Standard Chartered PLC (STAN) Earnings Call Transcript & Summary

[Presentation] Good morning and good afternoon, everyone. I'm delighted to welcome you to today's session, where we'll dive deep into the unique opportunity sustainability presents for our bank. Sustainability is at the core of our bank strategy. It's not often that one gets the chance to do the right thing in the eyes of all of our key stakeholders while also building a large, fast-growing and profitable business that plays to our core strengths. But this is it. Now of course, there's a small but vocal minority who thinks we should be doing more, parentetically earning less. We listen carefully to their challenge, but conclude that we are fundamentally in the right place, supporting a just transition that will allow us to make the required and sustainable contribution to net zero by 2050. I'm joined today by Marisa Drew, our Chief Sustainability Officer; and Ben Daly, who heads up transition finance on her team. From the CCIB business, we're joined by Alper Kilic, our Global Head of Project and Export Finance; Surya Bagchi, our Global Head of Financing Solutions; and Pradeep Nair, our Global Head of Structured Solutions and Development. We will take you through our sustainability strategy. Our progress to date and demonstrate how we are embedding sustainability across the organization. We'll also show how our CCIB business, in particular, is now building a deep and scalable sustainable finance franchise, supporting our clients on their transition journeys. Let me start by setting some overall context. Climate change is one of the greatest challenges facing the world today with the emerging and developing markets in which we operate, facing some of the most significant risks. At current rates, we are on for a 3.5 degree temperature increase by the end of the century. A step change in financing emerging and developing markets can accelerate the world's efforts to tackle the climate emergency. It's here that there is the greatest potential for new climate-friendly business models and low-carbon technologies to be deployed at scale. However, the availability of finance to help transition is not what it needs to be. Just 60% of the financing needed to achieve the sustainable development goals in low and middle-income countries is being met. In Africa, this is as low as 10%. COVID-19 has further widened this financing gap. We know without sufficient investment into the sustainable development and climate adaptation, populations in developing countries could be $80 trillion poor by 2060. It's a reminder that pushing ahead towards net zero is about ensuring growth and prosperity. The group's footprint with access to deep capital markets but also doing business in many emerging economies means we sit at the intersection of capital providers and those who need it. For many of our markets and our clients getting to net zero will be a long and complex task. The transition must be on a just basis, and we should not apologize for that. However, for as long as emerging markets growth remains heavily dependent on carbon-intensive activities, emissions in many of these markets are likely to continue increasing. So the sooner we can channel climate finance to them and cultivate more sustainable growth, the faster they can transition to net zero. The sustainable finance market isn't operating at the scale that it should. But the good news is that initiatives supported by so many industry participants, both public and private, are beginning to take effect, and we are in the right place to contribute. Just to mention a few examples. The Glasgow Financial Alliance for Net Zero, GFANZ, of which we are a member and of which I'm a part of the leaders group, recently launched partnerships with the World Bank and the African Development Bank to support climate finance action. Then there are the just energy transition partnerships or JETPs. These are designed to support a responsible transition away from reliance on coal as the primary source of energy in certain high-growth developing markets such as Vietnam, Indonesia and South Africa. These are all footprint markets for us and in Indonesia and Vietnam, we are leading the negotiations with the governments. Marisa will cover our work on carbon markets in more depth, and I'm delighted that we continue to play a prominent role in developing a credible and robust carbon market given the scale of the opportunity at hand here if we can get this right. The impact of regulation in this space is only set to increase in prominence as we continue to see a proliferation of green and sustainable taxonomies that will shape the way that we conduct our business going forward. Indeed, some such as the U.S. Inflation Reduction Act have the potential to act as a global catalyst, and we are encouraged by green growth agendas led by key markets such as Singapore and Hong Kong and Asia. While the task at hand is immense, I'm optimistic about the world's ability to rise to the occasion and of the role we can play within it. Now focusing squarely on Standard Chartered. Sustainability is central to the group's strategy, both as an imperative and a commercial opportunity. We began our sustainability journey in earnest before 2019 when we formed our commercially focused sustainable finance team. In February 2021, we made sustainability one of the 4 strategic priorities of the group. And in doing so, committed to build a $1 billion sustainable finance franchise. And in July 2022, we further confirmed our commitment to sustainability by appointing Marisa as our inaugural Chief Sustainability Officer. I'm pleased to say that sustainability truly is in our DNA, and I'm proud of the efforts of all of our colleagues who have passionately taken part in driving this agenda to have gotten us this far. We know we can make a difference in the world and do so profitably with sustainability core to informing our strategic direction. Marisa has refreshed our sustainability strategy and priorities, and I'm pleased to hand over to her now to share these details with you. I'll come back later to conclude the session followed by Q&A.

