Our goal is to materially improve returns to our shareholders over time while maintaining a

strong capital ratio

Turning to our provisions for credit losses under IFRS9 on slide 17. IFRS9 was introduced in
January 2018 for European banks, and has three stages of classifying loans. Broadly speaking,
stages one and two reflect the risk profile of performing assets, also factoring in the macro
economic outlook. While stage three reflects our lifetime loss expectations on defaulted assets.
For 2018, our provisions for credit losses were €525 million, flat year over year, and equivalent
to 13 basis points of loans. In the fourth quarter, provisions for credit losses were higher than in
the previous quarters of 2018. The increase was mainly driven by higher stage one and stage two
provisions on performing loans. As you can see on the slide in the appendix, our stage three
loans decreased by €262 million in the quarter. This decrease was primarily in CIB and was
mainly driven by a weakening in the global macroeconomic outlook, reflecting the forward
looking information element of IFRS9.

We ended the year with a CET1 ratio of 13.6%, as shown on slide 18. This represents a decline
of 43 basis points from the prior quarter, but remains well above our 13% target. The decline in
the CET1 ratio was driven by a €9 billion increase in risk weighted assets, including €7 billion in
market risk RWA.

Slide 19 addresses how we have operated, and will continue to operate, with a conservatively
managed balance sheet. Our balance sheet is highly liquid, low risk and well capitalised. Over a
quarter of our €1 trillion funded balance sheet is in cash and highly liquid assets and our liquidity
reserves. A further 30% of our assets relate to our trading operations, which are funded by our
trading liabilities and unsecured debt. These assets are highly liquid and are used to support our
client business.

Thirdly, we cut costs. Compared to the pre-transformation level of 2018, we reduced our
cost/income ratio by 18 percentage points. We achieved this while absorbing more than €8
billion of transformationrelated effects and facing an inflation rate we have not seen for decades.

. Our focus on technology has allowed us to grow revenues through closer interface with clients,
reduce cost by removing complexity in our technology, and improve our control environment.

. Finally, we managed and freed up capital. As promised, we kept our CET1 ratio above our
target minimum of 12.5% through all 14 quarters of transformation, and finished the year at
13.4%. This was despite an impact of around 170 basis points from regulatory changes, 100 basis
points from transformation-related impacts and, of course, supporting the growth of our business.
The Capital Release Unit played an important role here too, contributing around 45 basis points
on a net basis to our CET1 ratio.

In terms of profitability, we delivered our highest profit since 2007 at €5.6 billion before tax. Our
cost/income ratio is 75% and significantly below the pre-transformation level of 93 in 2018.

generated end-year run-rate savings of more than €3 billion from our transformation.
e, but we know we also need to continue to focus on generating further operational efficiency

In addition to the €2 billion of efficiency measures we announced in March 2022, which James
will provide an update on later, we will focus our efforts on generating further incremental cost
savings. These additional measures will relentlessly focus on a more efficient workforce
structure, including, but not limited to, revues of layers, cost per seat and location.

Deposits are up by nearly €35 billion over pretransformation levels, enabling us to take
advantage of rising interest rates, and loans are around €8 billion higher than in 2018.

Our CET1 ratio was 13.4% and our provision for credit losses was 25 basis points of average
loans for 2022, in line with our guidance provided back in March. Our liquidity metrics have
remained sound, and we managed to keep operational risk losses stable over the course of our
transformation

Looking at our business mix, almost 80% of our portfolio is in stable and mostly lower-risk
businesses in our Private Bank and Corporate Bank. The Investment Bank accounts for 21% of
the book, distributed across a variety of products and regional portfolios. Lastly, you can see how
well-diversified our loan book is. Household loans, which are mainly low-risk mortgages and, to
a small extent, consumer finance, account for 44% of the portfolio. 24% of the loan book relates
to financial and insurance activities, which span a variety of client segments, from exposures
with top tier banks to collateralised activities with funds.

Our Common Equity Tier 1 capital ratio came in at 13.4%, a 3 basis point increase compared to
the previous quarter. FX translation effects contributed 2 basis points. 3 basis points of the
increase came from capital supply changes, reflecting our strong organic capital generation from
net income, largely offset by higher regulatory deductions for deferred tax assets, shareholder
dividends and Additional Tier 1 coupons.

