Good afternoon, everybody, or I guess it's going to be afternoon for everybody now. Thanks for joining us. It's a pleasure to be talking about our AME business. I hope that over the course of today you'll get some real color from the team. If, like I did just a few years back, you get a sense of just a fraction of the richness of our franchise, we will have been successful. Africa, Middle East, it's a big region, geographically and culturally. It's one where the bank has been, Standard Chartered has been operating for 160+ years. Through that 160 years, we've learned a lot. A lot of that has gone into building the really substantial presence we've got today.
Of course, we've made some mistakes and learned some lessons the hard way as well, which is part of the reason that we're confident that as we sit here today, that we can take a region that's a meaningful contributor to our bank and a meaningful differentiator, maybe as importantly as the direct contribution, and use that to drive through to a real substantial component of the growth that Standard Chartered delivers through the next several years. I'm not going to say a lot upfront. I'll comment quickly on the results of the bank. As you know, I'm sure, we set out four years ago with a new strategy, almost exactly four years ago, in fact, to transform the bank, and started with a pretty heavy focus on remediation. We cleaned up the financials. See if I can get to a better place here. Cleaned up the financials.
We, I think, cleaned up the organization a bit, got the risk and controls in place. A lot of that was mechanical, and it needed to be done. I think we got it done relatively quickly, and it's positioned us to then make substantial investments over the past couple of years in the areas where we can grow. One of those investments has been in Africa and the Middle East against the backdrop of a pretty challenging economic environment, which Sunil and Raziel and others will talk about. We've managed to substantially improve returns. We've done that while at the same time increasing our ability to offer something that's differentiated to our global clients who have some sort of a connection to Africa or the Middle East.
What you see from just the quick slides we've got here, and you'll hear about it in much more detail from Sunil and team, our degree of relevance for our global multinational corporations, because of our presence in so many African, Middle Eastern countries, of course, it extends to the rest of the network as well. It's a tremendous differentiator for our bank. In fact, I was with a client just before I came here. It's one of our top 100 clients, outstanding client relationship. We deal with them in all parts of the world and in all products, including employee banking their retail customers, or sorry, their retail employees in countries in Africa and elsewhere. He said, "Sunil, what had really differentiated Standard Chartered in the beginning was the fact that you were able to solve our problems in West Africa.
We were finding it very difficult to get global banking services on a global scale from anybody other than Standard Chartered Bank. While that was the entry point to a relationship, the relationship is now much broader. It's still very large in West Africa, but much broader. That is at the heart of the dual purpose for us of Africa and the Middle East, which is that it is a source of growth and profit. It is also a key source of differentiation. It's one that we intend to continue to invest in and to grow. With that, I'm gonna hand over to Sunil. Thank you again for joining, and I'm going to come back later.
In fact, I'll be dropping into some of the breakout sessions, so if you have a question to me, I'll probably be the least qualified person to answer it, but I'm happy to take a stab. You have the A team here in terms of our Africa, Middle East business. Thanks.
Good afternoon, everyone. You can hear me, right? Good. Thank you. Good afternoon, everyone. Quite a few familiar faces, but let me just introduce myself to those who don't know me. My name is Sunil Kaushal. I'm the Regional CEO for Africa and Middle East. I've been in banking for 30 years, of which 22 years in Standard Chartered. I've worked in North Asia, Southeast Asia, South Asia, Middle East, and also covered markets in Africa, as I'm doing now. I've had the opportunity to work in our Corporate Institutional Banking as the Head of Corporate Institutional Banking in UAE, Singapore, Head of SME Banking, as Head of Retail Banking and CEO for Taiwan, and then most recently, before taking up this job, as the Regional CEO for our operations in South Asia.
We're going to cover quite a few themes today, but I'm going to focus on four particular themes. One, our franchise in Africa and Middle East is unique and differentiated. Two, the structural growth opportunities are compelling. Three, we are embracing digitization and forging partnerships to fundamentally transform our retail business. Lastly, we're executing on the strategic priority of the group and making good progress. If you look at the region, it basically comprises of two sub-regions, Africa, sub-Saharan Africa with 15 markets, and Middle East, North Africa, and Pakistan with about 10 markets. In markets like Uganda, Qatar, Bahrain, Ghana, we are the first bank to have established operations. In many of the markets, we were the central bank till a central bank was formed, and we continue to maintain strong regulatory relationships as well as relationships with the government.