Thank you, Bill. Delighted to share our sustainability vision and plans with you as I see it from the CSO lens. I can only reiterate the tremendous opportunity in front of us in sustainability. As we think about the greatest transition in history, and the quantum of financing required to meet this challenge, we have every potential to be the bank of choice for our clients in our core markets and to deliver an ever greater proportion of the bank's income ahead, and that potential is already coming through. From virtually nothing 4 years ago, our sustainable finance franchise generated over USD 0.5 billion or about 5% of our total CCIV income in 2022. And I'm pleased to say that based on this year's trajectory, we are well on our way to our commitment to deliver $1 billion in income by 2025. To do that, we are hard at work investing in the people, systems and infrastructure to support the 2025 target and beyond. When we think about how rapidly the space is moving, it's important to note that the book of sustainable finance has not yet been written, particularly in our markets. To meet this challenge that Bill posed, we will need to spend the majority of our attention doing more of what has proven and working well. accelerating the financing of wind, solar, EVs and the like, but we also very much need to apply a concerted innovation mindset to develop new financial tools, structures and technologies to unlock the areas where capital is not flowing at scale or not at all. And this is something that we are really good at Standard Chartered. I cannot emphasize how important this is to our developing economies. They need customized solutions that speak to their needs, their ambitions and challenges, not something that the West imposes on the Global South. And I generally believe that this is something that Standard Chartered with our 160-year history operating these markets is uniquely positioned to deliver. Now let me share a few words on our progress since my arrival. I've just passed my first year mark at the bank. And as I reflect on my experience, it started with an excellent foundation, a well-progressed sustainability ambition, full commitment from the Board and the management team and an extraordinary level of enthusiasm and engagement. I spent my first 6 months establishing my organization, bringing together 3 pre-existing teams, filling in key positions, evolving our sustainability governance infrastructure and refining our strategy and target operating model, all while making sure we did not miss delivering on our key financial and other internal and external KPIs. In terms of operating model, I think of my CSO organization as a change function that acts as a center of excellence to partner across the bank internally to drive our transformational agenda by facilitating the embedding of sustainability across all of our business lines and functions, and then externally with clients and other stakeholders who are mission aligned to drive change. I'm pleased to say that we now have a multidisciplinary team with a physical presence in all of our core regional hubs with a deep bench of expertise across the key disciplines ranging from transition finance and advisory to carbon accounting, to environmental and social risk management. I'm also very fortunate to have leaders on my team who are recognized as experts in their field from new economy technologies in carbon markets to biodiversity. And in a short period of time, we have established a high-performance culture with a team that is driven by outcomes and a common purpose and one that is geared up to deliver on our ambitious strategic plan. The 4 key objectives driving my strategic agenda for the intermediate term are: number 1, to deliver on our net zero commitments; 2, to scale sustainable finance; 3, to leverage 4 thematic innovation hubs, driving ecosystem development and future income and finally, 4, to further embed sustainability across the bank. Let's dive into each of these. Delivery of net zero. Why is the net zero commitment so important for a bank like ours? Well, in some respects, you can point to net zero as a starting point for where our sustainability journey really begins. We were one of the first international banks to set a target of net zero financed emissions by 2050. This target setting forced the bank to think about its transformation in a rigorous way, creating sectoral emissions budgets and a 2030 timetable to start the clock. Our financed emissions, which effectively are the emissions of our clients, account for over 96% of our carbon footprint. Therefore, our clients' readiness directly impacts our ability to achieve our commitment. As a result, helping our clients transition forms a core part of our strategy, and we can apply the learnings from our own journey to help our clients through theirs. By February 2024, I'm pleased to say that we will have disclosed targets for 11 out of the 12 net zero banking alliance aligned high-carbon-emitting sectors with the final target for agriculture to be completed by the end of next year. We believe that once completed, we will be one of only a handful of international banks to have done so. Notwithstanding the challenges presented by roughly 1/3 of our footprint markets, not having a 2050 commitment. One of the most debated sectors is oil and gas, for which we strengthened our emissions reduction approach earlier this year by moving from a revenue intensity metric to a science-based absolute target