Okay. Good afternoon, everybody. Thank you very much for attending this session with Standard Chartered. My name is Nick Lord, and I cover the Hong Kong banks for Morgan Stanley. I'm very happy to be joined by Pete Burrill, who is Standard Chartered's Deputy CFO. We're gonna start off this session with a quick question just to poll your responses. If we could have the question up. The question is, what should management's key focus over the next 12 months be? Is it managing RWA growth, capital levels and returns of capital? Is it managing cost to income jaws? Is it focusing on managing credit risk? Is it demonstrating the value of the international network, or is it demonstrating the long-term value of ventures?
I'll give you, 10 seconds to poll your questions or poll your answers. Cool. Wow. It seems to be RWA growth, capital levels and returns, which is very common actually, in terms of the answers we've had so far. Managing credit risk is something that seems to have also sort of increased a little bit in popularity over the last few days. Maybe, maybe I can start off, and thanks very much for joining us today. Maybe you can start off and just talk a little bit about the events of the last few days. Maybe give us some comments on sort of how you're feeling on liquidity, what you're seeing on deposits, et cetera.
Yeah. Happy to. First, I guess just to explain, I'm not out of breath or red in face due to anything going on in the markets. I was trying to get across London during a tube strike and being stuck in a taxi, apologies for being a few minutes late and therefore a bit out of breath. No, look, I think, you know, the last few days has really brought a focus to balance sheet structures, liquidity, a lot of those things that people that specialize in banks pay a lot of attention to, but people who don't, are starting to pay more attention to. I think from a Standard Chartered standpoint, got a very liquid and well-diversified balance sheet geographically as well as product wise.
LCR, which is obviously the primary metric on measuring liquidity for us, around 147% at year-end and, you know, maintained at high levels. Not really seeing any signs of stress from a liquidity standpoint. You know, on our balance sheet, there's obviously been a lot of focus in the news on investment securities as opposed to loans. I mean, we've got quite a low ADR ratio, and our investment securities are the vast majority mark-to-market through equity, and therefore already included in our capital ratios as of year-end. Small held to collect portfolio, really only used to hedge our equity base, so long-term assets rather than anything short-term, or structural.
Really no concerns or read across from our standpoint in the last couple of days, and really happy with our liquidity position and not seeing any direct impact from the events of the last few days.
Okay. Thank you. Thank you very much. If we sort of carry on on the macro side, I mean, I think a year ago, I was sat here with with Andy Halford, and we had quite a bit of macro uncertainty. We had the Russia-Ukraine war and large parts of North Asia were still in a COVID lockdown. You know, we're a year on. Maybe you could just talk a little bit about how you're seeing that macro situation today, especially in the markets you're operating in.
Yeah. I guess drawing on the markets that we operate in, I mean, obviously Russia, Ukraine, for us, not a lot of direct first order impacts, but the lockdowns in China and the impact on the Chinese economy last year was probably more impactful for us. Clearly with the reopening of China and the exit from COVID restrictions there, we're seeing that as quite a positive impact in Asia, in China specifically, but also in Hong Kong. You know, a good portion of the business in Hong Kong is based on China economic activity. The opening of the border between China and Hong Kong, we think will be quite positive. Not gonna get into debate about which may go into technical recession or not.
I mean, I think our base outlook for the U.S. was a kind of a small recession. Ultimately, I'm not here to guess whether that's going to happen or not in the U.S. and Europe. I think for us, the key markets tend to be more in Asia, and we still expect Asia to be the driver of global growth. We think the growth rates across a number of Asian countries, not just China, are quite positive. I guess I would still say quite optimistic still on the macros. Obviously interest rates, U.S. dollar interest rates and other rates have probably the most direct impact on our business. Quite a bit of volatility more recently, but I think still a positive trend and still reasons to be optimistic.
Maybe if we can just dig a little bit more into a couple of those points. You know, obviously you sort of spoke about China reopening and the benefits that brings to Hong Kong. Maybe if you could talk a little bit about the outlook for loan growth in Hong Kong and greater China. I mean, obviously last year Hong Kong was pretty weak. Maybe talk a little bit about what you're seeing on the wealth management side as well.
