially capitalizing on before, by capturing the flows coming out of our Wealth Management business and our cards business. Some of you may say, "Surely, you always internalized all of your flows, " but we didn't. We haven't made quite substantial systems investments to be able to do that in an automated way and it's going quite well now. We've invested in people. We've got a very strong trading team but we also have built out our sales team in quite a high-caliber way. And then final component, I think, of the big growth is to focus on financial institutions. So if you've been watching our -- if you watched what we're saying for the past couple of years, we talked about the proportion of our corporate CCIB business that is driving from financial institution clients as opposed to corporations and governments. It's now just about 50%. It was down at closer to 30%, 6 years ago. The corporate business is also growing but the financial institution business is growing faster. So who are these people? Well, we've always been a correspondent bank and we're capturing more of the flows from that correspondent bank rather than just doing the payments and running the sanctions risk. But it's also as a manager, we had a small asset management business 5, 6 years ago. It's quite large and growing very fast today. The new economy, some payment platforms and the like. And then the -- called the parastatal financial institutions that are development banks, MDBs and things like that. So we just had a good set of growth across client segments, across products. As you graciously pointed out, it did not come as a result of high risk. And our -- first of all, IRR has gone up but that's a function of market volatility. Normalizing for the volatility, IRR is unchanged and it's a relatively small proportion of our capital, which is not to say we don't take risk. I mean we have to take risk to facilitate client flows but we're not a big [indiscernible].

So you should be able to grow net interest income, you should be able to grow wealth, you should be able to grow financial markets. I mean, it feels like you can grow the bank over time.

Yes, we can grow the bank, I think 10% to 12% this year and 8% to 10% next year. And -- and we -- our guidance before we got into this craziness of this war was 5% to 7% and 2% plus jaws. I don't see any reason why our structural growth rate should be less than the 5% to 7%. And as we've shown, we can produce higher jaws during this higher growth period as we get back to a more normal level of growth, jaws will also normalize, perhaps not all the way down to 2% but we'll see. But obviously that's the vision for -- I mean, you guys know how it works. That's consistently decent growth and positive jaws is higher operating profit, a higher RoTE and should be a higher share price but I'm sure we'll find a way to get de-rated again down to 3x forward earnings.

So the funny thing is, the people in the room, they're with you. It's all the people outside the room you have to answer. And -- but I can say, actually -- so this was not true a year ago but I can say, you are a distance from the lowest rated bank that's presented in here today. And the shares go, as we said this morning, I mean, like your stock is up, so there'll be some [indiscernible], just a little but like you've introduced the costs thing there, Bill. And market has been fascinated by this with Standard Chartered. It was in a way, you [indiscernible] [ $10 billion ] a year, which must be really hard to do when you have high inflation markets but there wasn't any reward for that because your revenues kept going down. And then no revenues were going up. People just ask what's the investment drag to keep that moving. So you mentioned the jaws. Is that the best framework for it and how comfortable are you?

I mean, jaws, obviously, it's an imperfect measure, very imperfect from quarter-to-quarter, even year-to-year, it can be a bit imperfect but it tells you something. Look, we -- I mean, you're right. When I joined the bank, we had roughly a $7 billion expense base. We were investing about $600 million in our business, almost all of that was compliance. We've -- until last year, had a 7 plus a little bit billion-dollar expense base, investing $1.9 billion of cash, obviously, some of that gets capitalized but through time, that normalizes out. And having absorbed 7 years of inflation at 4 or so percent per annum and obviously increase the investment from $600 million to $1.9 billion, structurally. So that's a lot of productivity that came out of the system. We did not loosen things up next -- last year but we -- and we didn't actually increase our cash investments. We did have a significantly higher performance-related pay. And obviously, we had significantly higher wages and that's on the back of the inflation spike space that we've had. And that obviously has carried through to this year where we had a meaningful expense growth in the first half of the year. But we're on track to maintain a flat level of expenses from the second quarter level, roughly -- roughly flat. We will have another expense increase next year that comes with the salary increases that will come in next year. The inflation is still running high. And we will do everything we can to mitigate as much of that as possible but we will not cut back our investment program but nor will we increase it. Our expectation would be that we maintain a flat level of investment. The nature of investments is shifting. So we're getting into a slightly healthier balance of investments in growth, investments in productivity and defense. The big increase on the defense side, obviously, is cyber, which is something you will hear from everybody that sits on the stage. We will accelerate our addressing of obsolescence in our tech stack, which I'm not -- I mean, everybody's got it, whether we're more or less than anybody else, I don't know. But we're quite keen now to go into what we see as a long-term growth phase with a super solid underlying infrastructure. So we'll spend that money now to get the data centers, the cloud migrations, the core banking systems and we've migrated 30 of our markets onto a single core banking system. That's the good news. The bad news is, the hard ones are yet to come, which is Hong Kong, Taiwan and Korea. Thailand, they're hard because they're mainframe-based systems, they're separate from the rest of the bank. And certainly in the case of Hong Kong and Korea, these are big markets for us, lots of customers and we don't want to get it wrong. So we've got some investments that aren't immediately accretive but are very accretive long term in terms of building a strong foundation. But can we -- through a cycle, can we generate income growth that's substantially ahead of cost growth? Yes, we can.

So you mentioned 2 things that joined at one, you mentioned Mox, which is one of a number of investments that you've made that, to your last point, weren't necessarily accretive in the short term but you value will be in the long term. So how are you -- how is that manifesting itself there?