by 2030 with the obligation to meet the target fully owned by our oil and gas industry team. In addition to our net zero targets, we also have our 7 position statements transparently setting out what we will and won't do, which we will refresh every 2 years with the next update coming in quarter 1, 2024. Now that the sector target-setting process is nearing completion, we are moving to operationalize and embed the targets within our business. This is how we turn our net zero commitment into a catalyst for scaling sustainable finance. We're making a meaningful investment to build a single source robust data architecture to facilitate the bank's engagement with clients and support the significantly increasing regulatory demands for sustainability disclosures. This includes automated tools that will support fact-based decisioning and real-time analysis of the impact of a transaction on our carbon footprint. This paired with the fact that we have integrated our interim targets into our credit risk appetite and capital allocation processes will allow us to track, monitor and continually assess progress against our targets. We're also excited to be piling in CSO, the bank's first generative AI use case. Of course, under strict conditions, but it will auto populate climate risk questionnaire responses to drive efficiency and scale. As we aim to scale sustainable finance, we aspire to support our clients throughout their sustainability journeys by applying our expertise to where it's most useful for clients along the way. Many clients in our markets are at the early phases of evaluating their exposure to climate change or how they will transition their business operations. They are seeking advice on best practice, how to establish their frameworks, and how to raise the capital needed to fund their transition. And when we are able to meet our clients' transition needs, we experience a real flywheel effect taking hold. Let me give you an example of how this works in practice. In collaboration with our U.K. regulator, in 2022, we agreed to establish a team and CSO to conduct climate risk assessments or CRAs on our lending book. This began purely as a risk management exercise with over 2,000 completed in 2022 and a further 2,000 expected for this year. We could have simply stopped at asking clients to fill out a form to identify their weaknesses. But instead, with the solutions provider had on, our team created the ability to use the outputs as an engagement opportunity to help advise clients on how to address their red flags. This has led to advisory assignments and in turn to financing opportunities to remediate. And then to complete the wheel as we receive more information through our mandates and financings, this also feeds the flywheel by providing back to us high-quality data to inform our own net zero emissions and risk profiles. And now some highlights on our financial performance. The investments that we have made to date are paying off in our results. We have publicly committed in 2021 to mobilize $300 billion of sustainable finance by 2030. And based on a simple straight-line assumption of $30 billion per year, we are well on track to achieve this. Now turning to our sustainable finance income. This is up a healthy 36% in the first half of 2023, with strong performances across all of our regions and an over 50% growth rate in China, albeit from a small base. As we embed sustainable finance across the organization, there are no internal green or social subsidies for these transactions. The same cost of capital, RWA charge and return expectations apply to sustainable finance with limited exceptions. I'm pleased to say that the return on RWA has been at or better than that of CCIB. And what is comforting to me, just as with the mobilization figure is the increasing diversification in our product mix, which helps us to mitigate market volatility. This is well demonstrated in the first half of 2023, with subdued momentum in credit and macro trading products in part due to the interest rate environment, offset by the significant growth in transaction banking across both trade and cash growing at over 200% and 450%, respectively. As evidenced in the mobilization and income breakdowns, we're just scratching the surface in transaction banking and our retail and wealth businesses, but early demand signals are strong and year-on-year growth in trade and cash corroborate their growth potential. We've also seen double-digit growth in assets and liabilities. More than 90% of our sustainable assets are located in our markets across Asia, Africa and the Middle East, where we track through our detailed impact report, the environmental and social impact of how our assets are being deployed. And now turning to leveraging our 4 innovation hubs. Whilst we've covered our recent financial performance and outlook, I'm very keen that we mine the potential for future returns outside of our core range of traditional products and services. I believe that by being deliberate in demonstrating leadership to advance the ecosystem in emerging thematic areas, we will be well positioned to take advantage of the significant and differentiated revenue potential that will result from their maturation. The hubs are each run by senior leaders in my team but they are transversal, inviting colleagues to whiteboard in places where their expertise can add value and cross-functional synergies. The hubs are centered around emerging sectors of sustainability that