I guess on the, on the loan growth side, I mean, we've indicated low single digit loan growth. That's not Hong Kong specific, but I think the rate environment is a bit of an offset with volumes. The Hong Kong market has some specific nuances on the mortgage market due to the prime cap, which means that not necessarily the best time to look to grow.
Yeah.
That's part of our largest portfolio. I think we're still comfortable with a low single digit overall loan growth. On our corporate side of the business, we're focused as much on the kind of non-balance sheet and lending focused side of the business as much as we're on the balance sheet. We're comfortable with the low single digit loan growth. I think on the broader Hong Kong and China and on the wealth management piece, clearly the reopening of the border between China and Hong Kong, we expect it to be benefiting our wealth management business. It allows the in-person visits into Hong Kong branches. We're seeing some of that, but it's early days. I guess I would say cautious optimism that will translate through.
When it comes to wealth management, you've got that aspect, but you've also got the kind of market dynamics of assets under management, de-leveraging and market confidence when it comes to equity indices and other types of things that drive wealth management activity. Not all of those are pointing in the same direction. Again, overall cautious optimism. We do think that wealth should rebound this year from what we saw last year. Given how you started the questioning about first quarter last year, I need to remind, was actually our strongest quarter for wealth management and before a lot of the macro things had really hit.
If you're looking quarter-on-quarter comparisons, very strong compared to fourth quarter last year, but probably a bit weaker than what we saw, first quarter last year. Still optimistic on that and expect to see it rebound this year.
Okay. Perfect. Are there any other areas you can benefit from Hong Kong reopening?
Well, I mean, Hong Kong is our biggest franchise. In general for us, both on the retail side as well as on the corporate side, you know, a better Hong Kong economy is generally better for the business, wealth directly, but also on the corporate side and the broader retail banking.
That's great. I guess, again, you know, you spoke about wealth, having been strong. I mean, financial markets was also very strong, this time last year. I just wonder if you could comment a little bit on sort of what you're seeing there at the moment. Hopefully a little bit more activity, I guess probably a lot in the last few days.
No, I'm not gonna give a day by day update on that. I think, we've seen good activity in FM in Q1 of this year. As you mentioned, Q1 last year was also a high watermark for our FM business. We also had about a $100 million gain last year on some valuation of structured notes. That's not gonna recur this year, but adjusting for those, we expect it to be flattish in the first quarter. That's a good start. Again, last year was a record year for us in wealth management, and there was a lot of volatility in the market, we're pleased with the start to the year in FM.
Perfect. I mean, we spoke a little bit about sort of, you know, the near-term impacts of Asia reopening and financial markets and wealth, et cetera. If we think a little bit sort of longer term, maybe we just focus a little bit on wealth for now. I mean, what are the sort of the big structural trends you're seeing that your wealth management business should be benefiting from on a three, four -year view?
Yeah. I'll go back even a bit further than that. I mean, I guess first, our wealth management business is more kind of on the affluent end of the spectrum, not necessarily the ultra-high net worth, kind of traditional private banking. I think over the last 10 years, kind of if I exclude the last year, we were seeing double-digit growth. I think we believe that kind of the emerging affluence across our footprint is a sustainable trend and not something that was a one-off or anything special. I think we do expect strong growth of the market generally, and I think we are well-placed to capture that both from a product geography, as well as the existing client base that we have.
I think, you know, you asked three, four years forward, I go back 10 years. I think, you know, structurally, we believe that there is an emerging and rising affluent class in Asia especially, but also Africa, Middle East, where we're active. We plan to participate and benefit in that market uplift.
I guess, you know, a similar sort of question, you know, if we think about the longer term for CCIB. I guess, you know, when I think about sort of the region that I live in, which is Southeast Asia, you know, a lot of the talk is about sort of supply chains, China plus one supply chains, about investment in the region, about FDI, about trade. I guess, you know, that should actually play into a bank like Standard Chartered's sort of key strengths.
I just wonder if you could talk a little bit of, again, taking a slightly medium term view about what sort of things you're seeing there, you know, where you think you can compete, not just against local banks, but about against banks like HSBC or DBS or whatever.
