Right. Good morning to everybody, and good afternoon to those who are joining from overseas. We're going to split this into two sessions or two parts. First one looking at 2018 and results for that year, which I'll do now. I'll hand over to Bill, who will pick up on the strategy for the next 3 years. With that, we will eventually get to some numbers. Just the key sort of summary, and I've got more detail on several of the line items here. To go through this at a high level, overall income for the year up 5%, cost increase 2%, slightly lower costs in the second half than the first half, and clearly opening up jaws. The credit impairment charge is a little bit higher in the fourth quarter, but only a little bit. Overall, nearly halved on the previous year.
You will recall the previous year nearly halved on the year before that. Continuing very strong progress on the impairment side. Other impairment includes some charges relating to the ship leasing business, which is part of the strategy update we have today announced we will be withdrawing from over time. You put all of that together, and the underlying profit is $3.9 billion, 28% increase year-on-year. Below the line, provision for regulatory matters, $900 million, which we announced last week. We have got to a point where making a provision for that is now the appropriate thing. Not fully resolved, but that is the best estimate at this point in time. Restructuring, $0.4 billion.
About half of that is the final stages of the 2015 strategy, and the other half are some costs to do with the refresh of the strategy going forwards, and hence statutory profit up 6%, notwithstanding the big charge on the regulatory side. Below the P&L, I think a really important line here, risk-weighting assets were actually 8% lower in the year. We actually generated 5% more income off 8% less risk-weighted assets, which clearly is really important as we move forwards, particularly in terms of required capital levels, which we'll come back to. Underlying earnings per share at $0.61, up significantly year-on-year. Hence, the proposed dividend nearly double that of the previous year, albeit a year which didn't have an interim dividend in it. CET1 ratio at 14.2%. That would have been 14.5% but for the regulatory provision.
Capital levels still very strong. All of that pulls together in terms of return on equity at 4.6%, or on a tangible basis, which we'll use moving forwards, at 5.1%. Bear in mind, that was negative 3 years ago. Clearly, we need to get that up to double digit, which is a lot of what we're going to talk about later. Those are the key elements of the numbers. This chart is just a quick reminder on the journey that we have come on income going back to 2015. In 2015, we had $15.4 billion of income. We, as you will recall, went through a period of de-risking and exiting, and that took essentially rebased the income down to just below $14 billion.
Over the last two years, we have built that up to the $15 billion level with an underlying growth of $0.4 billion in 2017, then the $0.7 billion in 2018. Momentum picking up as we have gone through. If I look then at the 2018 income relative to the 2017 income, that is an increase, as shown on the previous chart, of $0.7 billion. You can see from here that that was pretty broad based. We had the corporate finance income slightly down, but otherwise we had income go up across all of the product areas with, in particular, transaction banking, albeit within transaction banking, cash management, which grew over 20% leading the way. Most of the other areas there, product areas grew by between 3% and 7%, as you can see from that chart.
Pretty broad ranging base for the income growth. This chart is then looking at Q4 compared with Q4 for the previous year. At a headline level, 3% improvement, albeit if we had done it on a constant FX basis, it would have been a 6% increase. The FX conversion into dollars has worked slightly against us. General theme, I think similar, albeit Wealth Management on this chart is on the right-hand side. That is, I think you'll recall, Wealth Management was very buoyant at the early part of last year. Hence the Q4 on Q4 comparisons slightly weaker on the Wealth Management side.
We've observed that as we go into 2019, we've made a solid start, but because of FX and because Wealth Management FM was so buoyant a year ago, then the Q1 will likely be a little bit lower than it was last year. Overall, 3% increase there on report a 6% on the constant currency basis. Looking then very high level at how this comprises when looked at across the client segments. The top left, the CIB, the corporate business, a very strong year, 6% growth on the top line. I think more importantly, we have seen the profitability increase very significantly, and the return on tangible equity has gone up from the mid-fours to the mid-sevens during the period.
As we seek to get the overall returns up to 10% level, clearly having our biggest client segment make such a big step forward during the period is really encouraging, we need to keep that momentum clearly going forwards. On the top right, the Retail Bank is again, a reasonable level of income growth, but particularly strong on profit, 18% increase in profitability. The return on tangible equity is already at levels exceeding the 10% overall group target, 11.8% on the Retail Bank. Commercial Bank grew on the top line, went slightly backwards on the profit line. The year before had quite low loan impairment charges, and those have come slightly higher in 2018. Overall, that has held it back on profitability.
Private bank, where we are continuing to rebuild that business, as we have invested more in new relationship managers and systems. That has held it back to sort of break even. Overall momentum top line about 3% during the period. Looking at that from a geographic perspective instead, the big region, GCNA, a very strong year. Double-digit growth on the top line. That was very wide-ranging across the various markets in the region. The profit before tax up 22%, so a big profit improvement in that region. The ASA region also, particularly on the profit front, has moved forward considerably. Strong performance in Singapore, particularly noteworthy. Profit before tax in the ASA region up 97%. The region that has been more challenged has been the AME region, partly local economic conditions, partly foreign exchange and conversion.
Overall there, a slight reduction in the top and the bottom line. Europe and Americas, the sort of powerhouse of origination for the commercial business globally, that has seen its profit over double during the period. Changing tack and moving on to costs, which I know got quite a lot of focus during the course of last year. We said that we would aim to get the second half costs in line with the first half, and that is what's happened actually with a little bit of FX benefit. We have come in slightly lower in the second half, which is the first time that has happened for a while. I think we do have good control over the costs.
Just to look at this a little bit back in perspective, in 2015, our costs, these are all excluding bank levy, were GBP 10.0 billion, in the intervening period, we have absorbed the reasonably considerable inflation, high regulatory costs and the amortization of the increased IT investment spend. Notwithstanding that, through the cost takeout, we said we'd take out GBP 2.9 billion over four years. We took out GBP 3.2. That has resulted over the three-year period in the cost being pretty much flat, whilst reinvesting, which I'm going to come onto immediately, a lot more into improving the IT architecture of the overall business. Good positive jaws enabled by that. Investment front, really key part of what we talked about in 2015 and acceptance then we were not investing enough in the fabric of the business in IT terms.
In the 2015 and prior period, we had typically been investing below GBP 1 billion a year. We have on average boosted that by around half. Last year was actually GBP 1.6 billion. I think more noteworthy is the proportion of that that is actually on things that are tangibly improving the businesses. In the green on there, you can see that back in 2015, about GBP 0.3 billion was on things that were improving the business rather than sort of regulatory projects. That GBP 0.3 has now moved to GBP 0.9. We have tripled that over that period of time. The evidence of that now having a real impact in the business, I think is strong, and we've picked out one or two data points on the right-hand side just to show that.
On the retail banking side, the online adoption proportion of customers online has gone from about a third to a half of the business over that period of time. The CIB business, the time to onboard a new client has come down from a pretty frightening 41 days to 5 days, huge improvement there. Straight2Bank customers in the commercial bank, proportion of those gone up from 38% to 58%. The private bank and productivity per head there, which is another area of big focus, now nicely picking up year by year. A lot of those very much enabled by improved systems and the investment that we have been making there. Turning to loan impairment. As I said earlier, loan impairment's pretty much halved last year, and they'd halved the year before.
In fact, they halved also the year before that, albeit off the pretty high base. What was about $5 billion loan impairment in the 2015 year, we are now down to $0.7 billion. The proportion on the bottom left, the proportion of the value of non-performing loans in the total book over that period of time has halved or thereabout. I think the other encouraging thing here is that quite a number of the indicators of the quality of the overall book are also on a continuing improving trend. In particular, the early alerts, which are down about 45% year-on-year. A higher proportion of the book is now corporate grade lending, and our cover ratios are very comfortably ahead of our recovery experience. I think overall good progress there.
The liquidation portfolio we identified in 2015 is now sufficiently small that we'll just wrap that back into the main business and we'll no longer separate that out going forwards. Turning to the balance sheet and asset growth. Top left here is the average interest earning assets. You can see again a good progression here. Around 6% overall growth on the asset side. The yield on that up about 35 basis points over the course of the year. On the bottom left, you can see the average liabilities. The bottom part there being the interest paying liabilities and the top slice being the non-interest bearing liabilities. Overall, 2% increase. We did not need to increase liabilities that much because we are pretty liquid.
The rate we're paying on liabilities has increased, as shown on the top right, by 43 basis points, we paid a little bit more during the year for those than we've got back on the asset side, which is something we are very focused upon. Overall, when you take the mix and the weight of the assets versus liabilities, the consequence of all of that is the NIM has gone up by 3 basis points to 1.58%, and the overall increase in the net interest income, 7% to $8.8 billion. On forward-looking interest rates, the 50 basis points proxy that we've used moderated that down a little bit to about $200 million, which is as you would expect as we move up the rate curve. Risk-Weighted Assets and capital. I mentioned earlier the significant reduction in Risk-Weighted Assets, notwithstanding the increase in the income.
8% reduction, 2017 to 2018. About half of that comes from the improved quality of the loan book, and the other half comes from a mixture of foreign exchange operational risk and market risk. A big area of focus, and interestingly, if you go back three years, we're about $45 billion less RWAs with only slightly less income. Again, I think evidencing the improved quality of the overall book and the balance sheet. Consequence of that on the CET1 ratio is 14.2%, would've been 14.5%, but for the regulatory provisions. Again, casting our minds back in 2015, immediately pre-rights, we were at 11.5%. A progressive build on the CET1 ratio. That has enabled us to announce the near doubling of the dividend. I think good progress there.
Finally, before I hand back to Bill, just a quick refresh on the progress that has been made over the last three years. Not in the sense of applauding progress, but just actually saying we have got a much better base off which to now grow this business going forwards. Recall back in 2015, CET1 is down 12%, pre the rights, 11%. The ROCE was negative at that time, we're now at 5%. Obviously, we need to go at the next 5%. Some interesting factors around the edges here. Top left, CIB profitability per unit of RWA is five times higher now than it was only three years ago. Commercial Bank three years ago was losing money, it is now profitable.