are nascent but ripe for scale and where the bank has legitimacy or a core competency and are particularly suited to our clients in our markets. Though early days, with the hubs only having been established in early 2023, I'm very excited to see the level of tangible activity already coming this early in their tenure. First, to carbon markets. This is a space where Standard Chartered has a rich legacy. We believe that high integrity carbon markets can create powerful incentives for real economy decarbonization, yet the market today is fragmented and needs leadership and confidence. Amongst leadership roles, we serve on the Board of the Integrity Council of the voluntary carbon markets and have advised on the establishment of transparent carbon market trading platforms across our network. But with an eye toward converting ecosystem development into revenue, we've completed our first voluntary carbon credit trades for clients in MENA and Hong Kong, initiating access to strategic sources of future carbon revenues. Our adaptation economy report highlighted a several hundred billion dollar adaptation finance opportunity in our core emerging markets. To that end, we are collaborating with the UN and others to develop a global adaptation framework and practitioners guide to facilitate private capital flows. And I'm delighted to have executed our first formerly labeled adaptation finance transaction partnering with a global provider of parametric insurance to offer protection against renewable energy infrastructure disruption. And now regarding biodiversity. Given the disproportionate reliance on biodiversity for industries that power so many of the economies in our markets, such as fishing and agriculture, the protection of biodiversity is a natural place for us to focus. While development at pace, conservation financing and standardized methodologies for biodiversity risk assessments are still in their formative stages, regulators and policymakers are increasingly turning their attention to this topic, including the Task Force on Nature related financial disclosure, which was launched in September of this year. Since the creation of our biodiversity innovation hub, in line with the Corporate Sustainability Reporting directive, we've completed a detailed materiality assessment to support the embedding of biodiversity considerations into our business strategy and create the foundation for future disclosures around how we are mitigating biodiversity risk. We're also pursuing a number of very exciting landmark conservation financing transactions that will allow us to translate biodiversity risk into opportunity. Our fourth hub, blended finance recognizes our unique ability to be a connector in our markets of different forms of capital to be applied to places where scaling is critical. As Bill mentioned, our work on the JETPs in Indonesia and Vietnam on their countrywide decarbonization plans will ultimately result in hundreds of renewable and grid infrastructure projects. And through this hub, we're also working with the monetary authority of Singapore to explore the creation of carbon credits to help support early coal decommissioning, a critical component in the JETP and other countries' pathways to a greener future. And finally, my last strategic area of focus on embedding. This gets to the heart of ensuring that we can deliver on our growth agenda and achieve our ambitious targets while doing so in a compliant and robust way. We cannot deliver the $1 billion income target just within my team and CSO and we do not aim to build a bank within a bank. The key to allow us to scale is to ultimately embed sustainability across all of our businesses and functions so that sustainability is the core of how they operate. My organization acts as the catalyst for this embedding from aligning incentives via a balanced scorecard to our enhanced governance infrastructure to our best practice sharing sustainability forum to creating sustainability products and services. We seek to touch all the areas of the bank at front to back. Two specific examples to touch on. To date, we have delivered a suite of 42 innovative sustainability products and variants underpinned by market-leading robust frameworks that ensure that anything we label green or sustainable or indeed transition is transparent to all of our stakeholders and presents a strong defense against greenwashing risk. Secondly, we have a content-rich bespoke training agenda to uplift the sustainability knowledge and engagement across our bank, which has included a highly interactive program for our country CEOs to help them embed sustainability and transition this into their corporate plans, as well as a relationship manager course designed to activate client engagement across the front line. I recognize that I've given you a lot of content in my section, so I will leave you with a corroboration of how I know we're on the right track. Why? Because externally, I see our applied sustainability expertise, creating a differentiated client relationship and wallet share impact with our most important clients and because internally, I see our product owners viewing sustainability not as a sideline to their core offering, but is fully integrated as part of their BAU. Here to make the case in both instances, I am pleased to be joined by the Head of our transition finance team. Then to be followed by the product heads and project finance, financing solutions and trade finance. So Ben, over to you.