Good cost discipline allowed us to generate positive income-to-cost jaws in the second half of
the year. Continued low levels of credit impairment have helped us increase profit by 61 per cent
on a constant currency basis to $3.9 billion and deliver a return on tangible equity (RoTE) of 6
per cent.

A cost-to-income ratio in CPBB around 60 per cent, down from 76 per cent in 2021, achieved by
growing income and executing a $500 million business expense reduction programme

Capital-lite income as a share of total income 42% share of total income. : Reshape the income
mix towards capital-lite income. Analysis: Share of capital-lite income decreased slightly to 42
per cent in 2021 due to the low interest rate environment, mitigated by strong growth in
liabilities. 3 Capital-lite income refers to products with low RWA consumption or of a non-
funded nature. This mainly includes Cash Management and FX products

Banks are trying madly to raise it, investors are wary of giving it, and lenders seem keener than
ever to hang on to it.
Strong income momentum growth from Mortgages up 38 per cent and credit cards and personal
loans up 5 per cent with improved margins and balance sheet growth and 12 per cent growth in
Wealth Management. These were offset by Deposit margin compression, impacted by a lower
interest rate environment.

, benefiting from significantly lower credit impairment. Income was broadly flat to 2020 and was
down 1 per cent on a constant currency basis, reflecting the $0.7 billion income lost in 2021 due
to the low interest rate environment. After declining 6 per cent in the first half of the year on a
constant currency basis excluding the impact of the debit valuation adjustment (DVA), the Group
delivered 4 per cent income growth in the second half. The Group grew loans and advances to
customers by 6 per cent and delivered a record level of assets under management within Wealth
Management. Expenses were up 3 per cent on a constant currency basis as performance-related
pay normalised after an abnormally low 2020 and as the Group continues to increase investment
in strategic initiatives. Credit impairments reduced by $2 billion reflecting the non-repeat of prior
year stage 3 charges and an improving economic backdrop as markets began an uneven recovery
from the effects of COVID-19. The Group remains well capitalised and highly liquid with a
Common Equity Tier 1 (CET1) ratio of 14.1 per cent, which translates to a pro forma 13.5% as
at 1 January 2022 incorporating upcoming regulatory changes, enabling the Board to announce a
further $750 million share buy-back programme to start imminently.