The Retail Bank, the proportion of the income from the priority, more profitable clients that Bill will talk to in a minute, up from about a third to about a half. Investing in wealth management, we said back in 2015 that we needed to replatform and basically put a more up-to-date platform in. That is now largely through. It will be completed, I think, in the major markets towards the end of this year. Investing safely in Africa. A huge change in impairment cost $550 in the 2015 year, down to $40 in 2018. Leveraging, this is very important, I think, as we talk more about strategy going forwards. In China, the income in 2016 was 22% lower than in the previous year. In 2018, we are now, despite everybody's concerns about China, we are on a decided upward trend.
16% growth in our income in China, and we see a lot of opportunities there. Overall, I think the platform for now taking the business up to the next level is so much stronger than it was three years ago. With that, Bill, I will hand over to you.
Great. Thanks very much, Andy. Good morning, good afternoon, everybody. Thanks for joining us here. Just to pick up where Andy left off, I'm extremely happy with the progress that we've made over the past three years. When we look back at 2015 at the challenges that we had, we had a reasonably clear path to where we are today and where we know we need to be over the next two, three years as well. There were a lot of unknowns. What we've demonstrated in the meantime is that we can grow the key parts of our business that we had recognized from the outset are real competitive advantages. We've grown those businesses. They're generating high returns. We see the opportunities for continued growth, and we will exploit those. We're going to talk about that in some detail.
Very happy with the progress that we've made over the past three years. I love where we're starting. This period of refresh strategy, I couldn't have asked for much more. Where are we today? We're sitting here with clients that are doing more of their business with us, more of the business that we want to do with them, playing to our key strengths. They're telling us that we're easier to deal with. They like dealing with us. They stuck with us through the dark days. We had some dark days. I mean, you saw them. We felt them very acutely inside our bank. We've come out of that. We're extremely well-positioned today to generate real growth over the next three years to get to this 10%+ return on tangible equity that we're talking about.
I'm going to speak a little bit about our refresh priorities. Andy's going to give some more detail, and we'll then wrap it up and get to Q&A. Just key messages, this is what we're going to take you through today. We have some core competitive advantages. Our network business is unique. It's differentiated. We often get the question, "Can you really prove to us that you're getting a good return on this stuff?" The answer is pure and simple, yes. We'll give you some detail on that and then help you maybe fill in some of the blanks. A second is this focus on our affluent client business. This is a key differentiator for our bank. Obviously, it's the retail part of our business, together with our private bank.
We operate in 26 retail markets with varying degrees of mix between our affluent and mass market business. Where we've got a heavy affluent focus, we're generating faster growth, higher returns. We have a differentiated wealth management product offering. Our open architecture approach, where we're not asking our suppliers to compete with our own product. We're distributing the best product for clients at any point in time. It's differentiated, we see that in our growth. We see that in our returns. We'll talk about that. For all the progress that we've made, we're not fully there. Obviously. We're not at our cost of capital plus, we have much more to do. We're going to start by obviously investing in getting our top-line growth at a sustained higher level.
The second is we're going to address the drags in our portfolio, and we'll talk about this in some detail. We have a number of countries or businesses that are still generating relatively low returns, and we've got action plans for every one of those. They're achievable based on the progress that we've made in transforming so many parts of the bank so far. We clearly have more to do. Third is, Andy gave some key highlights on the cost savings and efficiencies that we've driven over the past three years. We'll continue to be focused on efficiency, but increasingly our focus will shift to productivity, increasing the income per RM, decreasing the cost per unit of transaction, and various other measures of productivity. We're doing that with the help and assistance of a new Chief Operating Officer and associated organization, re-engineering our process from end to end.
We are extremely aggressive in terms of looking at this process, we'll shift our focus from efficiency to productivity to drive this bottom-line improvement and improvement in returns. Fourth is focus on digital. We are a very good digital bank today. We're recognized by clients and by competitors in our markets as being a leading digital bank in Asia, Africa & Middle East. We have excellent digital banking, mobile banking, online banking capabilities in retail. Our Straight2Bank platform is a benchmark in the industry for corporate clients, corporate treasury portals embedded in our corporate desktops. We can go from having digital as an enabling tool, which it has been and will continue to be, to a step further, where we can actually address some of our structural challenges through digital technologies, through business model innovation, and through disruption.
Standard Chartered is in a position now to disrupt in some of our key markets where we have very valuable franchises, but not very much profit. Deliver that value in the form of profits, in partnerships or organically. We'll talk about that. We get this right, and we're very confident that we can. We will generate a return on tangible equity above 10% by 2021. We will produce incremental earnings, obviously, that will allow us to increase the dividend, possibly doubling over this three-year period. We'll have material incremental capital above that will be available for investment, also available for returns. As we look at this investment versus return question, we'll spend a little bit of time on this as well. We recognize that we've got a healthy investment program today.
We've made big investments for the past three years, as Andy mentioned, we've got plans to maintain that high investment rate. We're taking expenses out of the system in order to further advance our investment agenda. The things that we know we want to do, we've got planned for. The earnings and the capital that we generate above that will be returned unless we have some new things that we can identify that are even more exciting than what we're doing today. We've got a clear focus on getting the balance right between investment and capital return. On page 18, the rest of this presentation is going to be broken into five buckets, all of which I've highlighted in the first page. Delivering our network, growing our affluent client business, optimizing low-returning markets, improving productivity, and transforming with digital.
We've got an important circle in the middle, which is purpose and people, which it's tough to model, but it's an enormous component of what we're focusing on as a bank. We are a purpose-led organization. That purpose resonates with our colleagues, with our clients, with other stakeholders, it guides the decisions that we take. We've invested enormously in people and will continue to. I can say today as we sit here, we've got a clear focus on our purpose. We've got a clear understanding through the organization. We made key investments in people, that will remain a priority for us for the remainder of all of our time here. Page 19, just hitting the financial framework high points.
Obviously targeting this 10%+ ROTE, reaffirming our commitment across the bank to 5%-7% income growth, similar to guidance that we've given in the past, business by business. Mentioned the $700 million of gross cost efficiencies, which will allow us to fund investment. We will manage aggregate costs below inflation. That obviously is the positive jobs that we will need to have to get the improved returns. Revising our capital ratio target from 12%-13% up to 13%-14%. We think this better reflects the market expectations as we sit here today. Also reflects the fact that we still have some uncertainties to absorb, most specifically the introduction of Basel IV, the resolution of outstanding matters, et cetera. We deliver this program, we will be in a position to increase the dividend, potentially by two times.
As I mentioned, we will throw off surplus capital, which will be available for reinvestment or for return to shareholders. We're going to spend a few pages now, starting on page 20, on our network business to try to shed a bit more light on why we're so excited about this, why this is such an important part of our overall proposition. We know that our corporate client business is generating well over half of our profits. It's been growing at a healthy clip, returns have improved substantially. The improvement has come overwhelmingly because of the focus on network income. If we look back over the past three years, we see a steady increase in network income as a proportion of our overall 10% growth in the last year. 13% return on tangible equity.
Highly accretive relative to the bottom half of this chart, which is the income with our corporate clients that's more domestic. Typically, local lending to one degree or other. We can't get out of the local lending business altogether. It's an important part of the overall offering. We've been reducing that steadily in favor of shifting our focus to the higher returning, faster-growing network business. As Andy pointed out, we've been very successful in increasing our income while reducing our risk-weighted assets. That's captured in this bifurcation between network and other domestic income. A little bit more color, maybe draw your attention first to the point I was just making on the right. Return on risk-weighted assets for our network business is substantially higher than the return on risk-weighted assets for our domestic business. That obviously is what makes this business attractive to us.
That premium is across markets, across regions. All of our regions are growing nicely. Although we've had particularly rapid growth in the Greater China and North Asia region. That really is playing to the opening up of China theme, and we will come back to that in just a moment. We can see that the big network income drivers are Europe and Americas. OECD clients that really value Standard Chartered's differentiated network in Asia, Africa, the Middle East, and in Greater China, again, playing to the China opening up theme. Also meaningful contributions from the ASEAN South Asia and Africa, Middle East region. Moving on to page 22, a bit more granularity on this network income and some of the exponential effects of the focus that we're getting.
As we shift from having relationships that were skewed to a single market or just a couple of markets or a couple of products into client relationships where we can help provide or provide services and products in 11 or more markets, which we have many, we get a 16x multiplier in profit. This is truly exponential. As we broaden and deepen the relationships with clients, really leveraging the maximum of our network, we get much higher income. Looking at how this breaks down into sub-client categories, about half our business is financial institutions, which have been growing very nicely for several years. This Financial Markets institution business is everything from correspondent banking to facilitating cross-border trade, Financial Markets dealings, treasury services, custodial services, securities services, right? These are core commercial banking businesses for Standard Chartered Bank growing very nicely.
Why are we generating this kind of growth from a client segment that's very mature? Obviously, the financial institution client segment is mature. Because we focused on it. Simply because we focused on it. This is the value that we've gotten from taking a great franchise that had been underinvested and under-focused and refocusing the team. You look at the corporate side, it's not so impressive, right? We get 3% growth, 5% growth. That doesn't tell the whole story because when you break that corporate component into OECD clients, which are growing very nicely. This is this focus that we've had on delivering our outstanding network to clients in Europe, Americas, Japan, Korea, India, China, all of whom have a large proportion of sophisticated global multinational companies. Get good growth in the OECD market. Less good growth in the non-OECD client base, right?
Our emerging market client base isn't growing as nicely. Those relationships tend to be a little bit more domestic, a little bit less network-oriented, and we have a higher penetration there already. The key message on this slide is more products, more markets, more clients, more profits. We're focusing on the client areas where we can get that growth, and we're actually delivering that. You ask, is that network business really valuable? It sure is. We're demonstrating that both in returns, in growth, in market share, in client satisfaction through key differentiation. This is an example on page 23 of a single client. It's a Chinese multinational corporation. We have dozens of these. We would have to have dozens of these to get the aggregate growth rate in network income that I've already highlighted.
