Results Presentation 27 February 2020 Contents Bill Winters 2 - PowerPoint PPT Presentation

FY’19 and 4Q’19 Results Presentation 27 February 2020

Contents Bill Winters 2 Group Chief Executive and 19 Andy Halford 5 Group Chief Financial Officer Appendix 29 Macroeconomic outlook, novel coronavirus responses and interest rate sensitivity 30 Fixed income information 34 Sustainability 44 Definitions and important notice 52 1

Bill Winters Group Chief Executive 2

We delivered on our strategic and financial commitments in 2019 We passed several important strategic milestones, generated profitable growth and returned surplus capital Network 1 and Affluent 2 activities continue to deliver premium growth and returns • • Massive push on digitisation and innovation is starting to pay off • Encouraging progress optimising performance in four of our largest markets Strategic Priorities • Productivity metrics continue to improve across the board • First buy-back completed (second due shortly), and agreement to sell Permata • Taking bold and ambitious actions to lead the way on global sustainability issues • Principal measure return on tangible equity improved 130bps to 6.4% … Financial • … driven by continued cost, risk and capital discipline Framework • Grew underlying profit before tax 8%, earnings per share 23% and dividend 29% • Underlying momentum in 4Q’19 continued in first weeks of 2020 1. Network activities: corporate and institutional banking services offered to clients utilising our unique network in 59 markets across Asia, Africa and the Middle East 2. Affluent activities: personal banking services offered to affluent and emerging affluent customers 3

We are now fitter - more able to both adapt to challenges and seize opportunities We are better equipped to lead in a rapidly evolving world • We are enabling client-centric ways of working • We are deploying our diverse talent into the areas of biggest opportunity Building a more skilled • We are creating an inclusive culture that uses our diversity to best serve our clients and productive and communities workforce • We are building a future-ready workforce, with strong digital and people leadership skills supported by health and wellbeing initiatives • We are supporting clients to transition into lower carbon technologies Reducing climate risk • We are working with clients in higher CO 2 industries to reduce emissions is the opportunity of • We are leading partnerships with other banks to align lending with the Paris Agreement our time • We are working with partners to better understand the mechanics of risk transformation 4

Andy Halford Group Chief Financial Officer 5

We made good progress financially in FY’19 Financial framework Strategic priorities FY’18 FY’19 ($bn) YoY 1 Ccy 2 • Operating income 15.0 15.3 2% 4% Income up 2%; 4% at constant currency Operating expenses 4 (10.1) (10.1) 1% (1)% ▪ Up 5% at constant currency and excluding DVA 5 … UK bank levy (0.3) (0.3) (7)% ▪ … with 4Q’19 income up 4% on the same basis Pre-provision operating profit 4.5 4.9 8% 10% Operating expenses 4 1% lower; up 1% at constant currency • Credit impairment (0.7) (0.9) (22)% ▪ Strong operating leverage with 3% positive jaws Other impairment (0.1) (0.0) 74% • Credit costs remain at historically low level Profit from associates 0.2 0.2 5% Underlying profit before tax 3.9 4.2 8% 10% • Previously disclosed US/UK investigations resolved in April Provision for regulatory matters (0.9) (0.2) 75% Risk-weighted assets 3 growth ≈ income growth 6 • Restructuring and other items (0.4) (0.2) 43% • EPS up 23%, driven in part by underlying tax rate down 5.3% Statutory profit before tax 2.5 3.7 46% 49% • Final ordinary dividend of 20c; full-year up 6c / 29% Risk-weighted assets 3 258 264 2% • CET1 remains strong, towards top of 13-14% target range Underlying EPS (cents) 61.4 75.7 23% ▪ New $0.5bn buy- back will reduce CET1 by ~20bps in 1Q’20 Statutory EPS (cents) 18.7 57.0 205% ▪ Potential for further capital return on Permata sale 7 Dividend per share (cents) 21.0 27.0 29% CET1 ratio (%) 14.2 13.8 • (39)bps Return on tangible equity up 130bps to 6.4% Underlying RoTE (%) 5.1 6.4 130bps 1. YoY: year-on-year variance is better/(worse) other than for risk-weighted assets (RWA) and common equity Tier 1 5. DVA: the Group calculates Debit Valuation Adjustments on its derivative (CET1), which is increase/(decrease) liabilities to reflect changes in its own credit standing 6 2. Ccy: year-on-year variance on a constant currency basis 6. On a reported basis Risk- weighted assets (RWA) are a measure of the Group’s assets adjusted for their associated risks 3. 7. Subject to regulatory approval 4. Operating expenses excluding UK bank levy