We are one of the major facilitators of capital flows into this region. In the recent IMF meetings that we had, I want to share an anecdote. We arranged a day with 10 sovereigns, 150 fund managers came in, and then the response was overwhelming, and the feedback that we got was really, really encouraging. No other international bank was able to replicate what we did. Recently in Pakistan, foreign investors have started putting money back into the economy post the announcement of the IMF program. 80% of the foreign flows are coming through us. I state all this to give you a sense of the depth of the franchise that we have and the breadth of the franchise that we have, and of course, the 160 years that we've spent in many of the markets. That is a competitive advantage. Moving on.
I've spoken about the competitive advantage, Bill also mentioned about the challenges that the economy have faced recently. It is a high-risk region. We have to accept that. Exchange volatility, high inflation, debt sustainability are major issues. Financial crime and linkages to sanctioned countries is another risk that we have to be conscious of. The perceived risk of this region, in fact, is greater than the actual risk. That's a challenge, and it's also advantage for us in certain ways. We have invested significantly in our capabilities to improve and strengthen the platform, for instance, on financial crime risk, on sanctions, for instance. We have strong relationships with multilaterals, with development financial institutions, with export credit agencies, which allows us, using the vantage position that we have and deep understanding we have of the markets, to structure transactions and distribute the risk and manage the risk.
That, again, is a competitive advantage. Very few international banks can replicate that. Moving on. Just a bit about the economy. These are both resource-rich economies, their economic cycles are linked and connected to the commodity cycle. You can see from the chart here that as the commodity cycle moderated, the growth rates also moderated. You have a few economies like Pakistan, which are counter-cyclical in that sense because they import energy, they import their commodity requirements. They did better when commodity prices went down. All in all, it is an economy, it is a region which is dependent on commodities. Secondly, you have a dominant role of the government in these economies. The governments are spending huge amounts of money in these economies and play a disproportionate share in these economies. That is changing.
If you start looking at the medium-term plans that most of these governments have set out, they want to balance the economies. They want to increase private sector participation. They want to privatize a lot of the state assets. That creates an opportunity for us as one of the major conduits for capital to bring in international and private sector capital. As we speak, the governments continue to invest in their core sector, oil and gas, and minerals. That creates a demand for capital. The infrastructure requirements, driven by very strong demographics, means that you need to keep investing in infrastructure as the region rapidly urbanizes. It's got one of the fastest-growing population growths. It'll have the youngest working-age population globally, and in the next few decades, it'll have a population which will be larger than China and India combined. That's a massive number.
It will continue to require capital to invest in its core sector, as well as in the infrastructure sector. That, again, creates a lot of opportunities for us. 2015 was a tough year for the bank. It was no different for the region. We took some difficult decisions around exiting subscale markets or segments in subscale markets, for instance, retail in Oman and Qatar. We de-risked the books significantly by reducing exposure to some of the tall trees. We got out of certain asset classes, wide-body aviation, for instance, that had an impact on the top line, but that was a deliberate decision. Exchange also played a major role. Between 2015 and 2019, roughly $400 million of income was lost due to exchange fluctuations.
However, we took aggressive action on efficiencies, managed our risk very tightly, and the outcome was that our risk cost, which was about 270 basis points in 2015, came down to 90 basis points in 2018. The first nine months of this year is below 40 basis points. That's a vast improvement, and as a result of which, our operating profits are up more than 40% during this period. This should be a familiar sight to all of you. This is something which Bill and Andy presented at the time we discussed and shared our refresh strategy with you. We, as Africa and Middle East, are well on our way to executing these priorities. I'll touch upon each one of them very briefly. Starting with the network. I have already spoken about how the network is a competitive advantage, how it is differentiated.