You hit on a few of the key points there. I guess one, our corporate business, we refer to it as kind of a network business, and that's our terminology for doing cross-border, serving companies outside of their home market. We've seen continued growth in that, even as people speculate about de-globalization or whatever. I think we believe and what we've seen is perhaps more changing in trade patterns, but not kind of a pullback to all domestic, kind of production or supply chains.
Given the fact that we're present in all the major ASEAN markets in Southeast Asia, as well as the presence we have in China, as well as in Europe and the U.S., kind of regardless of the pivot of those flows, so long as those trade flows continue to happen and we don't go back to pure everything back onshore. I guess that is our central view, is that there may be a regionalization or a change in the patterns of global trade, but we're not expecting to see a major pullback. We're still quite positive in our position there. We're still quite positive that there will continue to be growth and cross-border trade and international companies wanting to participate in that.
That's really the client base that we're trying to serve and feel well positioned to serve given our network.
Are you seeing a surge in that at the moment? Or is it a general trickle up? I mean.
I wouldn't call it a surge. I mean, I think we're seeing good activity in that, but I wouldn't say it's a broader trend rather than a.
Yeah.
A surge or a sudden shift. You know, I think you mentioned the China plus one. I guess what we are seeing is Chinese companies are also looking at operations outside of China to somewhat de-risk that situation as well. I think it's an evolving trend that we'll keep an eye on, but I think I guess I was just trying to counter the anti-globalization theme, and I do think it may be more, more regional, but I do think that trade flows will continue to exist and supply chains will continue to be global or regional in some way, shape, or form.
Yeah. Yeah. Yeah. I mean, we've explored some of the areas of revenue growth, and some of the areas you can benefit from. If we can now sort of start to think a little bit about costs. I think you set out at the 4Q results, I think an ambition of 3% jaws, certainly over the next few years. Can you talk a little bit about how you pace investment spend to be able to achieve and maintain those jaws?
You know, we're in a position as a bank that we haven't achieved the return on equity that we need to, that we think is appropriate for a bank of our, of our size and scale and what investors expect from us. The key focus on us is getting ROTE up. To do that, we have to drive positive operating leverage. The 3% guidance that we've given on jaws, we do think is achievable and we think is necessary in order to get from where we are today to our approaching 10% ROTE ambition in 2023 and above 11% in 2024.
You know, the investments are always a balance about making sure that you're supporting growth, but also investing beyond the near term. If you take a look at some of the things that we've done in ventures, in some of the digital banking space, I mean, clearly those are not short-term payoffs. That was us really trying to look beyond the next two years and make sure that we are creating room to invest in things which will support growth kind of beyond the current rate cycle. I think that's where the next question goes, is okay, people can generally see with the higher rate cycle how you can get your returns up, but the question is what comes next?
We're trying to make sure that we're creating space to invest in some of those things that do have a longer term. It's not an exact science, but we do try to balance both the need to be competitive in the near term as well as to invest in things that may have a longer term payoff.
I mean, when we look at, sort of cost control measures, I mean, we're obviously sort of, you know, structural things you can do or whatever. You know, there's the re-engineering of banking and, you know, some of the charters obviously focus quite heavily on reducing the number of branches, for example, digitization. You know, where are we on that process? Is that just a process that continually produces operationally operational efficiencies?
Look, I do think there's a, I don't wanna say a natural level, but I do think there's an ongoing ability to continue to get incrementally more efficient. That's not kind of a one-time thing. I think in our retail bank, which we call CPBB, so retail and private banking and business banking, we have a more dedicated program because I think in CPBB, that's the area where we haven't demonstrated as much of those efficiencies in the past.
Branches is one aspect that you mentioned. There's also a lot that can go on as far as standardization of sales and service models, technology platforms in the background, operations in the background, and trying to get some economies of scale out of the having a retail bank in a number of different markets, but not having kind of market dominance in any of those. I think we've got a dedicated program in CPBB where we're committed to $500 million of specific cost savings. And we got off to a very good start that year. Last year, sorry. We expect to be able to continue to deliver that. We expect that again, there's ongoing efficiencies whether the.
I'm not committing to 3% jaws kind of in perpetuity, but I do think that positive operating leverage is something that we will look at to keep the returns, 'cause we said that even after 11% we want to grow the returns thereafter. So we don't wanna kind of eke above 10% or 11%, declare victory, and then go backwards. Operating leverage and maintaining cost discipline, I guess I would say, and creating ongoing efficiencies is necessary to drive that.