I mean Mox and Trust are the 2 digital banks that we built ourselves. We can look at 2 others where we're a minority shareholder in Toss Bank in Korea and LINE Bank in Taiwan, similar models, different partnerships, different markets, of course. But in each case, the -- obviously, in a 0 rate environment with a deposit product, you're not profitable. In a 0 rate environment with a meaningful credit product, you get towards profitability. And in a 5% rate environment, with a meaningful credit product, you're profitable. Obviously, you have to absorb the build of ECL in the early years, as long as you're growing, you have to absorb the ECL, which is the stage that we're in with Mox and Trust right now. And we're layering in other things, wealth management products, equity dealing, FX dealing, eventually cryptocurrencies, dealing if we're -- if -- as when we're allowed, et cetera. So these will be profitable banks, so will be positive, I think, very positive IRR investments. But they're relatively small and they'll be small for some time, where we would put a small amount of capital of our total capital into these things. But as exciting to me, as the profit that will come off these banks is, what we've learned from building them. I -- Ben Huang, my colleague who runs Asia, who many of you have met today or separately, I know -- I'm sure he's been talking with investors about this over the past day or so, a couple of days. The -- our bank, Standard Chartered Bank in Hong Kong and Standard Chartered Bank in Singapore is much better by virtue of having seen their cousin -- how do I put it, play the -- kick their b***. And that's -- I mean that kind of competition is really good. I mean there's lots of ideas. And of course, Mox and Trust only exist because of Standard Chartered Bank. Those licenses would not have been given to somebody who didn't have our pedigree in those 2 markets. And we wouldn't have the -- let me say, the second digital bank in Singapore, I think, came almost a year after Trust bank because we were able to drop in all the KYC and client infrastructure, the KYC compliance infrastructure that another digital bank would have to build from scratch. So a huge advantage to being part of Standard Chartered Bank is, you have the Standard Chartered Bank being able to see what it's like to build a bank off of a cloud-native platform. And in our case, we chose Thought Machine, which turned out to be absolutely prophetic. They didn't have any customers when we signed up with them. We -- as we largely built that bank together, Thought Machine is now very, very present and they're excellent partners. So that -- it's been a great, I think, learning experience all around. I think we're all better as a result and we'll make some money.

Now with 5 minutes on the clock, I've got more than 5 minutes of questions but I'll let [indiscernible] ask us a question. Yes, halfway down, please.

Bill, thanks very much for your comments. I'd like to draw you out a little on the question of who does take the pain of the current situation of both commercial real estate outside the biggest cities and particularly the overbuilding in apartments in, particularly secondary markets in China. You were quite clear. I thought that the major banks will be protected. Does that then extend to smaller and regional banks thinking back that the -- some of the provincial development banks in the '90s were not protected or -- and does it extend beyond to the real estate developer? Or do they even go protect the long-suffering consumer who has paid a lot in for an apartment that may never be completed?

Yes. Let me be clear. I don't think the banks are going to be protected. I think the banks will be protected from becoming insolvent. And that's, really the point I was making was this is not a financial crisis in the making. We've had a financial crisis in China in the '90s and it was -- and obviously, we had a financial crisis right here in 2008, devastating for economies and the human condition. I think China is keen to avoid that doom loop. That's said, look, we've taken the better part of the $1 billion of provisions. Now we have a nice healthy overlay. We feel very well provided. I think by observation, we're a lot better provided than our peer banks because we've got a deeper insight into how bad things are, maybe probably more, that we're just cautious. But -- so is there more pain for Standard Chartered? I never said we can take -- I never said we're done, right? That would be imprudent because the situation isn't materially improving. That said, I do feel very well provided going into this. Banks have not taken all the pain they're going to take broadly, have not taken all the pain they're going to take including in China, in my opinion. And of course, the developers themselves have been wiped out. There's been an enormous destruction of value. And some capital markets investors have been severely impacted as well, most obviously in the big names like Evergrande, like Country Garden, Shimao, where there was meaningful capital markets issuance. So that's a possibility of recovery but it's -- let's assume that, that money has gone. I do think consumers will be protected. So the stimulus measures that have come in have been very targeted at builders completing buildings for which units are presold. And I think that's part of the -- address the social challenge and prevent this credit cycle issue or this, in this case, probably policy-led real estate compression issue from becoming a social issue.

Now we got 2 minutes on the clock and nobody's asked about Bill's $2 billion of buybacks this the better part year, which is in the history of Standard Chartered, quite remarkable numbers. So I'm sure, as was envisioned you've established a capital return discipline and the markets rewarded you generously, your well-performing bank stock trading at low multiple, I'm sure isn't what you like and as any chief executive, it's a low number. How forward-looking can that discipline be then in the model that you're running for Standard Chartered because it's kind of -- it seems to be working right now.

Yes. We think the growth is reasonably well entrenched. I mean we're just in the right markets, in the right client segments with a really good set of product offerings. So we are, we're not fully invested. We are fully investing. So at this $1.9 billion, $2 billion of cash per annum for our bank, with really substantial investments in technology but also in our ventures' units and in fintech partners and the like. Of course, we've done nothing purely inorganic and because the investment opportunities internally are just so much more compelling. But we don't feel very constrained in terms of our ability to invest. And then we have surplus, which we're returning to shareholders. So if we were sitting in the boardroom struggling over whether we give the next [ 500 ] to shareholders or do that 18% RoTE acquisition or investment in whatever, I'd be wringing my hands but we're not. I mean we have the capital to invest in what we need to invest in. If it turns out that we've got some stupendous opportunity, then we'll go slower on the buybacks but we'll make the case for why we think it's stupendous because still at GBP 7.40 or wherever we are at the moment, we think that, that's a screaming buy -- our perspective. Of course, I can't forecast stock prices or suggest to you what the right stock price is. But from our perspective, that's a good buy.

With that, perfect. Bill, thank you very much for joining us. Good afternoon.