All commentary that follows is on an underlying basis and comparisons are made to the
equivalent period in 2020 on a reported currency basis, unless otherwise stated. • Operating
income was broadly flat and was down 1 per cent on a constant currency basis • Net interest
income decreased 1 per cent with increased volumes more than offset by an 8 per cent or 10
basis point reduction in net interest margin. The decline in the net interest margin was as a result
of the low interest rate environment and is equivalent to $0.7 billion of lost income. Net interest
income included a positive $171 million IFRS9 interest income catch-up adjustment in respect of
interest earned on historically impaired assets, increasing the net interest margin by 3 basis
points • Other income was flat, with a record performance in Wealth Management and strong fee
growth in Transaction Banking offset by lower trading income in Financial Markets and lower
realisation gains in Treasury • Operating expenses excluding the UK bank levy increased 5 per
cent but were flat on a constant currency basis after adjusting for the normalisation of
performance-related pay in spite of a higher inflation environment. Expenses were held flat as
the Group funded continued investment in transformational digital capabilities through cost
efficiency actions. The cost-to-income ratio on a constant currency basis (excluding the UK bank
levy and DVA) increased 272 basis points to 70 per cent, however in the second half of the year
the Group delivered 260 basis points of positive operating leverage. The UK bank levy decreased
by $231 million to $100 million reflecting a change in the basis of calculation as it is now only
chargeable on the Group’s UK balance sheet “A resilient FY’21 performance returning to top
line growth in 2H’21, an increased dividend and a buy-back” Standard Chartered – Annual
Report 2021 33 • Credit impairment was $263 million, a reduction of Strategic report $2 billion.
Corporate, Commercial & Institutional Banking impairments declined by $1.6 billion as it
recorded a net release of $44 million. Consumer, Private & Business Banking impairments were
$285 million, primarily stage 3 impairments, down $456 million. Central & other impairments
totalled $22 million, broadly flat in the year. Total credit impairment of $263 million represents a
loan-loss rate of 7 basis points, a year-on-year reduction of 59 basis points in our cost of risk •
Other impairment was $355 million, an increase of $370 million. This includes a $300 million
impairment charge relating to the Group’s investment in its associate China Bohai Bank (Bohai)
following the announcement of its most recent results. The remaining other impairment primarily
relates to aircraft • Profit from associates and joint ventures increased 7 per cent to $176 million.
In 2020, the Group could only recognise its share of the profits of Bohai for ten months due to
the timing of its initial public offering in July 2020, after which the Group’s share of Bohai
reduced to 16.26 per cent from 19.99 per cent • Charges relating to restructuring, goodwill
impairment and other items reduced by $346 million to $549 million, with $125 million higher
restructuring costs more than offset by a non-repeat of $489 million goodwill impairment
primarily relating to India and UAE booked in 2020 • Taxation was $1,034 million on a statutory
basis. Taxation on underlying profits was at an effective rate of 28.8 per cent, a decrease of 8.9
per cent compared to 2020. This reflects a favourable change in the geographic mix of profits,
the impact of a lower UK bank levy which is non-deductible and higher profits diluting the
impact of non-deductible costs. Taxation on statutory profits was at an effective rate of 30.9 per
cent, an increase of 1.9 per cent on the underlying rate due to restructuring costs incurred in low
tax jurisdictions • Return on tangible equity increased 300 basis points to 6.0 per cent due to the
increase in profits • Underlying basic earnings per share (EPS) more than doubled to 76.2 cents
and statutory EPS of 61.3 cents increased by 50.9 cents • A final ordinary dividend per share of 9
cents has been proposed along with a share buy-back programme of $750 million which will
start imminently

primarily driven by credit impairment releases, partially offset by lower income and higher
expense.

Retail Products income declined 6 per cent or 7 per cent on a constant currency basis. Deposits
income declined 41 per cent as margin compression from the low interest rate environment more
than offset increased volumes and improved balance sheet mix. Strong volume growth and
improved margins led to Mortgages & Auto income increasing 38 per cent and Other Retail
Products income growing 28 per cent. Credit Cards & Personal Loans income was up 5 per cent
as balances grew on the back of a recovery in transaction volumes. Treasury income increased 10
per cent with higher interest income partly offset by a $224 million reduction in realisation gains
given movements in yield curves.

The Group’s balance sheet remains strong, liquid and well diversified. • Loans and advances to
customers increased 6 per cent since 31 December 2020 to $298 billion driven mainly by growth
in Financial Markets, Mortgages and Corporate Lending. Volumes declined $4 billion in 4Q’21
with a $9 billion reduction in Treasury Markets balances more than offsetting underlying growth
in Corporate Lending and Financial Markets. Excluding the reduction in Treasury Markets, loans
and advances to customers grew an underlying 2 per cent in 4Q’21 • Customer accounts of $475
billion increased 8 per cent since 31 December 2020 with an increase in operating account
balances within Cash Management and in Retail current and saving accounts partly offset by a
reduction in Retail time deposits. Volumes increased $21 billion in 4Q’21 primarily from growth
in operating account balances and corporate term deposits • Other assets increased 5 per cent
since 31 December 2020 while other liabilities were 1 per cent higher. The growth in other assets
was driven by increased reverse repurchase agreement volumes and an increase in investment
securities held within Treasury Markets. The growth in other liabilities reflects increased
repurchase agreements and issued debt securities offset by reduced derivative balances The
advances-to-deposits ratio decreased to 59.1 per cent from 61.1 per cent at 31 December 2020
reflecting the strong growth in customer accounts. The point-in-time liquidity coverage ratio has
remained stable at 143 per cent and remains well above the minimum regulatory requirement of
100 per cent.