This is not just a one-off, pick the nice example that happens to support the point. It is statistically one of many. It has to be. Where with a single relationship over a three-year period, we've got more products, more markets, more deposits, better quality income, better capital efficiency, i.e., the risk-weighted assets are growing slower than the income measures and the deposit measures, leading to a 2.6 times improvement in return on risk-weighted assets from 2015 to 2018. We have many more of these opportunities to go. We've really barely scratched the surface in terms of clients in particular coming out of OECD markets where we have been investing. On page 24, I'd like to dwell just for a moment on China. You've seen in the growth numbers, you've seen in the network numbers that the GCNA region is central for us, it's critical for us.
It's based on our exceptionally strong position in China, complemented by our exceptionally strong position in Hong Kong. Not to forget also the much stronger position we have in smaller markets like Taiwan and Korea, clearly playing into the broader Chinese trade ecosystem. We believe in China. Obviously, we note the slowing down of economic activity in China, and we are fully cognizant of the risks of increased trade tensions. Despite that, we think that the outlook for China is good. We think they're taking the steps necessary to maintain economic growth at a really healthy, robust level. Wealth is accumulating, trade is growing, and the proportion of global growth that will come from China is very high. We are exceptionally well-positioned in China. We're a leading bank in the opening up of the capital markets. Number one cross-border payments bank.
Number one bank in Bond Connect, which is the facility to bring external capital into the Chinese market. Number one, or certainly top tier, in the internationalization of the RMB. Number one Belt and Road bank, focused on not just our relationships in China, but our relationships across the Belt and Road countries, where we have presence in 45 different markets. We're well-positioned in China. We think China will present us with ongoing great opportunities. If we switch to page 28. In Africa, a slightly different story, right? African economies are under pressure, as we know. Most of the region is in recession of one form or other right now. Despite that, our confidence that Africa has great medium, long-term prospects is undiminished. Substantial increase in expected trade volumes as the African economies themselves open up.
Very rapidly growing middle class at a demographic dividend, and growth that's still above the global average. We're exceptionally well-positioned in Africa, both to generate profit in each of our African markets, which we are doing today, and we think we can continue to improve profits. This is a good, profitable region for us, despite the current pressures. In addition to that, we've got a very important element of our differentiation for our non-African multinational corporate clients is our African business. 62% of our top clients in CIB deal with us in Africa.
It's not the only reason they deal with us, but when we think about the things that differentiate Standard Chartered Bank versus other banks that have networks, not our network, they have different networks, but many of them deal with us because we can solve their problems in areas where they can't find anybody else that actually has the local presence to understand the problems they have, in this case, in Africa. A good underlying profitable business for us. Good growth opportunities, and very important for the overall differentiation of our network. That was a quick run-through on why we believe so passionately about the value of our network business and why we're continuing to invest in it. I'd like to switch now on page 29 to 26? I can't see the numbers. Sorry.
I'd like to switch now to the focus on our second theme, which is our affluent client population. Like the network business, you can see we're getting the benefits of focus there. The wealth management priority clients, premium clients, private banking business was a little bit less than half of our income three years ago. Through a focus on marketing, through a focus on technology, through a focus on the way we organize our branches, just the way we've oriented our retail bank, we've had a substantial improvement and increase in our priority client segment, growing at 8%. Very high returns, 30% return on tangible equity, because of course it's a much less capital-intensive business. Bulk of the income coming from wealth management products and deposits rather than personal loans or credit cards.
A clear shift in the nature of our retail business and driving the good top-line growth that we've had in retail and the good ROE improvement that we've had in retail. We'll talk about that in a little bit of detail in the following pages. We'll also talk in the separate sections about the other income. This is the mass market. Obviously not an exciting story at all. 0% growth over the last year and over the past three years. Now, that's better than the negative growth that we had for most of the previous 10 years as we effectively attrited our mass market business. Not good enough by a long shot.
We're going to look at how we can improve both the growth rate in our retail business, but also the profitability, which as you can see is slightly negative, through aggressive digitization, ongoing management of costs, ongoing management of physical infrastructure, et cetera. We'll talk about that in the coming slides. For the time being, let's just focus on wealth and the affluent client segment. You got a measure on the left just capturing a few of the benchmarks for the profitability of this business. Obviously, it is more profitable by any measure. We know that we generated good growth. We talk on the right, how are we going to focus on getting this good platform that we built into hyperdrive? Which is really the objective. We think we can do that. First is going to be continuing to evolve our customer proposition.
When we think about the banking world of the future, we can imagine that there's an element of that world which is going to feel a lot like buying any consumer product. You can buy your credit cards or your personal loans the same way you can buy your washing machines or your windshield wiper blades. You can go to [Bubblalic] or Amazon or .com, and you can get that. Our proposition is that clients will have a different segment of their lives that they're not going to want to execute on a generic platform. It's going to be the life decisions that are important to them, how they manage their wealth, how they manage their health, perhaps how they manage the education of their family or themselves or their family. These are life decisions.
We think that there will be a heavy human component to that business for some time to come, and that people will be inclined to aggregate the kind of advice that they get on these things that are interrelated to some degree. Building out our proposition for wealth management products into a broader health and eventually other important life decision type platform will be important for us. Developing personalized and contextualized investment ideas, both delivered technologically, and we've made some great progress on that, but also delivered the old-fashioned way, human contact, voice-to-voice, face-to-face. Our open architecture platform is an enormous differentiator for us as something that we'll continue to develop with more product services delivered through that platform. Clearly, an increased focus on analytics. We just got a few of the measures of progress we've made in the past couple of years.
We know that we have much, much more to go. Just to summarize quickly on the affluent product business, it's key for us, it's growing fast, it's high returning. We're differentiated. We're evidencing our differentiation through market share gains and customer satisfaction gains, and it will continue to be a key area of focus for us. If I can move on to page 29, to the optimization section of our discussion. I'm going to spend a couple of minutes on this page because it's pretty important and there's a lot on here. Start by saying we somewhat simplistically break the countries in which we operate into three buckets. The top bucket is those markets where we are a top local universal bank. Think Hong Kong or Kenya in there.
These are markets where we've got a good scaled retail business, good local commercial banking business, also important network countries. Both inbound, so the rest of the world dealing in those markets, but also outbound, i.e., they've got multinational corporations that need servicing for the rest of their business. We get a good return on both the domestic and the network business in those markets, and we're going to invest substantially as we have to generate the incremental growth that we know we can achieve. The third bucket is countries that are pure network-focused. Think the U.S. or Europe or Japan, where we don't have a meaningful domestic business. We don't have any retail. We've got some small domestic lending. You can see 7% is domestic business. We know that that domestic lending is in and of itself standalone is unattractive.
It is a means to an end. The network business is attractive in those businesses, and it is a big chunk of our network is coming from these pure network countries. We will do as little of the domestic business as we can. We will focus on the network business. We will continue to grow that franchise, more clients and deeper. The challenging bucket for optimization is the middle. This is where we have an international bank with good network capabilities, trusted local capabilities, but typically subscale. The trusted local capabilities are typically retail. In many cases, we have got a market share that is very small in the context of big markets. Think India, Indonesia, Korea, the UAE, which we are going to go into detail on the following page.
We know that we observe that the returns on our subscale local businesses are quite poor. The red circle here does not mean we are losing money. We are actually making a bit of money, but it is dragging our ROTE down materially. It is unacceptable and it is unnecessary. In fact, it is necessary that we correct this in order to get the overall 10% plus return on tangible equity. The network business in these countries is good. We would not want to compromise it. It is as good as it is in the rest of the network. In some cases, there is some synergies between the local and the network business that we would not want to lose either. We have just taken of those 17 countries, 21 countries, sorry, on the previous page. We were doing a deep dive on four. There is a similar story for the rest as well.
The things that these four markets on page 29 have in common are, one, we have good network business in each case, although we can do more. Second is we have a meaningful local retail business, but it is subscale. It is relatively small as a percentage of the markets in each of those cases. Third is we have a retail business that is skewed to the mass market rather than this focus on affluent that we have seen elsewhere. Clearly, we need to address all three of those issues to get these markets up to adequate scale. Of course, there is a different approach in each market. When we look for guidance and inspiration, we often turn to Korea. Still on this chart, because while we have dramatically improved their performance over the past four years, it is still a low-returning market.
As we think about how we can get to this 10% plus ROTE, we are going to have to improve markets like Korea further. How have we done it? Focused on cost. We focused on customer proposition. We focused on liberating capital that had been trapped to one degree or other in these markets, and we made really good progress on all three fronts, and we have more to do. We will continue the trek in Korea. Indonesia, slightly different story. We have obviously had a dual focus with Permata and with our own local bank. We have identified Permata as non-core, which will allow us to focus entirely on our local banking business with some of the same themes that we talked about before. UAE and India have been going through a transformation. We have been shifting and pivoting towards affluent clients, but we have much more to go.
We have focused on cost. We have more to go. We've focused on capital. We have more to go. Each market is a little bit different. We know we can do it because we've made good progress in so many markets already. We have a few other tools that we're very happy to deploy at this point. Recognizing that we've got some outstanding digital capabilities, recognizing that we've demonstrated that we're a great partner for big tech, for fintech, for e-commerce platforms around the world, and we've got some good experience in setting up these partnerships and running these partnerships. We can put that into overdrive and take our relatively small retail franchise that nevertheless has great value, and combine that with other partners in the markets in which we operate to achieve much greater scale, perhaps owning less than 100% of the operation, but that's fine from our perspective.
If we execute this agenda, we pick up 150 basis points of our ROTE. In the progression from five to 10 that Andy took you through, an important part of that, and Andy will take you through, an important part of that is the 150 basis points that come from these countries. We're very focused on optimizing the remaining markets in our portfolio that need optimization. We've got good tools and good plans to do that, and we're prepared to be quite creative in terms of the way that we reposition our business, innovating new business models to get there. If I could shift to page 30 on productivity and the shift from efficiency to productivity.