Out of our top 100 customers, 80% of them use the Africa and Middle East network. The network income, as you can see, is growing high in high teens. The returns that we derive from the network income is higher than what was already an attractive rate for the group. It's higher than the group, about 260 basis points higher than the group. That's a very powerful combination. Customers using the network income growing, and the returns being attractive. That combination means that we can sustain and hope to grow the attractive returns that this region generates. Moving on. The Africa and Middle East region is slightly different from, say, the ASEAN South Asia or GCNA market when it comes to affluent segment. This region comprises largely of emerging affluence. We have to manage our business model to cater to that particular fact. What have we done?
We have started putting on the products, wealth management and bancassurance products, onto a digital platform. Technology today allows us to acquire and target customers in a cost-viable way in large numbers. That was earlier not possible unless you invested heavily in a branch network. We're also working with regulators, advocating change and opening up new markets. If you see the bancassurance market, that's doubled in the last two years. The number of customers, as this economy has matured, savings increase, the penetration of insurance and wealth is increasing, and we are in a very good position to capture this opportunity. Again, the combination is very attractive. We're using technology to acquire more customers. We are penetrating more customers with wealth and bancassurance products, and the returns are very attractive, and you're opening up new markets.
Moving on, we've spoken about the efficiencies that we worked on quite relentlessly. The number of branches that we have, if I compare with 2015, are down by a third. Our head count is down by over 20%, and we've invested all those savings into technology and into digital. To share some numbers with you, our actual salary costs are down 14%. Our head count is down 24%. Our premises costs are down 18%. The investments that we've made during this period is up by a factor of 7.8. That's a massive number. We have driven efficiencies very hard and invested in creating a digital ecosystem. Coming to digital, I've spoken about digital quite a few times. What are we doing exactly? We are investing in a mobile-led platform, an end-to-end digital mobile-led platform, which is self-assisted and where your processes are digitized.
It means your cost of acquiring and your cost of servicing comes down significantly. Our initial estimates suggest the following, that our cost of acquisition is down by 80%. Our cost of acquiring is down 80%. Our cost of servicing is down 60%. We are now, if I compare it to last year, acquiring customers at the rate of 4x compared to September of last year. If I compare to October of this year, this year to last year, we're up 5x. Month-on-month, that number is going up. We are acquiring customers in large numbers, and we are acquiring them at a cost that makes it very attractive. That's a big change taking place. We have put 70 most frequently used services onto the digital platform. The customer no longer has to call his or her RM, no longer needs to walk into a branch.
Our usage of this channel for services is now 50% in a market like Kenya. That's a big improvement that's going up. We have most recently launched what we call CDI branch. It's a staff-assisted, our staff-assisted, tablet-based onboarding of customers. From 1st of January 2020, we will stop all paper-based onboarding across nine markets where we have digital banking in Africa. That's again, a big shift and a big change. We are now exploring alliances, and there is a lot of openness and willingness of telcos to partner with us to offer financial services to their large customer base. That will be a game changer. That equally applies to e-commerce platforms. Now, I have spoken about some of our strategic priorities. One important component of that was optimizing certain markets that were called out in February. There were four large markets that were called out.
One of them was UAE. UAE for us in Africa and Middle East is roughly 25%-30% of different financial metrics. It's a very important part of the entire franchise. Rola Butros, our CEO in UAE. She joined us in August 2018. She is the first woman Emirati to head a bank in UAE. She spent more than two decades as the head of corporate institutional banking for the largest bank in UAE. Rola, if you can come over and share some of your thoughts. Thank you very much.
Thank you, Sunil. Hello, everyone. My name is Rola Abu Manneh, and I'm the CEO for Standard Chartered Bank in the UAE, a role I've had since August last year. As someone who has worked in the UAE for my entire career, I was inspired to join the SCB family, as I had seen the fantastic values of the bank, the strength of the brand, and the incredible quality and commitment of the staff and senior management. I wanted to be part of delivering this for clients, and so far, I have not been disappointed. Today, as you will see from the slides there on the screen, I'd like to talk to you about our UAE business support, how the group in serving clients operating in the region, our plans to optimize returns, and how we are executing the group's priorities.