I mean, you spoke about, sort of a retail business there. I mean, is this stuff you can do on the wholesale business as well, or is that more about capital efficiency?
You know, when we set out a bit more details on our strategy.
Mm-hmm.
Obviously there's cost efficiencies that can be done anywhere. When you look at our corporate franchise, the issue in our corporate franchise historically wasn't necessarily cost income ratio. Depending on what peers you look at, it wasn't that far out of whack. What really stood out was the kind of capital inefficiency, which is why the focus on the corporate side of the business has been on return on risk-weighted assets, which is really, you know, I think Standard Chartered a number of years ago was more top-line focused and not as sensitive to the capital demands of that. We've really been trying to shift to make sure that we are only deploying and committing capital where we can get appropriate returns.
We look at that on a client level, not on an individual transaction level, but I think that's really been. If you saw the RWA optimizations that we were able to achieve last year, and that wasn't modeling and other things. It was really just upping the ante when it comes to the return expectations and profile that we wanted. We've made really good progress there, and we think we can continue to make progress. I think that's where you've seen a bit of a shift in a bit more emphasis on our financial markets business, which is more capital efficient than some of the lending that we've done in the past.
As well as looking at the cross-border business, where a lot of those clients aren't necessarily using us, for the balance sheet, but rather for the cross-border services and products that we can offer them. Yeah, you're right. I think on the corporate side and our wholesale side more broadly, the focus has definitely been on capital efficiency. If any of them are listening to this, they don't get a clear pass on the cost side either. It's the key area of focus for them is return on capital.
Yeah. I mean, you mentioned ventures, and you mentioned sort of creating space for future investments. You've obviously got Mox, which seems to be building up a nice customer base in Hong Kong. You've got Trust Bank in Singapore. I just wonder if you can talk a little bit about, you know, how those are going, synergies between the two.
Yeah.
Sort of what is your timetable for profitability on those, if you can comment on that?
I guess breaking up our ventures, there's three main components to what we have in our ventures segment, which we newly broke out last year. I guess, the first is Mox, as you mentioned. We launched a standalone, built from scratch, native digital, only, if you will, bank in Hong Kong with a couple partners. It's grown quite rapidly, but, you know, some of the offerings that we had hoped to offer were related to travel and FX, and obviously with Hong Kong and China having the COVID challenges, it didn't. Those products weren't launched as much. Customer take-up has been great.
Reviews on the App Store have been great, we're quite positive on the developments of Mox and hope to achieve break even on that in 2024. There may be some IFRS noise because IFRS 9 noise 'cause as you're building up a loan book, you take kind of more than normal impairments. There or thereabouts, we expect break even on Mox in 2024. Trust is an interesting one 'cause you talk about learnings, and essentially we used a lot of the learnings from Mox in Hong Kong to stand up Trust Bank in Singapore. Again, entered into a partnership with FairPrice Group, the one of the biggest grocery store chains and a government-related entity in Singapore.
Had extremely fast customer growth, over 400,000 customers by the end of last year, still growing into this year. We used a lot of the tech that was kind of stood up for Mox in order to do that in a faster fashion. We did take the learnings from what we had done on Mox, which again, was not building off of legacy Standard Chartered architecture, but really a new tech stack. I think that accelerated our ability to do that in Singapore. For us, both of those are. I'm not gonna put out a timeframe on profitability yet on Trust, but I'm sure we will be updating and monitoring it closely.
Those are kind of the two, I would say, bigger bets, if you will, in that it's, it's quite an undertaking to launch a brand new digital bank with partners in a market. So far so good. Quite pleased with that. The third component other than Mox and Trust is SC Ventures, which is a bit more of the kind of sandbox for more creative, not necessarily digital banks, but kind of banking related or other businesses that we think are interesting. And we've had good take-up and some interesting ideas there. We've got two of a cryptocurrency, one on the market side, one on the custody side, for institutional players. Think that that's an asset class that's going t o.