The benefits are clear on the right side of the page. The progress that we've made in improving our cost of production and our income per capita are strong. As I mentioned earlier, we've got a very structured process now to go through each of our client journeys from end to end, one at a time over the course of this year and into next year, looking for radical changes in terms of the way that we operate. To take the good efficiency platform that we've got and drive that through to real productivity. Finally, if I could shift to digital for just a moment. Digital obviously is part and parcel of everything that we do, and there's an element of the digital agenda, which is a set of tools to make ourselves more effective and more efficient, better customer experience and the like.
We've got a very good track record of delivering these things, and we will continue to do so. I think we're with or ahead of the market in many regards. We're behind the market in some areas as well. There's plenty of upside. The second broad application for digital is this business model innovation. Taking things that we do today and doing them fundamentally differently, perhaps with different partners, perhaps targeting different clients relative to the ones that we are dealing with today. This is relatively early stage, but we've made some good concrete progress. I think we've demonstrated that we are prepared to disrupt in some markets where we think that's the best way for us to achieve the optimal returns. Probably got 3 types of digital application. The circle on the top is those situations where we're deploying our own solution.
When we look at the digital banks that we've rolled out to four countries in Africa with another six scheduled for the rest of this year, these are standalone digital banks. It's using Standard Chartered technology, developed in-house, rolled out in-house, very impactful in these markets, and we think that there's much more to go. We'll talk about that a little bit more later. Similar platforms for SMEs in India. We are applying for a virtual bank license in Hong Kong, which while we're using many technical components from third parties and partners, the package is being pulled together by Standard Chartered Bank. While we'll operate this as a separate entity, we would intend to be able to port our knowledge and competence back into the main bank as we learn from this very important business in a very important market for us.
On the lower left, we've got our ability to work with partners. I mentioned Ant Financial, this cross-border blockchain-based remittance platform, which we started Philippines-Hong Kong or Hong Kong-Philippines, which we rolled out to other corridors. We will continue to roll that out. Ant Financial has been very generous in their praise of Standard Chartered. They've labeled us an outstanding partner, the bank that they prefer to work with, technically extremely capable, able to keep pace with them side by side with good, strong commercial applications and pragmatism. These are the kinds of partnerships that we've been able to form that are really differentiating for our customers and obviously also for the bank. A couple of other examples that we've got here that we'll go into in a little bit of detail. Finally, fintechs. I mean, fintechs are our friends. They feed off us.
We feed off them. They give us great ideas. They give us great products and services. We've got over 500 engagements with different fintech companies. As I mentioned in earlier discussions from this podium, the fintech is a great equalizer, right? We can go head to head with the biggest banks in the market or the biggest e-commerce players in the market because we have access basically to the same technology they do, but through third parties. These fintech providers are desperately keen to make sure that we're never behind a bank that perhaps is much bigger than us with a bigger technology budget. That's exactly what we're doing, and we've become masters at working with partners and fintech companies, and we'll become even more better as we continue to roll out our digital capabilities.
No bank presentation would be complete without a referral to blockchain technology, distributed ledger, artificial intelligence, machine learning platforms, and ecosystems. I've done it, okay? It's all here on one slide. You can digest it all at once. Maybe the difference between what everybody else has said about these six things and what we're saying about these six things is that we're actually doing it. We're doing it because it's kind of existential for us. If we're going to go toe-to-toe with the biggest players in the market. We're going to have to be faster, nimbler, more innovative, and better utilizers of third-party products and partnerships. We have many examples of all three of these things. I've listed just a few of them on this page.
If we move to page 33, I thought it would be useful to give a little color. We're really answering the question, why do you have different digital strategies in different markets? Just take you through a little bit of our decision tree. The first question we ask is it a big market? Is the market opportunity big? Because if the market opportunity is big, we need to throw some serious resources at it to make it work. If it's not so big, take, for example, Kenya or Ghana, we're going to go digital in those markets. We're going to go digital hard, but we're going to do it with the stuff that's on our own shelf. We've got good technology on the shelf.
We've delivered that through our bank, first rolled out in Côte d'Ivoire, now rolled out in Ghana, Uganda, Tanzania, Kenya later this quarter, the rest of Africa, then beyond, over the rest of this year. We can deliver that. It's impactful. It's differentiated relative to local offerings. It's not the cutting-edge state of the art, but that's okay, because we're starting in a market with fewer alternatives for our clients to choose from. Of course, we will continue to improve that offering over time. For those markets which are large markets, but where we don't have a big market share, again, think India, Indonesia, back to the optimization slide that I went through. There, we're also going hard digital, but digital is going to be the answer in this case.
Digital is going to be the thing that gets us from subscale and under profitable to scaled and profitable. We may need to do that with partners. We're very happy to link up through various forms of partnership to deliver our capabilities in a differentiated way, potentially in a disruptive way, into some of these big markets where our existing profitability is quite low. Right? The third bucket are those things where the market is scaled and we've got a good position. Think Hong Kong. The opportunities there are not to hide under a rock and hope that digital doesn't take over these markets or that the virtual banks licenses all become irrelevant, but rather to attack head on. The fact is, we've got a great business in Hong Kong.
We have a lower penetration of the mass market and a lower penetration of the millennial market than we do of the more affluent or older people market, or silver, as we sometimes call it. We'll launch our virtual bank regulatory approval pending, focused on these segments where we're relatively under-penetrated. Are we going to disrupt that market? Yeah, I think we will. Are we going to offer a better banking proposition to those customers? Yeah, I think we're going to build the best digital bank in the world that we're going to deliver to this highly sophisticated group of buyers in a very developed and sophisticated market. Customers will tell us whether we've achieved that. It's going to be good and it's going to be differentiated.
We're going to target those segments of the market that we don't offer today, and we're going to take the best ideas from that virtual bank and port them back into the main bank. Is there the risk of disruption of the core franchise? Yeah, a bit. But we're going to get much more by targeting that 81% of the market. Sorry, that 91% of the market that we don't have today. We're going to get much more from there than we're going to give up on the 9% of the market that we do have today. Very excited about this, both for the technology that we develop, but also for the opportunities to generate profit in its own right in Hong Kong. Digital, central to our bank, critically important. We're in a really good place to start, and we'll continue to drive that hard.
I'm going to wrap up here. We've covered the five points on the left side of the slide. We've hit the key points of the financial framework. With that, I will hand back to Andy, and then we'll have some time for summing up and Q&A later.
On to slide 36, just to pull that together into numbers. Clearly, the objective here is how do we get 5% to become 10%. A little bit more detail on a couple following slides on some of these, but we have reiterated our view that 5%-7% income growth is what we should and will be aiming for. Cost growing below the rate of inflation. We were previously saying at inflation or below. We're saying now below the rate of inflation. Although that looks like a small block on there, I think the productivity gain that is implicit in growing the revenue block substantially more than the cost block is actually quite important here in productivity, a core thesis going forwards. Impairment was commendably low last year, as I talked about earlier.
It would be nice to think it would stay at those low levels right the way through the period. Maybe that would be a little optimistic, we put a slightly higher impairment charge in here. Not because we're worried, just being realistic, that may be the average over a multiyear period. Tax and bank levy, we have tax rates just above 30% at the moment. We see those going just below 30% over time. And bank levy basis of charge changes in the 2021 year, which will put our bank levy charge down to below $100 million. That will give us some benefit. RWA optimization I'm going to come onto in a minute, essentially saying we think that we can actually keep the growth in the RWAs below the rate at which we are growing the top line.
Importantly, with the 13%-14% range, to the extent that we are generating excess capital over and above that that we need in the business, we will look to return that. I think that is probably one of the key differences between the last three years and the next three years, is the last three years, the return on equity has been all about the R, the return bit. Whereas hopefully the next three, it can be about the E and about the R, as we actually manage this to the 10% level. If I take the income side first, split this on the left-hand side into the net interest income, this is slide 37, and on the right-hand side into fees and other income. Our strong belief is that volume growth is absolutely there for the taking.
GDP growth in the markets in which we operate above global averages. If you go back over the last two or three years, we have grown, depends upon which time period, but 5%-6% on volume growth, and we see every opportunity to continue that. The mix of income we will be pushing, as Bill has referred to, very decisively towards some of the more profitable products, more so even than in the past, and that should help a little bit on the margin front. On the liability side, which as you could see earlier, there is a slight uptick in liability cost, but that is very much within our sights now. We know we need to work on that. It's a core cost within the business, and we need to work that down, which we will do.
Rates and margin, interest rate benefit going forwards will likely be lower than that in the recent past, but not nonexistent. There is still some upside from either interest rates already rolling through or some smaller levels of interest rate increase across some markets. Importantly, one we've not talked a lot about before, but some legal entity restructuring that we've been doing in the background. Not very visible. It is well progressed now. Over the three-year period, the ability to actually port liquidity across markets in certain markets will significantly improve, and that will enable us to actually reduce some of the liability cost. On the right-hand side, fees and other income, we've split that between consumer individuals and the corporate side of things.
The big focus, as Bill has been referring to, on affluent customers, the fact that the wealth management platform is being replaced, the fact that over the last period, in fact, since 2009, wealth management income has grown at a CAGR of about 8% over that period of time. Clearly, that is something which we are going to be really pushing very hard over the next three-year period. On the corporate side, several opportunity areas. You can see the CIB business and its strengthening momentum during the 2018 period. The fact that we have got a lot of opportunities still sitting out there, particularly in China, which has been going strong. Despite everybody's concerns about China, we are doing very well there.
E-platforms and a lot of the things we're doing on the distribution front give us very good reason to believe that we can increase the income on the corporate side. Put that all together, 5%-7% on the average over the next three years is where we are setting our sights. On costs. $10.1 billion is where we ended up, as I said earlier, in 2018. Clearly, over the next three-year period, we will have to absorb inflationary increases. That is a fact of life. With the increase in the investment spend, there is a slightly higher amortization cost that actually goes through the P&L. Those two would put upward pressure on the cost.