The UAE has developed rapidly to become one of the world's most modern and wealthy states. It offers businesses stable political and macroeconomic conditions, the forward-thinking and future-oriented government, and good general and technology infrastructure. Economic growth over the past couple of decades has been impressive, and despite the most recent slowdown, has had only brief periods of recession, namely 2008-2009, after the global financial crisis. That is still presenting some challenges today. By revenue, the UAE is the eighth-largest market in the global group's footprint. We play an extremely important role as a hub for our business in the Middle East and as a gateway into and out of Africa. It is to the Africa and Middle East region what Hong Kong is to Greater China and Singapore is to ASEAN.
It's important to understand that there is a change taking place in the region, especially Saudi and the UAE, increasingly looking to diversify their economies. We see opportunities from private sector participation and privatization. This plays into the hands of a well-networked bank who can bring investors and clients together. Furthermore, with oil at around $60, the need for raising private capital is even more relevant. Our access to connect the pools of capital and funding elsewhere to the demand of infrastructure in the region and the UAE plays to our strength. Beyond corporate banking, the UAE is a universal franchise. We are an international bank with a differentiated network, able to serve the needs of international companies that operate there. We have a trusted local business with a rich heritage, providing the financial services that the needs of individuals and local businesses.
There are clearly challenges that need to be addressed, especially in our domestic business. We have been very focused, improving the credit quality and impairments in our commercial business and turning around our retail business to improve returns. We have taken some tough actions over the past two years, including reducing headcount and branch numbers and exiting suboptimal relationships. We have seen some encouraging signs of improvement in financial performance year-to-date in 2019. In order to get the overall returns the group as a whole is targeting, it is necessary that we redouble our efforts. Of course, the network business is meaningful with high returns, and we do not want to compromise it. We need to approach the challenges thoughtfully but vigorously. Moving on to the next slide. What can you expect from us?
First, we will be obsessive about delivering value from our core strengths and focus on our differentiated high-return network. On average, the ROCE on our network business for corporate clients is nearly double that of our domestic business and more likely to be associated with capital-light products. We aim to be the bank of choice, supporting investment flows from Greater China and North Asia to Africa and the Middle East. Our capabilities, both onshore in the UAE and through our DIFC presence, gives us a competitive advantage with regional and international clients. We will continue to deepen relationships with our public and private corporate clients and grow revenue from financial institutions, sovereign wealth funds, and government-related entities, especially in Abu Dhabi. In retail, we're committed to growing the affluent client base and providing wealth management solutions to suit their needs, as well as increasing low-cost digital client acquisition.
The combination of these actions is expected to deliver significantly improved returns. We will monitor performance closely and can further refine the model if required. We will need to remain within our risk appetite and not compromise our standards in pursuit of revenue. The mindset is now more return-focused to deliver ongoing optimization of low-returning Risk-Weighted Assets, and tight control of costs will create capacity to invest. In summary, the UAE is a large and stable economy with an important hub for our business, acting as a gateway for Africa. We have a large and high-returning networks business with upside, and we have a meaningful retail business that, with continued investment into digital and new mass affluent propositions, can offer meaningful returns. Thank you. I'll now hand back to Sunil.
Thank you, Rola. I now want to focus on something which is very close to the bank's purpose and to who we are as a bank. We've spoken about the huge capital requirements of the region. We've spoken about the investments going into what is essentially a resource-based core sector, the investments required for the ever-growing demand for infrastructure. This is a region, if you take the example of Africa alone, it requires more than $100 billion of investment in infrastructure. Only 50% of it is being met currently. 60% of sub-Saharan Africa is without regular electricity. As we bring in this capital and fulfill this massive demand for investment, it is also incumbent upon us to ensure that is done adopting the highest environmental, social, and governance standards. We also believe it's a big opportunity and a big differentiator for us if we get it right.
To that end and to that purpose, we started aggressively investing and building up our capabilities in sustainable finance, including blended finance and financial inclusion. The digital capabilities actually provide us that option now to go and bank the unbanked. The start has been very encouraging. If you look at the accolades, if you see the progress that we've made from the largest renewables project in The Gulf to being recognized as the number one sustainable bank in Africa, that's an encouraging start. This is an area where we're going to make significant investments, and it's going to remain an area of focus for us in the future years. At the end of the day, the financial results matter. If you look at the first nine months performance of 2019, it has been encouraging. Client income is up double digit, around 10%.