We all may have our own opinions on cryptocurrency, but I think, as a bank, we feel that it's an asset class which is going to remain, and there should be institutional-grade services available for that asset class. That's kind of some interesting ones that We've got some in the payment space. We've got, Solv, which is a big SME platform in India, and I think gonna be launching in Kenya as well, which is more of being a middleman and a marketplace, for SME businesses. Quite a lot of interesting things. We continue to experiment and launch new ventures on an ongoing basis and shut down ventures which don't show as much promise.
It's kind of a manageable size and something that we think is worth investing in, even if there's not the immediate payoff. We also take within our ventures some minority stakes in banks. In some of the markets where the regulators have decided to launch digital banks or digital challenger banks, they don't want traditional banks to run those. They want new entrants into the market. In Korea and Taiwan, we've taken minority stakes in some banks there. We're trying to participate in ventures in a variety of different things, from minority stakes to majority-owned ventures, and associates, and we think that's important.
Actually, for us as a bank, which is because we don't have a dominant position in any one market from a retail standpoint, I think we're open to experimenting without necessarily fear of cannibalizing our own business.
If we could just sort of change topic again and talk a little bit about credit risk. I guess there's a couple of things that came up last year in terms of China commercial real estate and some of the sovereign exposures. I wonder if you could talk a little bit about where we are with those at the moment, and then, you know, given we've got an evolving macro situation, any other areas you're particularly focused on or worried about at the moment?
Yeah. Look, you called out the main ones. If you look back at our book and our results last year, I guess first of all, on the consumer side, for those not familiar, we don't have a large consumer unsecured book, so most of our consumer is very secured, so we don't see a lot of volatility or a lot of direct read across from macro uncertainty or inflation on the consumer side of the book. That's reasonably stable from a run rate standpoint, and I don't expect any big surprises to come out from our consumer side. On the wholesale side, as you mentioned, we had two major impacts on our impairments last year, and that was China real estate.
I guess on China real estate, the kind of policy direction is positive, but the underlying economic activity and sales activity of the real estate projects is not yet back to where it was. I think while I would like to think we've drawn a line under our China CRE, we'd really like to see that underlying activity improve. That being said, we feel we're prudently provisioned on our China CRE and hope to have drawn a line under that one. Sovereigns is another one where last year obviously we dealt with the default of Sri Lanka and Ghana, two footprint markets.
If you look at the exposures that we had, we were quite proactive at reducing exposures to the extent that we could in those markets to make sure that the impact was manageable, but it was still reasonably significant. We also dealt with the downgrade, not default, but the downgrade of Pakistan. We had a little bit less than $100 million of provisions on that. We're not out of the woods on those yet. Pakistan is the one that we're watching most closely. Beyond Pakistan, there's not a lot of individual regions or geographies that would, I think, be the same type of risk that we saw last year.
Other than those two, however, the sovereign defaults from the China CRE, there's not really an industry or a geography which is concerning us at this point. I think the management team, you know, Bill and the others have really done a lot over the last number of years to take away some of the previous concentration risks that we have, really look at diversification on geography, on industry, on client type. There's not really any one area at this point that I would point out beyond the two that you mentioned.
Okay. One final one from me, and I guess that's about capital. You know, you do return a decent amount of capital nowadays with share buyback and obviously the increased dividend in Q4. Can you talk a little bit about how you think about opportunities to reinvest, which are obviously quite big in the markets that you're operating in, versus that capital return?
Look, I think I'll take it back to the ROTE discussion. I mean, that's the lens on which we're looking at this. Where we have opportunities to deploy the capital and generate, I would say, above our ROTE targets, then we will do that internally. Now, given what I mentioned earlier on the challenges that we've had on the corporate side of the business in making sure that we're getting appropriate return on RWA, we're more focused on efficiency on that side rather than putting more capital in unless we can get the returns. We don't wanna starve that. To the extent we find those opportunities, we will do that. On the consumer side of the business, it's not a capital-intensive business, so it's not something that we need to put more capital into.
When it comes to any other opportunities, be that a kind of acquisition or anything else, the measure that we're gonna look at is it accretive to returns? With the share price, I'm not looking at it today, but which has been trading at quite a significant discount to book value, we'll continue to look at returns as a lever that we can pull when we are generating capital and we don't need it to grow the business profitably. That's the dynamics that we go through. We don't have a dividend payout ratio. We have the $5+ billion t arget on distributions more broadly, and we've demonstrated a willingness to use buybacks when we think that they're attractive.