Thank you, Marisa. As you know, we published net zero targets for our high-emitting sectors. Our focus is now on supporting our clients deliver on their decarbonization plans whilst capturing the maximum banking wallet associated with the energy transition. So how are we doing this? As Marisa has mentioned, our CSO function has a wide range of capabilities and products ready to support our clients. One area of investment has been to develop a transition finance team. This team has experienced the next wave of decarbonization solutions our clients are now investing in. For example, the hydrogen and battery value chains as well as carbon capture and storage and low-carbon metals. We've largely hired from industry and now have a diverse group of 16 decarbonization specialists who sit within our CSO and coverage teams. Our strategy is to build the bank's financing experience by supporting the early adopters in the U.S. and Europe and then leveraging this knowledge in our core markets across Asia, Africa and the Middle East. And in doing so, drive more low-carbon assets onto our balance sheet. Our first deliverable has been to embed the team across the CCIB organization and with our clients. And I'm very pleased to see that we're making good progress on both counts. To share a client example, one of the banks most longstanding clients is a large natural resource company. Our relationship has historically been focused on supporting their traditional business. We've been spending a lot of time with this client explaining our targets and expectations but also introducing our expanded decarbonization capabilities. This engagement has led to a multitude of recent new business line wins, including renewable power advisory, an anti-flaring project, a significant battery storage financing and a low-carbon shipping solution. Our second deliverable has been to support the bank to build a strong pipeline of transition deals. To give some color on our progress. The first wave of carbon capture and storage projects are heading towards final investment decision. Here, we're supporting both oil and gas and financial sponsor clients raise debt for projects. Our Chinese, Korean and European businesses mean we're also very active across the battery supply chain. In the low and no carbon fuel space, we're working on our first renewable natural gas advisory, and we're tracking sustainable aviation fuel opportunities in both Asia and Europe. We're also working hard to accelerate economic low-carbon steel solutions, and we're taking a leading role in steel decarbonization industry groups. Away from the project finance and M&A space, we're also leveraging our extensive trade network. We're targeting flows of critical metals like lithium and cobalt as well as circular economy materials. We recently closed a trade facility for a Vietnamese steel manufacturer to support their scrap steel sourcing. Pradeep will share more information on this later. To wrap up, whilst having a lot of large industrial type clients may seem like a challenge from a net zero perspective. It is also these very clients that have identified the transition as an opportunity and developing many of the scale projects we are seeing. I'm encouraged that projects are continuing to develop in the low-carbon space even with the challenges of high interest rates and the broader energy security backdrop. The transition requires material CapEx and often includes new technology and complex delivery schedules. Our clients are, therefore, looking for structured approaches to financing with a strong focus on risk sharing and mitigation, and this leads to higher value banking wallets. We're building a differentiated proposition to capture the growing opportunities from the energy transition for our sustainable finance franchise, whilst also supporting the group's net zero commitments. I'll now pass on to Alper, who will talk about how we are working with clients in building sustainable infrastructure.

Thanks, Ben. The requirement for sustainable infrastructure is large and growing. And we are seeing this manifest itself in the changing investment plans of our clients across the regions and sectors. According to a UN study, there's a $4 trillion annual investment gap that developing countries face as they work to achieve the sustainable development goals by 2030. About $1.2 trillion of this gap is in renewable energy investments. While we have observed that sustainable infrastructure and renewables volumes have been steadily increasing, the majority of these investments have been made in the developed markets. However, we expect stronger growth in emerging markets in the next 5 years. This surge in demand in emerging markets is anticipated because across our footprints in Asia, Africa and the Middle East, governments are issuing strong statements to reduce the investment gaps in infrastructure and to set out their own commitments towards net zero emissions. Also, there's a much stronger effort from the multilateral banks and development finance institutions to support these targets. So why do we think we can create differentiation for our clients in this space? Firstly, as Bill mentioned, we are uniquely positioned as a bridge between the providers of capital in developed markets and the demand for capital in emerging markets. Our client profile exemplifies this positioning. While we have been proudly supporting our clients in our emerging markets footprint in over 160 years, we also have very strong client and institutional relationships with multinational corporations, large financial institutions and governments in the developed markets. We are also recognized as an industry leader and have teams with strong skill sets and experience to advise and finance our clients across the wide range of businesses in credit spectrum. Acting as the nexus between different parties in blended finance is our sweet spot. Our team is well recognized at pulling together complicated and unique financing