As I said, we've made good progress in terms of growing our network business, which is high returning. We have stabilized the commercial banking business. We have driven efficiencies, reinvested those into digitizing our operations, and the cost of risk is very well managed. If you look at the financial metrics, income is up around 5% overall. Costs have been held flat. The cost of risk, as I said, has come down significantly, and the operating income is up. Operating profits are up about 26%, with RWAs reducing. That's a good financial outcome. That's an area where we're going to be using this platform, build on it, and start improving our returns even further so that we meet the objectives set out by the group. In conclusion, hopefully you've taken back the four messages that I spoke about. Our footprint is unique and important for our customers.
Long-term opportunities in the region are exciting and compelling. We are embracing digitization and forging partnerships to transform our retail bank, and we are forging ahead executing the priorities of the group. It has been a privilege to work with a diverse team that you will be meeting in the breakout sessions, and hopefully you will gain more from those sessions and more details and granularity from those sessions, in the coming few hours. I now leave you with this final message. The webcast section of the presentation will now conclude. Thank you very much.
Right. Okay. Thank you very much, indeed, everyone, for the presenting strategic markets teams. I think they did an excellent job in the rooms that I was sat in. Hopefully, you learned a few things. Lots of scribbling. This is just really a wrap-up area. We can go wherever you want on this one. Large macro questions you want to raise or kind of anything at this stage. We will record this, if we think there's enough questions that are worth then transcribing and putting on our website, to link to the webcast, then we will. Really it's up to you. For questions, we've got Sunil, we've got Bill here, the whole team that you would've met during the course of this afternoon. Really over to you. I'll hand it over. Alastair. If you just say your name and firm.
Yes. Alastair on Bank of America. I suppose the question is, what are the constraints on the growth of this business? What's the balance sheet constraint? What's the investment constraint? Clearly at the top level, those are things we give Bill a hard time about constantly. Within the framework, what are you given to work with? The opportunity set's there, but what are the constraints on what you do?
Thank you very much. I think this is a region where the demand for capital is massive. For us, we need to manage the risk. We need to be selective in terms of what we take on, and we should have the confidence also to distribute it. It's very important, because you need velocity in your balance sheet. For us, returns, ability to structure, distribute, become very important. An element of that also is the cost of funding. The pricing has to be right, which is linked to the returns. That's on the corporate institutional banking. On retail, we want to grow profitably. As I was mentioning to one of the groups, I think it was you were there in that.
We need to really use, or utilize the investment that we made on the digital front to grow the customer base in a profitable manner. For that we have to understand what is the cost of acquisition and servicing, which is what we are deeply into. I wouldn't call that a constraint, but that's an imperative. Our model is quite different because that's the channel for us. We are not a standalone, private equity funded digital bank.
Okay, cool. We'll come in close to Manus and I'll hand it to you, and then I'll come over this side. There you go.
Hi. This is Manus Costello from Autonomous. You talked in various sessions about needing to meet the group return on equity, return on tangible target by 2021. Don't these regions have a higher cost of equity and therefore should have a higher hurdle rate applied to them? How do you feed your thoughts about local cost of equity into the returns targets, which you would have for these regions?
Mohammed, you want to take that? In terms of
Can you use your own microphone?
Yeah, sure. In terms of the cost that is allocated to us, or the capital that is allocated to us, it takes into account the higher risk that these markets carry. If you look at a market, say, like Pakistan, or a market in Africa, the capital that we have to carry takes into account the higher risk of that particular market. Which means that the returns that you see are on a higher capital base. That's already built into the returns criteria that we set for ourselves. We carry, if you look at a like-to-like loan booked in a high-risk market versus a low-risk market, the capital charge is higher, and that's the way we compensate. Conversely, you need to have a higher return required to cover the higher capital base that is required.
Yeah. I think you're spot on. From a local perspective, actually we're already there, right? In most of our markets, we are anywhere returns between 15%-25%, based on invested capital. Because we incorporate the country risk as well, we have a concept of notional capital allocated to these markets based on the risk of these specific markets. Accordingly, when we say we want to achieve our hurdle rate of 10%, it's based on adjusted risk metrics and adjusted capital, even if not invested in the market itself.