What we are determined to do, however, is to drive efficiencies, both on the regulatory front, some of the bigger regulatory programs are now starting to come to an end, and also outside the regulatory space, a big focus upon third-party costs, upon locations and high cost locations, and on processes. New Chief Operating Officer, David Whiteing, who's come really driving the process view here. I think it's a lens that we haven't applied as much in the past, we can do going forwards. Therefore, the confidence that we can get sort of order of magnitude about $700 million out of the business. There will be some further restructuring cost to do, about $500 million.
Our view is that we absolutely will be able to keep the cost in the business down below inflation and keep the high level of investment that we really need to drive the business forwards. On RWAs, $258 billion, slide 39, in 2018. We absolutely expect there will be growth in the RWAs from the growth in business opportunities that are out there. To the extent that those are giving us an acceptable return, we will invest the RWAs unashamedly in growing the business. However, with some of the exits, principal finance to roll off fully, ship leasing, et cetera, the non-core classification of Permata, if you put that in the non-core category, then for the rest of the business, there will be a reduction from those things.
Optimization initiatives, there is a lot of work going on looking at the models for risk weightings where we see further upside opportunity. If you put those all together, we would think that something of the order of a 2% growth in Risk-Weighted Assets would be consistent with a 5%-7% top line growth on the business overall. Obviously in 2022, so just outside the three-year period we're talking about, Basel IV will kick in. We previously said that will be roughly 10%-15% increase in the RWAs pre-mitigation. We now, having spent more time looking at that, think we're more in the 5%-10% range after some mitigation actions. Of course, by 2022, there'll be another year of profits as well to come in that period. RWAs is going to be very central to the thesis going forwards.
As you've seen, a lot of progress in 2018 on that front already. Finally, on capital, what does that mean? Capital ratio for last year, 14.2. As I said earlier, the mathematical consequence of everything we've been talking about in terms of our financial projections will be a progressive build in the CET1 to higher levels. The exits and the reclassifications non-core will give us further potential benefit there. Ordinary dividends, obviously, we are endeavoring to grow the dividends as we go forwards. As Bill has mentioned, potentially, we could get a doubling of the dividend in the period to 2021. That should still leave us with extra capital. If we can find good places to invest that to grow the business further, we will do that.
To the extent that we cannot find those opportunities, we will be quite happy to look at returns back to shareholders. Hopefully, that paints a framework there. With that, Bill, I'll hand back to you to close.
Good. Just a couple of comments by way of wrap-up, and then we'll have time for Q&A. The priorities that we set out today are really guided, as I mentioned, by our purpose and delivered by our people. That's not so visible to you from the outside. I can only tell you that it's been an enormous area of focus for us. Where this translates through to confidence ourselves, is that we have instilled, and will continue to instill, a culture of excellence in our bank. We weren't uniformly demonstrating a culture of excellence when you went back three, four, five years. We're not uniformly demonstrating a culture of excellence today either, but it's a lot better, and we'll continue to improve as we focus on the investment in our people. We understand our responsibilities to our societies and our communities.
It's a big part of what attracts people, clients, to Standard Chartered Bank. We have a clear focus on our emerging markets, but also bridging the emerging markets to the rest of the world, doing so in a sustainable way. We have made a big investment in our people. We will continue to, and we made a big investment in our communities, which we will continue to. This is a soft stuff that is tough to put into a model, but is critical for our value proposition to our own colleagues, also to our colleagues, to our clients and to other external stakeholders. Just by way of wrap-up, I know we haven't answered all of your questions today, and we won't even through the hour of Q&A that we'll have starting now.
What we have done is put a framework out on the table with really key indicators of progress that we've made over the past three years. It's that progress that gives us the confidence that we can deliver the next phase of our corporate development and our march towards a good, strong, sustainable level of profitability in the bank. We have a number of things that are in the works that we haven't given you detail on, which we will. Each time we have a new important initiative to call out, we'll reflect back to this presentation today, exactly in the way that we did in November 2015, when we set out a list of about 50 things that we were going to get done that was met with a relatively high level of skepticism.
I'll tell you that we made great progress or ticked the box on 50 of those 50 things that we said we were going to do. What we've done each time that we came back to you in every three months or six months afterwards is to say, "This is what we said we were going to do. This is what we've done. Mark the progress." We'll do the same thing here. The confidence that I have today is vastly greater than the confidence that I had in November of 2015 when we stood up and gave our first strategy refresh. Because we've gotten the validation from our clients, we've gotten the validation from our colleagues. We've been able to attract some outstanding talent. We've been able to develop some great talent within.
Market share is up, income is growing, profits are improving, loan impairments are down, regulatory issues are grindingly being set aside. The progress that we made with the New York State Department of Financial Services, obviously the provision that we took last week are indications that we're making progress on these fronts as we are on so many other things. I feel great about the progress we've made. I feel great about our prospects. I hope we've shared a little bit of that enthusiasm with you. Fully recognize that we're going to have to prove it, and that's exactly what we intend to do. With that, Andy will rejoin me. We got an hour or so for questions. David. We can start here, and then we'll go to David.
Thank you. It's Robert Sage from Macquarie. I've just got a couple of questions. One of the things that strikes me is that you've not changed your revenue growth expectations 5%-7%. I think that's broadly in people's numbers. I think if you look at consensus, you're only expected to make less than 8% or something, ROTE, in sort of 2021. I was wondering where the delta was arising. I've got two specific questions on this. The first one is on the loan losses, which I think you sort of say is about 28 basis points last year. I see from one of the slides that there is an expectation that will rise between now and sort of our 2021. I think when you look back to 2015, the guidance was more around sort of mid-50s.
I was wondering whether there's been a significant reduction in terms of expected credit losses as a sort of loan loss provisions moving forward. I guess the second question is that you're still, actually, you've improved your cost guidance from at or below the rate of inflation to below the rate of inflation. Should we be thinking quite significantly below the rate of inflation in terms of where the consensus might be too pessimistic, do you think?
Let me take that. Loan impairments and forecasting it, as you well know, is not a easy and precise science. As you say, we are sub 30 basis points at the moment. We were for 2018. We had in previous forecasts nearer 50. What is implicit, if you microscopically examine the height of the bar on there, is we probably worked on something around 40 basis points as a sort of three-year average. Whether that will be right or not, then, we will know in three years' time. What I would say is certainly at the moment, the loan book is behaving very well. The early alerts, which are usually the sort of forward indicators as to what's going on are still improving, therefore, given a fair wind, hopefully we can stay at the lower levels for a period of time.
We're trying to take a sort of three-year-out view, hence just being a little bit more thoughtful about that. If we are too cautious, clearly it will help that leg of the numbers.
The cost side, I think, is more nuanced. We are both clearly wanting to keep the cost down, we are not wanting to starve the business of investment to do the things that we have talked about going forward. A lot of the things Bill referred to will need an element of IT enablement behind them, to the extent that we can afford to do that, we would far prefer to be continuing to invest to improve the fabric of the business to do it. If we wanted to, for sure we could cut it down, we could get lower cost. Whether that in the medium term would be the best thing for the business, I'm not quite so sure.
I think for the moment, I'd be more thinking that inflation just below was sort of where we'd be at, rather than thinking about significant cuts below that.
Thanks.
Morning, David Lock from Deutsche. I've got two, please. Firstly, on capital. You're running at 14.2%, and you're saying you think you can run between 13%-14%. Very simple maths, but if you grow the risk-weighted assets by 2% CAGR, it looks to me like you don't actually need much more dollar billions of capital. Actually, you're at the right number from a dollar billions perspective today. In which case, how should we be thinking about the earnings, frankly, over the next three years, and what they're going to be used for? Because it doesn't strike me you need to retain very much over the next three years. What are the headwinds that we should be thinking about that need to be consumed? Obviously, there's this outstanding fine, which I know you won't be able to talk on.
Are there any other items where that capital might be used, or is that the best way to be thinking about that capital and how it could be distributed to shareholders? The second one is on costs. If I look at slide 38, where you give the cost walk. Always conscious with plans like this where we're hoping for lots of income growth over the coming years. What is the plan B? I notice that the kind of cost flex, the amount of investment spend you've got, it looks relatively small on the chart. If the income disappoints, how much can you actually flex down the investment spend to help kind of hit that ROTE target? Thank you.
Why don't I just start on the capital question. Andy will elaborate, no doubt, and cover costs. We've got a pretty healthy investment budget built in anyway. As Andy said, we've stepped up our investments, and we intend to maintain that pace. In fact, we intend to increase that, funded in part by, or entirely, but then a part more, by the cost savings that we'll continue to generate. If the earnings progression is as we hope and expect, then there will be substantial incremental capital, even factoring in a dividend that we would also expect to increase over this time. We'll see at the time whether we have some really compelling incremental investment opportunities, so beyond what we see today. If they're there, then we won't hesitate to continue to grow our business.
If they're not there, we won't hesitate to return that to shareholders.
Yeah. I think if you take the maths of the guidance we've given on the top line and costs and et cetera, you will work out there is a reasonable level of capital return that is expected during the period. That could be at a level that may be a slight difference between sort of where the consensus is at the moment, and hence why there's that slight difference to the previous question. You'll do your own maths on that. At least we are in the position now where we can be talking about that, whereas the last three years, clearly that has been really sort of off limits. The cost front, come back to the previous point. We can take the cost of the amount we are investing in improving the business down if we want to do that. That is completely within our grasp.
It's totally controllable. The balance, I think, is this point about what is the better thing for the medium term of the business. In the short term, for sure, we can take some of that expense down if we want to do. Our preference would be to continue to build the business and do the things we're talking about. The growth is out there to be taken in these markets. We would rather avail ourselves of that. We think that is the better way to build value in this business, than to just be sort of taking the cost down progressively over time.