The Group’s CET1 ratio of 14.1 per cent decreased 28 basis points but remains 4 percentage
points above the Group’s current regulatory minimum of 10.1 per cent. On a pro forma basis,
after the cessation of software relief and other regulatory changes and adjustments detailed
below, the CET1 ratio as at 1 January 2022 is 13.5 per cent. The CET1 ratio of 14.1 per cent
declined in the period as approximately 90 basis points of profit accretion was more than offset
by distributions, RWA growth, movements in reserves and an increase in regulatory deductions.
An increase in underlying RWAs, excluding the impact of FX, reduced the CET1 ratio by
approximately 40 basis points. This included a 20 basis points impact from higher market RWA
following a clarification of the regulatory treatment of Structural Foreign Exchange risk.
Ordinary shareholder distributions reduced the CET1 ratio by approximately 30 basis points.
These distributions included ordinary share buy-backs of $0.5 billion completed in the period
which reduced the share count by approximately 2.5 per cent during 2021 and a total 2021
ordinary dividend of 12 cents a share or $370 million. The total 2021 dividend comprised the
interim dividend of 3 cents per share and the Board recommended final dividend of 9 cents per
share. Payments due to AT1 and preference shareholders reduced the CET1 ratio by
approximately 20 basis points. The net effect of other movements in the period reduced the
CET1 ratio by approximately 30 basis points as higher regulatory deductions, adverse
movements in other comprehensive income and reserves offset the reduction in RWA from
currency translation effects. There are three policy changes expected to impact the calculation of
CET1 and/or RWAs in 2022. Firstly, the PRA has confirmed that software relief will be
excluded from CET1 from 1 January 2022 which will reduce CET1 by 32 basis points. Secondly,
the recent industry wide regulatory changes to align IRB model performance (the IRB model
repair program) will add approximately $4.7 billion of additional RWA from 1 January 2022.
Finally, the introduction of standardised rules for counterparty credit risk on derivatives and
other instruments (SA-CCR) will add approximately $1.6 billion of additional RWA. The
combination of the IRB model repair program and SA-CCR are expected to reduce the CET1
ratio by approximately 31 basis points from 1 January 2022. The Board has authorised a share
buy-back with a maximum consideration of $750 million to start imminently to further reduce
the number of ordinary shares in issue by cancelling the repurchased shares. The share buy-back
is expected to reduce the CET1 ratio by approximately 30bps. The Group’s UK leverage ratio of
4.9 per cent, reduced by approximately 30 basis points due to an increase in onbalance sheet
exposures but remains significantly above its minimum requirement of 3.7 per cent. Outlook We
have had a solid start to 2022 and we expect income to grow in the 5-7 per cent range with mid-
single digit asset growth and an increasing likelihood of some support from interest rates, which
should help support margins particularly in the later part of the year. Expenses are expected to
grow $0.4 billion including the impact of inflation to $10.7 billion, excluding the impact of
currency movements. Whilst we remain vigilant to the continued uncertainty in the external
environment, our loan portfolios are in good shape and, barring major negative events, we would
expect impairments to slowly increase from the exceptionally low levels in 2021. Our medium-
term cost of risk is now expected to normalise between 30-35 basis points, slightly lower than
our previous medium-term guidance of 35-40 basis points. Although regulatory changes will
lead to an increase in RWAs at the start of the year we fully intend to operate dynamically within
the 13-14 per cent CET1 range. Looking beyond 2022, the actions we are undertaking and likely
trajectory of interest rates puts us on the path to deliver a 10 per cent return on tangible equity by
2024. With the tailwind of a rising interest rate outlook, we believe we can deliver 8 to 10 per
cent income growth per annum between 2022 and 2024, with 5-7 per cent from underlying
business growth and a further 3 per cent from rising interest rates. We are embarking on a $1.3
billion gross structural expense reduction programme, funded by $0.5 billion of restructuring
charges, which will free up investment capacity and allow us to deliver 2 per cent positive
income-to-cost jaws on average per annum before the benefit of rising interest rates. The actions
we are taking on RWA optimisation means we expect RWAs to grow at a low single-digit
percentage. We have reiterated our intent to operate within our 13-14% CET1 target range and
aim to deliver in excess of $5 billion of shareholder returns over the next three years.