Yeah.
Hi, it's Raul from JP Morgan. If you look at the history of Standard Chartered, one of the mistakes the group has made is to go down too much into mass market retail in other markets. Clearly that doesn't seem to apply in Africa in your current strategy. Why do you think that is different, and what are you doing differently now to not make the same mistakes of the past?
I think the fundamental difference in Africa, since your question is on Africa, is that the mass market in Africa is not asset led, it is liability led. Your RWA charge is zero, and the interest rates and the returns that you make on them are very healthy. Our challenge is how do we grow that base and how do we put more capital-like products onto that base? That's where digital helps us, that's why we are putting quite aggressively our wealth management and bancassurance products onto that market. If you had an asset-led mass market proposition, you carry a lot of risk. This is a liability-led mass market proposition. That's the fundamental difference.
Questions? Jenny.
Jenny, QIC Fund. Can I ask about capital efficiency? When I look at your RWAs, they've come down a bit over the last few years.
Some of that's going to be the op risk. A few of that's kind of amongst the other [inaudible] . As we look forward, obviously, there's quite a bit of regulatory RWA inflation that's going to come through. If I look at the breakdown of AME, the majority of the profits are being driven by the CIB. I'd assume that the majority of this capital is allocated to the CIB. How do you think about improving the returns in that to compensate for the additional RWAs that are coming through?
We've been very disciplined about our RWA. You're right, the bulk of the profits are from CIB. If you look at the new business that we book, there are clear thresholds in terms of returns. We are not looking at aggressively building up on RWA. What we are really looking to build is our distribution capability. That's key. That's linked to the first question that I answered, our risk appetite and our ability to distribute, because the demand is there. We will, of course, grow in a calibrated manner, but if the returns are attractive, yes, we'll take those steps. We are not looking to grow RWA in any aggressive fashion. Our focus will be lead a transaction, book a deal, but then distribute. Use our ECA relationships, use our multilateral relationships, use our development finance relationships to credit wrap, credit enhance, and then distribute.
That's what we are focusing on. That's very different from what we used to do, say, four years ago or five years ago. That's a very fundamental difference.
Are there further efficiencies you think you can find that can compensate for those incoming RWA? Obviously, that is quite a big part of the group.
We are taking steps. Below 3% return book, we are selling down. We are selling down, we're taking some upfront losses, but then we are booking stuff which gives higher returns. We are exiting certain markets in terms of certain customer segments where the returns are low. We are creating efficiencies, as we have created on the cost base. We are creating on the RWA base and then substituting it with better returning assets.
Okay. Thank you, Martin.
Yes. Martin Leitgeb from Goldman Sachs. Is there any particular market which stands out in the broader region where you think the market could be target for particular growth strategy for the group? Is there anything you think you might be missing in terms of either from a product perspective or one of the major markets which would help you better serve these trade channels and corridors you have highlighted earlier?
Any other markets where we could potentially grow faster? Is that your question?
Anything you think where your footprint is too small at this stage, where you could benefit as a broader franchise and for the network, if you were to focus more aggressively on growth.
If you look at our footprint across Africa and Middle East, clearly, there are three large markets where we don't have a commercial banking presence, or, sorry, a commercial license or a branch license, or an operation of any scale. One is Saudi, where we have a limited license, and we've now obtained a full branch license. You'll see us expanding our presence there. South Africa, we have a branch license, but our operations are quite limited in that sense, quite focused. The nature of the market is that you've got four or five really large players, similar to a couple of other markets like Australia and Canada. There, if you really need to grow, you need to have certain inorganic kind of aspirations. The other one is Egypt.
These are three we see as immediate large economies where there could be an opportunity to grow further, either by getting new regulatory licenses or growing what you have. While we wait for the next question, for the benefit of those who may not have been in some of the sessions, I think the questions that we got were very much focused on the four themes that we spoke about. One is the network. A lot of questions around the value of the network and how are we differentiating and getting into the granularity of it. How could we grow that quicker? What is required to grow that quicker? That was quite an interesting and robust conversation. The other one was around retail and digitization. What value does retail bring to the overall franchise, and how is digitization? It was very well received, how is digitization?