Thank you. It's Tom Rayner from Numis. Good morning. Could I have two, please? The first on the sort of normalizing to 40 basis points of impairment charge. The sort of underlying conditions which drive that possibly would also drive some positive procyclicality in RWAs might also require you to build coverage against your Stage 1 and Stage 2 performing assets. I wonder, have you factored those things to any extent into the overall financial targets? I've got a second question just on the U.S. provision in terms of what new information did you have that allowed you to take that provision, and is there anything else you can add about potential non-financial penalties, or is that something you just can't talk about at the moment? Thank you.
Yeah. As I said earlier, the accuracy of forecasting at 40 basis points versus 35 or 30 is clearly quite a tricky one. What I think we're doing is saying last year, the overall macro environment was reasonably benign, and the credit book behaved very well. As we look out there, maybe there's a little bit more stress in the system and therefore we should err slightly on the side of caution. I suspect if we had put the credit impairments in on that chart at exactly the same levels as last year we'd be getting the opposite question of wasn't that all being a bit too optimistic. What we're hoping is that that allows for some expansion of the business. It reflects the fact that we have got good control over the credit book.
As I say, whether it is accurate to the last two or three basis points, I'm not quite sure. On the U.S. provisioning, there are various accounting rules about where you have to be within a process to decide on provisioning and the accounting rules, and where we've got to with that discussion got us to the point where it was appropriate that we should provision. It is a best estimate of an outcome. It is not the outcome itself, but it is a best estimate, and hence why we have reflected it in the 2018 numbers.
Yes. Good morning, it's Martin Leitgeb from Goldman Sachs. Could I have, first of all, a clarification just on your earlier comments on capital? I was just wondering in terms of timeline of that capital target range, thinking back obviously a couple of years ago, the 12%-13% target range with Standard Chartered and being significantly above that level, I think immediately three or four quarters thereafter for the remainder of the period. Would you expect the bank to run within that, 13%-14% throughout the bulk of that kind of three-year period? Do you need to wait for the annual stress testing cycle in order before you could make any consideration about the return of excess capital? Could that occur earlier? The second question is on Korea.
Here, I think Korea accounts for around 10% of your capital consumption to date, and I think we're aware of the difficulties in taking out costs. I just wondered if you could comment a little bit more on the levels you have to improve profitability, and I think, would you consider the optionality you could have with the business if the opportunity arises or going forward? A third question, very short. Just in terms of the legal entity optimization in Asia. I think we have seen fairly limited detail. I was just wondering if you could elaborate a little bit more how big that entity is and what kind of funding benefits could arise from that. Thank you.
Shall I pick those up or you want to?
Why don't you take a run through. I'll add any color I've got.
Yeah. Obviously, the more certainty we can get on big ticket items, the more confident we get on making returns on capital. I would hope through the majority of the next three-year period, we would sit within that 13%-14% range. We're not sitting here with an endeavor to be constantly above it. I know since the 2015 update we have sat constantly above it, but that was one period and we're now in a slightly different period. Hopefully through the majority of the period we'd be in range rather than demonstrably outside of it. Korea, I suppose two things on Korea. I think the returns on Korea are dependent upon two things. One is the operational performance and the other is the level of capital invested in the business. Clearly the operational performance certainly compared with 2015 has changed markedly.
We lost $200 or $300 million in 2015, and we made a $200 million of profit last year. The operational performance has improved a lot. We have started to get capital out of the business, and earlier this year we actually got quite a big chunk more out of the business. It takes time to do that, but, over the next three years, we would hope that we can further improve on the capital front as well. Legal entities, well, it's one of those subjects where one either goes very shallow or one goes very deep. Suffice it to say, what we're seeking to do essentially is to get the legal entities more aligned around the regions that we are running the business through. Northern Asia or Southern Asia, and the sort of rest of the world hub. Our historic structure has not been along those lines.
By doing that, those businesses or those legal entities which are in subgroups, the ability to look at liquidity and things like that on a collective basis rather than on an individual basis is bigger. The opportunity is not in the tens of millions. It is bigger than that. Low hundreds. It's not inconsequential in terms of our journey to get the ROTE up and the profits up. It's quite significant.
I'll just add a little bit of color on maybe on each one. On the capital, we're certainly not waiting for specific incremental approvals from regulators or validation from the stress test. We passed the stress test very handily in a scenario that was pretty focused on the markets where we operate. We're not constrained in terms of coming up with the optimal capital level by specific things like stress testing. As Andy said, we would intend to operate within the range. Not at the top of the range, not above the range, but within the range. That's why we have a range. Andy also said we've been in a different place the last three years, and we'll be in a different place for most of the next three years. We're going through an interesting transition right now.
Korea, as I commented in my comments earlier, it's outstanding progress. There's some real lessons for how we operationally improved our least well-performing or our most underperforming market three years ago and gotten that into the bucket of, it needs some more work. It's been pulling every single lever that we could pull, short of the strategic alternatives that you set out. Would we consider other things? Well, if we can maintain the progress that we've achieved in Korea, then we don't need to consider other things. Other things are not going to create value for our shareholders today. We think we have many levers that we can pull operationally. Then obviously using some of the digital capabilities that we are also in a better position to deliver now than we were anytime over the past three years, is a further catalyst for growth.
Finally, on the legal entities. At the core of this is a recognition that the regulators in our markets, in particular the HKMA or the MAS or in different ways, the Dubai International Financial Centre regulators, are more comfortable with the markets in their neighborhood than they are with markets outside their neighborhood or than somebody sitting in London would be with markets that are very far away and sometimes feel quite scary. Obviously looking at the way the stress test has played itself out over the past couple of years with a very heavy focus on a China hard landing. That's been a central feature of the stress test. Of course, we're a U.K.-domiciled bank. We'll always have to operate under the rubric of the Bank of England and that stress test. That's all there.
In terms of our ability to be a little bit more fungible with capital and liquidity within a neighborhood, by reorganizing legal entities in a more hubbed way, will be very additive to, as Andy says, materially additive in terms of our ability to manage capital and cash.
I'm just going to move around the back here now. Move across. It's an obstacle course.
Hi, good morning. It's James Irvine here from SocGen. I've got two, please, one on capital, one on revenues. The first on capital. Bill, you mentioned that the reason for pushing up your target range to the 13%-14% was Basel III and the conduct issue still to be resolved. Should we think that when we get around to 2022, that range is probably going to drop back down to reflect those things disappearing? That's the first one. The second one on revenue, specifically CIB. I guess over the past few years, you've been shedding less profitable customers and deepening the wallet share with existing customers. Are you now assuming growth in customer numbers for CIB going forwards? How much of that is going to drive your 5%-7% growth, please? Thanks.
Yeah. Our range is 13%-14%. We think that's the right range for now. As situations change, either as market expectations change, as some of the uncertainties that we continue to experience reduce, we may consider an adjustment one way or the other in that capital ratio. That's not something that we're planning on or factoring into any of our thinking today. The 13-14 and then operating within that range. It's a big range. There's a lot of flex between 13 and 14 already. We would expect to operate well within that range and maybe drift to either side of the middle of that range as appropriate for the circumstances. If that requires a wholesale change in the target, we'll consider that at the time. CIB, yeah, we're absolutely growing the number of clients.
When Simon stood up here in the space a year and a half ago, Simon Cooper, heading CIB. He identified a few initiatives that had to do with deepening our relationships with existing clients. He called it the next 100. We have very good penetration of our top 100 clients, much less good penetration of the next 100, which we were too concentrated. Too concentrated in terms of credit exposures, but too concentrated in terms of income as well. We said that the next 100, they're not new clients, and they're on the books today, but we've seen substantial growth in that group of next 100 clients. We maintain the top 100 at the same time. He had a second initiative around what he called the new 90. These were 90 OECD customers with whom we had no banking relationship at all.
I think some of the biggest names in technology or some of the biggest cross-border trading companies, some financial institutions where we had no relationship at all. We looked at the company's profile and the areas in which they operated and looked at what we had to offer and said these companies should be banking with Standard Chartered. We onboarded every one of those 90 clients and most of the next 90 after that. They're onboarded, and they're producing profits at a faster rate than we thought. Absolutely, a source of key growth for us is new clients, in particular, coming out of the developed markets. Also new clients coming out of the emerging markets who have increasing network operations. These are our keys. That's what's driving that financial institution growth that I mentioned in the context of our network side.
It's what's driving the OECD client growth. It's both the deepening, also new clients.
Thank you.
Also, sorry, just to add to that, in the commercial business, we've added just over 6,000 new clients there as well. Compared with three years ago, where I think we were very much sticking with the clients who were sort of tried and tested, actually saying, "No, we should push the boundaries out." There are a lot of clients who have got international service needs that fit very much what we do, many of whom don't actually know what we offer, and now really actually focusing upon that, evidentially bringing in quite a lot more clients.
Thanks. Ian Gordon, Investec. Can I have two, please? Bill, on slide 26, I was surprised when you expressed mild disappointment at the 0% growth in non-priority revenues. Given that these are currently loss-making, wouldn't minus 10 be a better number, or do you regard that as inconsistent with your growth aspirations within priority? Then secondly, just a point of clarification on your revenue target. Have you dropped the words over time, or is your 5%-7% unrealistic for 2019 given the Q1-on-Q1 headwinds you called out, accepting that Q1 2018 is a tough comp?
On the personal growth, the personal business serves a number of purposes for us. One, it's a feeder for our priority and eventually private banking customers. We want to have a big catchment area in order to drive that premium and priority income. Second, it's a big absorber of fixed cost. Sure, we could just throw clients out left, right, and center, but the fixed costs wouldn't come out at the same pace without structural change. Just taking a business that's subscale and assuming that you can attrite your way down to decent profitability by grinding the income number lower, it's not a good strategy. With the benefit of hindsight, that's what we did for 10 years, which is why the profitability of our retail business went from okay to poor to bad to really unacceptable over a period. We have turned that around.