We're in the market right now with the buyback. I would expect us to continue to balance those things.
Cool. I'm gonna open it up to the audience for Q&A. If we have any questions, please raise your hand.
I guess one thing if we're reflecting on the questions that I should have clarified when you asked me about the positive jaws was that just that it's not a quarter by quarter thing. As I mentioned on the, you know, we look at the jaws on an annual, but we're not guaranteeing that kind of every quarter you're gonna see that. Just thinking about first quarter, what I mentioned on FM and Wealth, we are seeing positive momentum on the interest rates flowing through, and we're still quite comfortable with our full year guidance, both around income as well as jaws. I don't want to create an expectation that quarter after quarter after quarter, you're gonna see the exact same print.
Okay. Yeah, no, that's a, that's a good point. Maybe we can talk, I mean, we were on that capital point when we were talking about how you think about reinvesting capital. Obviously, you know, you've announced the exit last year from some of the smaller footprints in Africa on the retail side. Obviously, you've announced that you are looking to sell your aircraft leasing business. What else is there out there that's peripheral to the business that you could sort of release capital from?
Look, I think if you look at both of those examples. When it comes to the markets, you mentioned the exits, but we also entered and expanded in Saudi Arabia and Egypt. When it comes to markets, we're a bank that's been in most of these markets for 150+ years . We don't take kind of exiting a market lightly, and we're very thoughtful before we do that. Really the decision was not so much about financial or capital, just it was more strategic. Is this something which is critical to our network business? Is this something where we think we can compete on the retail side effectively? If the answer to those questions is no, then we're probably not the best owner for that business.
It's not that they were a drag on returns so much as it wasn't such a strategic fit. I think you could say the same for the aircraft business. It was a good business. You know, it was profitable, it was decent, but it's a business that, you know, you either have to kind of lean into and grow or you're probably not the best owner. I think, you know, although we have a very broad and diversified network, I don't think that the kind of geographical exits is the strategy that we're looking at.
Nor is it necessarily the solution to the challenges from the return standpoint. I think we'll look at things that are, you know, a product in a country that might not make sense, where we don't have the scale to compete and we can't do it profitably. I think you'll see more minor portfolio changes rather than wholesale fundamental exits. Always with that return profile is, you know, is there something better we could do with this capital? Could we utilize this in a way which generates more returns?
I guess the counter to that or the other side of the coin to that, when you mention, you know, Saudi and Egypt, I mean, what are the gaps that you still see either in terms of geographies or in terms of products?
You could pull out a map, and I'm sure we could find places that we don't operate. We feel that we're in most of the geographies that we would want to be in. I think Saudi and Egypt, given our footprint of Asia, Africa, Middle East, Europe and America, was two of the bigger economies that were kind of consistent with our existing footprint. I don't think we feel a need to expand either geographically or from a product standpoint that there's big gaps in our portfolio.
You know, bolt-on acquisitions or things that are consistent with our strategy, that are consistent with the footprint and markets that we know and understand are things that we would take a look at. When Citi announced and looked to exit some of the assets is clearly something that we looked at, but we wanna make sure that we deliver returns before we start thinking that acquisitions are the way to deliver those. They generally aren't in the near term. I think we're more focused on organic growth and meeting the targets that we've set rather than inorganic either expansion or contraction.
Okay. In terms of, again, going back to that growth point, you know, I mean, you've got China, and there's lots you can do in China. You've got some very, very fast-growing parts of the footprint, so India, I guess, and Southeast Asia. I mean, how do you see those, you know, that South and Southeast Asia part doing relative to the rest of the business over time?
Look, I think we think that's some of the economies that you mentioned are gonna be the core to growth going forward. Singapore is another one which we're quite positive on Singapore and the role that it plays in kind of ASEAN and beyond. China, India. We're also quite large in Korea. We've got a Malaysia business, an Indonesia business. We've got it goes back to the earlier point. I think we've got the footprint, the on-the-ground knowledge and the market presence to be successful. We do think that in those markets that I think have the most growth potential, we are there on the ground, competitive and quite optimistic.