What aspirations do we have for digitization? Some of the aspirations we shared, I think, some of you felt were quite conservative, and maybe the runway ahead was far greater. We take that on board. The other one was around the underlying economies. When do we see growth kind of going up from the current 2-2.5% to a more normalized 4%-5%? The sessions that we had were very, very interesting, but these were the large thematic questions that were raised. What was the plan B if some of the large markets or the segments within those large markets didn't ultimately end up performing to the expectations that we have or the metrics that we set for ourselves. Yes, please, get back to the questions.
Okay.
Africa as a continent is often cited as an area which has suffered, in particular, from a protectionist or discriminatory approach to trade by the European Union. How well-positioned do you regard yourselves? How well are you positioned to take advantage of any liberalization of trade which may arise if the U.K. or other countries manage to escape?
EU is the largest trading partner for Africa. We see trade in Africa growing a couple of ways. One, as you mentioned, if it opens up and there are bilateral trade agreements reached. I think fundamentally in the medium term, I think it's the intra-Africa trade that's going to really change the game. What do I mean by that? The Continental Free Trade Agreement, we've had a good start in terms of the agreement being signed up and agreed. There are 54 countries that had to sign up to the agreement. Currently, the intra-Africa trade is only 16%, versus 60% plus in the EU and 50% plus in ASEAN. There's a potential in the medium term to really create a large, robust intra-Africa trade platform. That's what we are quite excited about.
We are working with and having conversations with some of the development finance institutions that are looking at creating the core infrastructure and the regulations to facilitate this. In the medium term, I think that's going to be a big game changer.
For the transcript, that was for Investec. Thank you.
It's Andrew Coombs from Citi. A couple, please. The first, the deliberate de-risking actions and the regulatory changes, in Kenya and Nigeria, $230 million income attrition. Could you just give us a feel for how much of that is in CIB versus how much of that's in the retail bank?
De-risking was both in CIB and in the retail bank. CIB mainly to reduce the tall trees and the concentration risk that we had. Retail was largely on the high-risk personal loan portfolio, where we felt that the economic cycle was taking a turn for the worse, and we decided to move ahead and de-risk that. In terms of de-risking and the regulatory you said, yeah. Regulatory was in Kenya, largely on retail. Nigeria was, I think 50/50 between transaction banking as well as retail.
Okay. That's helpful. Then just on the retail and the digital proposition. You've rolled out in eight countries. You've got quite ambitious targets in terms of client acquisition. It's a very compelling story. Yet when we look at your revenues over the past few years, they've clearly stepped backwards. If you were to try and strip out these items, can you explain just a bit more what the revenue headwinds are on an underlying basis in that retail segment that you're facing?
I think retail was a segment that got impacted the most from currency depreciation. As I mentioned, at the outset, if you look at between 2015 and 2019, we lost about $400 million of revenue, just because of currency depreciation in markets like Pakistan, Zimbabwe, Zambia, Ghana. Retail challenge currently is primarily in two markets. One is UAE, which we have called out as a country. Rola and the team have done a good job in terms of returning it back to pretty decent profitability. retail has just about turned profitable there, and we need to address that and really enhance the returns because UAE retail is approximately 50% of our RWA for the entire region. We need to fix UAE.
Sorry, what was the number?
It's about half in terms of the overall asset base. UAE needs to be fixed for the overall retail returns to be acceptable. That's where we are.
I just have the final question along this theme. If you look at the revenue split between CIB retail, commercials, CIB majority at the moment, retail making up most of the rest of it, where do you see that same split in another three years' time? Do you expect retail to grow faster than CIB from here?
Retail in terms of % would grow faster. Of course, benefiting also from a lower base. CIB is a much larger business and we don't see that slowing down. We won't want it to slow down. It's just got a good pipeline. It's got a great proposition. It's got fantastic returns. We see no reason for slowing that down.
Any more questions? Okay, great. Lovely. Okay. Sunil, thank you very much and the team, thank you very much. Most importantly, thank you all very much for coming. Very happy to sort of take questions in a more informal setting. For that, I think we can close the session. Thank you very much