What we know, though, is that we're not going to get the real growth in the personal segment the old-fashioned way. The idea of just putting lots of feet on the street or using third-party sales agents to offer a product which is not particularly differentiated to the mass market, a narrow list of things that they really want, is not a strategy that we think we can win. We have to take some different approaches, and those different approaches would involve different customer propositions, different types of partnership, which will allow us to access different customers through different channels. Obviously, using analytics to refine the offering. The use of analytics, the use of digital marketing, and things of that nature, we think we're very good at that. We have a long way to go. We're not best in class, for sure. Certainly not at the mass market.
We will continue to develop those capabilities. In the mass market, we're not going to be differentiated in a substantial way all by ourselves in some of these markets. We'll look at ways that we can partner with other people to achieve what we would be more challenged to achieve ourselves. Against that backdrop, 0% growth isn't so good.
To your second question, I'm sure somewhere in the glossary, it says on average over a three-year period, but not necessarily daily.
If you could go to the back, to Manus and then.
Have we mentioned that we've had a solid start to the year, Andy?
We have.
We have.
Thanks. It's Manus Costello from Autonomous. Can I just follow up on that point on retail? Last year at your seminar, you showed us that a third of the retail business was loss-making. I'm a bit surprised that you haven't come out with a more aggressive strategy to deal with the retail business, particularly in some of those markets where your share is not big and you're facing digital challenges. Why didn't you take a more aggressive approach? Can you elaborate a bit more on a comment you made? It makes it sound as if you're going to enter into some JVs, or you might even consider merging some of those local businesses with partners and taking minority stakes. What are you actually talking about there?
I'm disappointed that you're disappointed about our plans. I think we've been very clear about our intent, which is in those 21 markets where we're an international bank with trusted local operations, that we intend to get those businesses to a level of profitability that's accretive to the group and accretive against our 10% overall return target. The way to get there in each market will be different. We could obviously spend a lot of time going through market by market, and giving a bit more detail. We picked four, which were indicative of the sorts of things that we would do. We have many levers to pull in terms of the business as usual. We have significantly digitized our operations. In India, for example, where we have a digital banking suite that we offer to existing and new clients that is zero human touch.
We're close to the point of getting 80% of applicants through on a no human touch basis, which is an industry benchmark for more or less the best you're going to do, at least with the current technology. We've reduced the turnaround time from days to seconds, and we've reduced the cost of acquiring new clients from about $70 a client to about $7 a client. Obviously, enabled by the Aadhaar system, which is the national identification system in India, biometrically verified. Where we have that, which we have in a number of our markets now. Nigeria, interestingly, was one of the first to have a national, biometrically verified identification system. The opportunities for step change in terms of productivity are real. Of course, the market has access to that as well. We have to find some differentiated ways to get to scale.
We have seen in markets like Singapore, where we've turned around and are trading market share in the mass market segment into the early signs of some good growth through very targeted product offerings. There are business as usual approaches to improve the profitability of these businesses, and we'll be rolling those out as well, if we already have, in Korea, in Indonesia, India, UAE, et cetera. It may not be enough, and it may be right for us to either leverage third-party distribution channels, so effectively putting our products onto third-party platforms for distribution much more broadly than we can today. Leveraging, at the same time, the data and the associated analytics that come from those third-party platforms. Just having a new sales channel isn't particularly helpful.
Having a new sales channel where we're leveraging our partners' access to customers' data and associated analytics, combining with our data analytics, risk management competence, risk management experience, is an exciting proposition. Why haven't we done this yet? Why haven't we announced five joint ventures across five markets? We had to get our own house in order before we could be confident that we are the desirable partner that we need to be in order to generate really good, profitable, sustainable business. Having invested enormously in our foundations, digital and otherwise, over the past three years, we're ready to do that. We started to roll these things out. Some of them we've been public about.
Partnerships with Ant, the consortium that we set up in trade finance, the digital bank that we've rolled out in Africa, which is not with partners, although we've got many partners that are providing products and services into the platform that we built in Côte d'Ivoire in Kenya when we launch, et cetera. We've got early stages of a good track record. We put it out there really to make two points very clearly. One is, Andy and I stood up in front of our group internally last year and said that we're not going to accept plans for this next round of our corporate planning period that don't have every business and every country generating positive EVA. Generating operating profits less cost of capital that were positive. We had many that were not positive EVA.
We have accepted no plans from our own internal process that don't generate positive EVA by 2021. That doesn't mean that we're going to succeed in every one of those plans, every one of those plans is credible. It's amazing how sharply the mind focuses when the instruction to the team is, you have no choice but to come up with a plan that gets us to positive EVA, and the alternatives are less attractive. We're committed to doing this. We'll continue to report out on this. We've got a number of levers that we can pull, organic and through partnership. We intend to do that. I hope as we call out our progress, that we can deal with your disappointment.
As in there are no retail markets you consider exiting?
We've exited eight retail markets in the past four years.
Incremental.
No. I would say we look at every one of our businesses and ask the question, one, do we have a good route to adequate profitability? If the answer to that is no, two, is it important for some other part of our business? Typically important to our network business somehow. On the back of that, we decided to exit markets like Thailand, Philippines, or other business lines in times gone by. There are no incremental markets that satisfy that screening that we've gone through right now. Does that mean that will be the case for the next three years? Of course not. As we've continued to review operations, progress against the plans that we've got, reassessments of the strategic importance of different markets. For the most part, you're talking about smaller markets.
The smaller markets, turn to Andy, these smaller markets are not our problem.
Yeah. I'd just add a couple of things. There is no inherent rejection of withdrawing from smaller markets, but the facts are if you took the 20 lowest income markets that we had in 2015 and added them up, they were loss-making. If today you take 20 smaller markets, they are profitable. There has actually been quite a lot going on behind the scenes. This is not a retail-only comment. It is a small country comment. Secondly, roughly the amount of income that we generate in those 20 smallest markets and record in country, for every $1 recorded in country, there is another $1 that is contributed elsewhere in the network. To the point about what is unique about the franchise, could we chop the smaller markets? We should not underestimate the ability of them and demonstrable ability to actually contribute elsewhere.
I think the retail bit, to the extent that the ones that are a bit marginal, what we're doing in places like the Côte d'Ivoire, where we're actually saying, is there a lower cost digital approach to market? Let us give that a go and see whether actually that on top of the physical presence, the two together could actually change the one or two that are more marginal. Our sense is we should do that first and see where we get to with that.
I think there's time for another.
Hi, it's Fahed Kunwar from Redburn. Just had a question on your targets overall and the kind of reliance on revenue growth. Obviously, I think you talked about hitting 50 of your targets before, but the one that was missed was the ROE ultimately, and that was predicated on revenue growth. It looks like if you look at that period, the macro tailwinds from the U.S. and China estimates were better than they are now. I guess, what's different this time? Why do we believe in those revenue growth targets this time versus last time when it seems like we fell a bit shy on the returns? Is there more self-help here? The kind of capital, is that the main point?
Just to get some color on that question, because I think that probably is the biggest reason why the shares probably are down right now, because it's another revenue growth target plan. Just think about the revenues as well, the 6% constant currency Q on Q. Year-on-year, Q4 was very strong versus peers. Was anything funny in that kind of won't roll forward, or was that just outperformance and market share gains for the fourth quarter? The last question I had was on the core Tier 1. If you do 3% or 4% ROE growth, so over the 2%, should we be thinking that will then generate revenues greater than 7%? Or could we be in a situation where you're doing 3% ROE growth and the revenues are kind of 6% or 7%, so within the range? Thanks.
Maybe a bit on revenue growth. When we reflect back to the scenario that we laid out in 2015, we imagined, and we were quite clear about the economic environment that we imagined. We got a few things wrong. We didn't imagine that China was going to devalue about 11 seconds after we made our presentation. It did, and that took a lot of the wind out of the sails, in particular of our wealth management business at that time. We imagined a much more robust level of global economic growth. Reminding ourselves we were viewed as being too cautious at the time. It turned out we weren't cautious enough in terms of our assessment. GDP growth was about half over the first 18 months of what we had indicated in our presentation. As a result, interest rate increases have been even slower.
There's further reasons for that, which inflation has been more subdued than we imagined at that point. We got a few things wrong in terms of the economic forecast, acknowledging that we didn't expect it to be perfect in that regard. That's a big explanation for the relatively subdued growth in the early period. In the later period, we have hit the growth targets. As the economy got back on track as China recovered, et cetera. The second thing is that we probably underestimated the amount of de-risking we were going to need to do.
As Andy showed in his income walk forward, in 2015 and 2016, we had a really dramatic decrease in RWAs, decrease in income, and most of that came from our own de-risking, or not just de-risking, but also recognizing that we had big chunks of our capital that were deployed to value destroying things, that weren't necessarily risky, but just weren't going to generate a good return. We probably underestimated a bit how much we needed to retrench before we could grow. You can't normalize everything away and say, "Hey, if you just take all the bad stuff out, we nailed it." We can say those are a couple of things that we gave very transparent estimates of at the outset. It turned out that we were a bit wrong on each front.
We have subsequently, as we've sort of overcome those initial gaps, some external, some internal, we have generated that growth. We particularly generated that growth in these areas that we called out from day one that we were going to focus on. When I sat up here and talked about the focus on network income three years ago, the typical response was, one, we don't know what that is, and two, there's no evidence that it generates any value for your bank, so we're going to discount it completely. You did discount it completely. What we've subsequently demonstrated, and what we tried to explain today, hopefully in a more satisfactory way, is that it's actually a fantastic business that is growing very fast. Likewise, the focus on the affluent part of our business.
This good stuff that was well less than half of our bank is now well more than half of our bank, is growing at a fast rate, is generating a high return. We see no reason not to have the confidence that we can hit the 5%-7% growth rate when we don't have these balls and chains around us that we had in the early period. We have evidence that we can actually grow these areas. Now, are there more headwinds than tailwinds right now? Yeah, possibly. Global economies are slowing. One of the advantages of being a mid-sized bank operating in this environment is if we can leverage this differentiation that we've demonstrated, we can offset a lot of, not every possible economic headwind. We're not naive.