Yeah, you mentioned India, China, clearly two of the biggest economies in the world, with quite good growth potential, where it doesn't take a lot of market share to make a difference. You know, China is one example. We can talk about the GDP and economic challenges that China faced last year. Our China business grew 10% onshore and 20% offshore despite that. Quite optimistic. We had set out a goal to double the profitability in China. Clearly the CRE took a hit. We still feel quite positive about that. In India, the other one you mentioned, quite positive on our opportunities in India. It's something that we've got a quite competitive proposition there. Quite a lot of experience.
I think, quite optimistic on the opportunities that that'll present. Yeah, we feel good about the footprint that we're in. We feel good about the opportunities in Southeast Asia as well as Northern Asia, where we've got a competitive market position and a good product offering to take advantage of that.
Can I just ask if there are any more questions from the audience? Yep. I've got a question just down there.
Hello. A question about how the changing in value chain, potential regionalization of flow are impacting Standard Chartered?
I think, and I don't have the. If you look in our year-end presentation, we actually put some of the network flows as far as where we're seeing growth between regions. For us, I guess it's been a positive rather than a negative. Because we're active in all of the markets in Southeast Asia as well as Northern Asia, as well as Africa and the Middle East, so long as they're continuing and re-pivoting as opposed to stopping, we feel that we can benefit from that. We saw quite a bit of growth in that cross-border business.
Some of that was flattered by interest rates, because obviously a lot of cross-border business sometimes is cash management. Our cash management business got a lot of tailwinds from interest rate, interest rates last year. We do think that net, so long as it's regionalization and, inter-Asia or Asia out, or Asia in, or even within the regions of Africa and Middle East, that we're well positioned and will benefit from that.
Any more questions from the audience? Maybe we could just pick up on that point a little bit. I mean, you know, you've got a lot of. I guess this is the question I always think about Standard Chartered, you know, the returns obviously have been, you know, suboptimal historically. You've got this regional business, which everybody seems to want to get into, but everybody sort of challenges the returns on it. Could you maybe talk a little bit about what is so attractive about business? I mean, is it an intrinsically high return business, and how do you sort of maintain that sort of 11% or 12% ROE that you eventually achieve?
I think, there's a couple aspects to it. One is the client profile and those clients tend, that are active multinationals and operating in multiple jurisdictions, tend to need a lot more services than just, if you will, balance sheet and lending. Those services, be they cash management, be they FX rates, some of our FM offerings, tend to be more fee income, less balance sheet, therefore more attractive from a return on capital standpoint. Yes, I do think that, to a certain extent, the client base that is more active in, outside of their home markets tends to have a broader need for services beyond lending, if you will.
I think that's why you see that correlation to a certain extent, is that it's to a certain extent, the client base that's that reflects. I guess that's probably what I would draw it as kind of the biggest, which is why I think it is attractive and a lot of people are interested in it. But that goes back to the network and the history that we have. You know, I think our presence in Africa is quite unique and quite an offering, now also across the Middle East, as well as all the key markets in Southeast Asia and Northern Asia, where.
I think the change for us over the last number of years, I think historically we looked a lot at the companies that were based there, outbound, but not necessarily big Western companies that had activities there and really focusing on getting those relationships to get a bit more of the inbound work. There's been really a focus on that, as I said, network or cross-border business, as we call it, and really trying to capture that as the core strategy. A focus probably as well more on financial institutions as well.
I think we're very focused on the corporate sector and as we want to kind of grow FM and as financials, institutions, be they, investors or insurance or others, wanna get active in those markets, we should pay attention to that client base as well and make sure that we're delivering products, and where we're lending, maybe we can structure in a way that it's interesting for other parties to take it off the balance sheet and we can play more of a structuring role or a facilitator role rather than just keeping those loans on our balance sheet. It's a variety of those types of factors that make it very interesting for us and a key focus for us in our strategy.
Cool. We're over time.
One more question.
One more question. Yeah, please go ahead.
Sorry. Can you tell us what the level of engagement was with Saudi ?
No engagement. No engagement.
Any more questions? In that case, we're over time. Pete, thanks very much for joining us today.
Thank you very much.
Thanks for your insights.
Thanks.