structures. This is necessary to establish the right risk and return profile in order to execute deals in many of the markets where we operate. We have great relationships with all major multilateral development banks, development finance institutions as well as export credit agencies. Different sources of capital and support provided by these agencies are among the most critical enablers for the bankability of long-term financings. Since 2020, almost 70% of sustainable finance transactions we finance are in Asia, Africa and Middle East. We are also proud to have supported a number of impactful transactions in the developed markets. I would like to cover a few transactions which have stood out due to their unique characteristics. In Angola, we facilitate the financing of the construction of hospitals across several regions. In Uganda, we structured a solution for off-grid solar water pumping stations providing sustainable water supply to thousands of farmers. Then in Saudi Arabia, we supported our key clients to finance the largest commercial scale green hydrogen production facility in the world. With initial production of up to 600 tons of green hydrogen per day, saving about 5 million tons of carbon dioxide annually. We also facilitated an innovative floating solar transaction in Indonesia and we are proud to be the green loan coordinator. Upon completion, the project will power approximately 50,000 homes. And whilst we excel in emerging markets, we have also been active in the developed markets, predominantly supporting our clients, in renewable energy and energy transition in the West. We just helped finance 2 offshore wind projects in France. Upon completion, these projects will provide green electricity to 1.6 million households. In conclusion, the world is shifting to sustainable infrastructure, and there is no turning back. The public and private sector actors have a huge role to play in supporting the growth targets in sustainable infrastructure. and we are uniquely positioned to utilize our strong relationships and industry experience to help drive this agenda. I will now hand over to Surya, who will cover the opportunity around the sustainable loan markets.

Thanks, Alper. Our team focuses on green end of use proceeds loans, sustainability-linked loans or SLLs, social and pure-playgreen loans. There's been an exponential global growth in sustainable loans, particularly in 2021 and 2022. In the first 9 months of 2023, however, while global issuance of sustainable loans has been substantial at over $400 billion, this does represent a 28% drop year-on-year. This drop is a result of both lower -- new loan issuances due to high interest rates as well as lower SLL issuances over concerns on the quality of key performance indicator or KPI linkages. The sharpest decline in the SLL issuances is from the West. However, due to our unique footprint, we are less dependent on SLLs in the West and able to rely on the steady growth in opportunities from Asia, Africa and the Middle East. Let me briefly touch upon where we see opportunities in these markets. In South Asia, for microfinance, aimed at improving social well-being, such as financial literacy and financial inclusion for women. In ASEAN and Greater China, for eco-friendly clean industries such as renewable energy and EV supply chain. In the Middle East, there is a drive for economic transformation away from oil dependency. And finally, in Africa for social projects and climate mitigation. We have stretching ambitions in this space while leveraging our strict standards of governance to position ourselves as the bank of choice. We apply experiences from the early successes and challenges from the West as we help our clients in Asia, Africa and Middle East navigate their participation in these markets. We are partnering with all our clients to advise them in granular detail to plan their sustainability journey and commitments. We take a tailored approach in advising and structuring sustainable finance opportunities that work in sync with their long-term strategic business transformation ambitions. In driving growth, we are, and we will continue to be agnostic across SLLs, green user proceeds, social and pure-player loans. In financing solutions, we have executed over 300 sustainable finance transactions with strong growth in Asia, Africa and the Middle East. More than half the number of transactions now come from these regions up from only 30% in 2021. I will briefly touch on a few landmark transactions in 2023 that demonstrate the differentiation that I am highlighting. Safaricom is a leading telecom client in Kenya. We arranged a KES 15 billion in or $100 million SLL, where the plant is committed to reduce emissions to achieve their net zero targets, gender diversity as well as social equality. In the Middle East, we advised on a headline LEED Platinum neighborhood development project. In China, we financed a leading city gas distribution company on a loan that supports their green projects in renewable energy and clean transportation sectors. Finally, as an example of a social loan, which is very close to my heart, we led a $200 million syndicated loan to Credit Grameen, the largest microfinance institution in India. The proceeds of this loan will benefit millions of customers of Credit Grameen, who are mostly women in rural areas. They are using this financing to generate employment opportunities to lift their families from poverty. In summary, our footprint provides opportunities for high quality and impactful growth across the full financing solutions product suite. Our aim is to consistently deliver on this across our network and lead the evolution. We differentiate ourselves by applying a rigorous approach for sustainable products and driving impact. Lastly, our unique network across the East and West allows us to be the connector of experience from the West into our footprints in Asia, Middle East and Africa. And with that, I will hand over to Pradeep.