Our primary performance measure RoTE continued to improve Financial framework Strategic priorities Underlying return on tangible equity (RoTE) increased 130bps driven by strong positive jaws and lower equity Underlying RoTE 0.2% 6.4% 0.5% 0.0% 0.1% 0.7% (0.1%) 5.1% (0.2%) FY’18 FY’19 Net interest Fees and Expenses Impairment Tax and UK RWA Equity income other income bank levy 7

FY’19 income was up 4% at constant currency; up 5% ex -DVA 1 Financial framework Strategic priorities Clear underlying business momentum: strong Financial Markets and Transaction Banking partially offset by Treasury Income ($m) +5% 56 103 (25) 194 15,271 195 (293) 538 14,968 (288) 14,503 (177) 22% 5% 5% 6% 8% (2)% (26)% FY’18 DVA 1 FY’18 FY’19 Currency Financial Transaction Retail Wealth Lending & Corporate Treasury Finance 2 impact constant Markets Banking Products Management Portfolio & Other currency adj ex-DVA 1 Management for DVA 1 1. DVA: the Group calculates Debit Valuation Adjustments on its derivative liabilities to reflect changes in its own credit standing 2. Prior year Corporate Finance income included $67m of ship operating lease business income which was reclassed to restructuring, excluding the impact of this decision 8 Corporate Finance FY’19 income was up 2% YoY on a reported basis

4Q’19 income was up 1% at constant currency; up 4% ex -DVA 1 Financial framework Strategic priorities Similar trends in 4Q with continued strength in Financial Markets and good Wealth Management performance Income ($m) +4% 22 43 (18) 72 (36) 177 3,597 3,595 (110) (30) 3,447 (118) (2)% 33% 21% 5% 12% (10)% (43)% 4Q’18 4Q’18 4Q’19 Currency DVA 1 Financial Wealth Retail Lending & Transaction Corporate Treasury impact constant Markets Management Products Portfolio Banking Finance 2 & Other currency adj ex-DVA 1 Management for DVA 1 1. DVA: the Group calculates Debit Valuation Adjustments on its derivative liabilities to reflect changes in its own credit standing 2. Prior year Corporate Finance income included $17m of ship operating lease business income which was reclassed to restructuring 9

All client segments grew, generated positive jaws and improved RoTE 1 in FY’19 Financial framework Strategic priorities Corporate businesses grew profits strongly; Retail Banking continues to be the highest returning client segment FY’19 vs FY’18 ( inc/(dec)) YoY 2 FY’19 5% Corporate & Income $7.2bn +6% Jaws Institutional Banking (1)% Expenses $4.4bn Profit before tax $2.3bn 12% RoTE 8.5% RWA 3 $132bn +1.1%pt 2% 3% Income $5.2bn Retail Banking +3% Jaws 0% Expenses $3.8bn RoTE 12.6% 5% Profit before tax $1.1bn +0.8%pt 4% RWA 3 $44bn Commercial Banking 6% Income $1.5bn +8% Jaws Expenses $0.9bn (2)% RoTE 7.3% Profit before tax $0.4bn 100% +3.9%pt RWA 3 $28bn (8)% Private Banking Income $0.6bn 12% Expenses $0.5bn (3)% RoTE 7.3% +15% Jaws Profit before tax $0.1bn nm +8.3%pt RWA 3 $6bn 9% 1. Return on tangible equity: Group average tangible equity is allocated to client segments based on average RWA utilised and the global level underlying effective tax rate is applied uniformly 10 YoY: Year-on- year (FY’19 vs FY’18) % variance is increase/(decrease) 2. 3. RWA: risk-weighted assets

Broad-based improvement in operating profit in all regions Financial framework Strategic priorities Strong profit growth in ASA and AME and resilient performance in GCNA; positive jaws in all regions FY’19 FY’19 vs FY’18 (inc/(dec)) YoY 1 0% Income $6.2bn +1% Jaws (1)% Greater China & North Expenses $3.8bn Asia 3% Profit before tax $2.4bn 6% RWA 2 $86bn 6% Income $4.2bn +7% Jaws (1)% Expenses $2.7bn ASEAN & South Asia Profit before tax $1.0bn 6% RWA 2 $89bn 1% (2)% Income $2.6bn +2% Jaws (4)% Expenses $1.7bn Africa & Middle East 29% Profit before tax $0.7bn RWA 2 $49bn (7)% 3% Income $1.7bn +2% Jaws 1% Expenses $1.5bn Europe & Americas 2% Profit before tax $0.2bn 8% RWA 2 $44bn YoY: year-on- year (FY’19 vs FY’18) % variance is increase/(decrease) 1. 2. RWA: risk-weighted assets 11