Thanks, Surya. With international trade weighing 56% of the global GDP, trade finance has an enormous opportunity in making global supply chain activities more sustainable. The early indications we have had so far are that our clients are absolutely intent on making the transition. I quickly reference a piece of research that we published in 2021. It is called carbon dated, and we looked extensively at the supply chains of suppliers of global MNCs, many of whom have committed to a net zero transition. The study found that the supply chain emissions account for an average of 73% of MNCs total emissions. More than 2/3 of MNCs said tackling supply chain is the first step in their transition with many companies planning to cut suppliers for failing to curb emissions. So what have we done so far? And what sets us apart from others? Our sustainable trade finance proposition, which we introduced in 2021 is aimed at helping companies build more resilient business models, including supply chains and making global trade more in closer. This helps our clients and sales team to identify the sustainable business practices of our clients or the lack thereof. This enables origination of client opportunities in a simple manner and at scale. This is aligned to external standards like the loan market associations, green, social and sustainability linked loan standards, incorporates green washing controls at a client deal and at a transaction level. This ensures our clients and we are comfortable in the outcomes. These processes are designed to prescreen most of the checks and enable transaction processing on scale with similar turnaround times as that of a regular transaction. We have a comprehensive suite of sustainable products spanning 12 variants, which is complementary with our traditional product suite. We have also introduced sustainable CASA as a proposition, which enables clients to use their liquidity to be referenced against our sustainable assets. The very nature of trade means there are multiple counterparties and financial institutions. We cannot build a sustainable trade proposition without working with other banks NFIs. To this end, we introduced FI proposition in sustainable letter of credit discounting in 2022 and a sustainable FI trade loan in the third quarter of this year. The sustainable trade loan provides FIs with liquidity to support trade flows associated with clean technology projects, accelerating the progress of their clients in their sustainability agenda. We have also innovated with tech-based solutions like deep tier supply chain finance with our fintech partner linked lodges in China. This brings financing to the underbanked sector. As part of this collaboration, just a few weeks ago, we worked with an ESG rating agency to integrate suppliers ratings to extend sustainability-linked finance into supply chain finance structures. We are a thought leader in this space and intend to continue advancing work with all stakeholders to have an aligned approach to provide sustainable trade finance and deploy at scale across the globe. Taken together, in a relatively short span of time, our efforts have led us to executing around 4,700 transactions across many industries and reaching about a similar number of clients in 37 markets. I will briefly touch on 2 client examples. We led a EUR 600 million green syndicated invoice finance program for Polestar EV, who procures vehicles manufactured by Geely in China. This was aligned with EU Taxonomy's substantial contributing criteria. For every 20,000 cars sold, this solution helps save an estimated 2,150 kilograms of carbon dioxide per kilometer annually. We supported Tung Ho Steel in Vietnam with import financing for procurement of scrap steel. By using scrap steel and employing electric arc furnaces over traditional blast forms, Tung Ho Steel has significantly reduced its energy consumption and estimates. It has seen a remarkable 75% reduction in carbon dioxide emissions. In conclusion, I hope I have given you a flavor of what we are doing in our transaction banking business. Sustainable trade is a large opportunity, and our proposition is differentiated. We are not only doing the right thing, which we fundamentally believe in but we are creating an infrastructure to enable scale and develop a commercially viable trade franchise. I will now hand it to Bill for his concluding remarks.

Thank you, Pradeep. As you can tell by what you have just heard, there's a lot going on. So just to recap, I want to leave you with a few messages. Whilst the threat of climate change is universal, the impact we can make in emerging markets is the greatest and underscores the need for a just transition. As a leading global bank, we believe finance can play a significant role in addressing these challenges, and we are all well positioned to capitalize on opportunities and in doing the right thing to generate profits. We are a thought leader in this space, and we will continue to be. We can generate decent returns for our shareholders and the planet if we play the part that we very naturally play given our capabilities, and we look forward to keeping you posted on our progress. Thank you for your time, and I'll now hand back to the operator so that the team can take your questions.