We can offset a lot of the headwinds that are coming or the reduced tailwinds that are coming. We believe fundamentally that the big tailwind that we've got is that we operate in the most exciting markets in the world that are volatile. They'll go up and down. China will go up and down as well. We think that structurally, this is a growth opportunity for us. Structurally, we're going to acquire a greater share of a rapidly growing market. You want to take the quarter-on-quarter comments?
Yeah. Nothing that I'd particularly call out on the fourth quarter. I guess the Financial Markets business may be unlike some banks, actually had a good quarter. To be fair, maybe we've underperformed in that area in prior quarters. That was quite encouraging to see that come through. No, there's nothing I'd particularly call out. Your other one was on, I've lost it now, RWA growth versus income growth. Directionally, we're saying 5%-7% and 2% RWAs. Think of that sort of relationship as being a broad proxy for what we'll be targeting going forwards.
It's Andrew Coombs from Citi. If I could have a couple of follow-up questions, please. Firstly, on slide 37, going back to the previous question, you were talking about 2% RWA growth per annum, 4% asset growth per annum, 5%-7% revenue growth per annum. You've been at lengths to talk about network income, affluent customers, but you also do flag you're still assuming some benefit from higher rates. How much of a tailwind is still to flow through from the previous hikes? I think going forward, you said minimal future hikes, but could you spell out exactly what's in your assumptions there? That would be my first question. Slide 39, the RWA growth, the 2%, you've identified $22 billion cumulative RWA reduction plans within that for divestments, model changes.
Can you just give us an idea of the timing of when that $22 billion drops out? It does have implications for your capital ratio and therefore the timing of any buybacks you can do.
Clearly, interest rate rises do take a while to actually work through fully into the system. We've got the number that have happened over the last six or so months that will flow through. We've reassessed the rough estimate of what a 50 basis point increase globally would be. Previously, we'd had that at about $300 million, now about $200 million. As you rise up the interest rate curve, you would sort of expect that. I guess, again, if you look at the heights of the columns very carefully, you would probably say we have taken the roll forward of what's already out there, plus, I don't know, 25, 30 basis points of the presumed further increase. Hopefully we've not over-egged that one.
On the RWAs, part of that is putting the non-core activity to one side, therefore that is mathematical as of today, albeit obviously that's still within the published numbers. The rest of the RWA reduction, I think the ship leasing is something we will roll off over a couple of year period. It's not something we're going to go and rush to do a fire sale on. The principal finance business, again, over the next 18 months, to the extent we have retained a small interest in that over that period of time, one would expect to see that progressively roll off the books.
Hello. Morning, Bill. Morning, Andy. It's Chris Manners from Barclays. Two questions, if I may. The first one was just on the dividend. It's quite eye-catching to say you're going to double the dividend to roughly, what, $0.42 by 2021 if all goes to plan. Could I ask you a little bit about the pathway of the dividend? Are you thinking about a payout ratio? Are you thinking about a certain capital level, then you top it up, just because most of the other U.K. banks are now saying they'll do a progressive dividend and everything else gets supplemented with specials and buybacks. That'd be the first one. The second question is on the 2021 ROTE target. I assume that's just a stat ROTE target, rather than an underlying. Correct me if I'm wrong on that.
When we look at your incentivization and comp and payouts and things like that, is that actually linked to beating 10% ROTE? Could you explain a little bit about that? I didn't have time to see it in the annual report this morning. Thanks.
Okay. Let's just take those in order. On the dividends, we have not tied this to a payout ratio per se, just reflecting the fact that the progression on profit will move around a little bit and being too tied arithmetic, we think is a little bit tied. What we are saying is that as the profitability of the business improves, we would definitely see the dividend increasing with that and observing there is the potential for it to double over that period of time, i.e., we are very prepared to be returning money to shareholders. On the ROTE, we'll continue to calculate that the way that we have done it in the past.
You will see when you get far enough into the annual report that certain members of the senior team, some of whom are standing here, have an incentive around an 8%-11% range over that three-year period.
Thank you.
Morning, Guy Stebbings from Exane BNP Paribas. Two questions. The first was on deposit costs, which grew quite a bit in 2018. I'm just interested in terms of the phasing of that and how much came through in the fourth quarter. Perhaps you can confirm what the Q4 NIM was versus the 158 for the full year. The second question was on regulatory costs, which you've called out as coming down in the future. They've proved incredibly stubborn in the past, and there's always new initiatives that come along that surprise us. Are there specific chunky items you can point to that are likely to come out and gives you considerable confidence around the trajectory there? Thanks.
Yeah. On deposit costs, the middle of the year, we saw a little bit of switching out to term deposits from current accounts. By the end of the year, actually, that had normalized again. We saw the sort of slight peak of that in the middle of the year. The fourth quarter NIM was within one basis point of the year average NIM, so there was not a lot of difference there. Regulatory costs, you're absolutely right. They seem to have been nudging up bit by bit by bit. I think, within the regulatory costs, we've got compliance costs, we've got regulatory programs. Some of those programs are now basically running the sort of course. Those we can see coming off. Hopefully, with the U.S. investigations and so on nearing a conclusion, then hopefully a little bit of that will come out as well.
That's why we're a little bit more optimistic that we might actually be seeing the peak of the hump for a period of time, hopefully.
Hi, Benjamin Toms from RBC. Can you talk a little bit about the potential for fintech disruption in Hong Kong? A little bit more detail about what Standard Chartered are doing in order to protect itself against the disruption. Thank you.
Well, I commented on the virtual bank license process. There are no standalone digital banks in Hong Kong today. The HKMA has put out an invitation for banks to apply or for companies to apply to get a new virtual bank license. A lot of criteria, but the key one is you can't have any branches. These need to be standalone, separate entities that are purely digital. We don't know who else has applied, and we can speculate. We don't know where the HKMA is in their approval process, although they've suggested that the first successful applicants will be announced in the not too distant future, in the next few months. We've worked very hard on this. We're building this bank in anticipation of getting regulatory approval. We will use the capabilities that we're building in our main business in any case.
I guess other people are taking different kinds of approaches. Some will focus on subsegments of the market, credit cards specifically, perhaps wealth management products in other cases. Some will focus on extensions to e-commerce platforms, where they will look primarily to finance goods that are otherwise purchased through those platforms. We'll see what creativity the market comes up with and how the HKMA decides to direct that. We feel very good about the position that we got with, in particular, our affluent client segment, which is the driving force of our earnings, public earnings, and also earnings growth in Hong Kong. We think that's relatively well protected with the range of product offerings that we've got, the client relationships that we've got, the level of customer service.
We'll continue to augment that with the digital investments that we're making, some of which we will learn from and develop in the context of our virtual bank that we are developing separately. The possibility for some disruption in the mass part of the market? Absolutely. We intend to be a disruptor in that regard. I think we will see changes for sure. For our core franchise, we feel pretty well protected, both because of the quality of the product that we are delivering today and intend to deliver in the future and because it's not obvious that that's going to be in the sweet spot of a branchless digital bank ab initio.
We've got a question on the webcast.
A question from Ronit Ghose on the web. Can you define what size of market opportunities Stan has in retail banking via digital in markets such as India, Africa, or Greater Bay Area?
Yeah. Greater Bay Area, which we didn't talk about in any detail, is one extremely exciting incremental development. We know that the Chief Executive of Hong Kong, the Mayor Party Secretaries of Guangdong Province and Macau got together last week. They offered some policy guidelines on what this integrated market area will look like. We're talking about close to 100 million people growing much more rapidly than the average in China, with embedded free enterprise zones and the like, with the intention to effectively, one way or the other, reduce the barriers of people, capital, intellectual property between Hong Kong, Macau, and the rest of the Greater Bay Area in mainland China. We're extremely well-positioned for this.
Our Hong Kong business, together with the very substantial business that we have both in Guangzhou and Shenzhen, as well as several of the other smaller, I say smaller cities in the Greater Bay Area. We've got new cities like Nansha, which don't exist today, which are going to house 10 million people in the next five years. Just to put a little bit of context into that. We're extremely well-placed to provide banking services and leverage the core strength that we've got on both sides of the border. Is that a digital opportunity per se? Yeah, sure. Absolutely. It's a lot more than digital, I think from that perspective. The size of the opportunity in India and Indonesia, other markets, I think you only have to look at the profitability of the local banks that have acquired scale.
The HDFCs, ICICIs, Axis Banks, Yes Bank, Mandiri, et cetera, are very high returning banks. They've got market shares that are above 10%. In some cases, substantially above 10%. That's the wallet that we can go after. Are we going to displace ICICI in India? Of course not. They've got their own offerings and they've got something like 4,000 branches that are still relevant for big parts of that operation. Can we have a targeted offering that's zeroing in on 50 or 100 million Indians that will be in the sweet spot of what we can develop, ideally in partnership with others so that we've got a differentiated proposition from the outset? Yeah. Absolutely.
Okay. Just a second.
Hi, it's Alice Timperley from Morgan Stanley. If we come back to slide 29, where you call out the four key markets and the 150 basis points ROTE benefit, could you perhaps just give us a bit more detail on the contribution of each of these markets more specifically? Secondly, on asset quality, the credit grade 12 balances seem to have ticked up quarter on quarter. They're at $1.4 billion in Q4 versus $900 in Q3. Is there anything to call out there?
We're not going to give a lot more detail on the four countries. You can see from our country reporting the magnitude of the challenge in terms of the aggregate returns from each of these markets. I've tried to be specific that our network income from these markets, and the returns on network income are broadly similar to our overall CIB network income. Which is, it's the network income is higher returning, and it's growing quickly in each of these four markets. We have a higher proportion of the income in each of these markets that comes from domestic corporate banking, which is ongoing optimization. This has been a big part of what Simon and team have done over the past few years and will continue to do.
In each of these cases, we've got a retail business that's on one side or the other of zero in terms of operating profit. Not by huge amounts, but zero obviously is a big drag on our overall returns. The objective in each one of those cases is to have a retail franchise at the end of the day, that's generating a return above cost of capital.
I'd just add, in those four markets, 2015 lost GBP 1 billion between them, and they made GBP 400 million between them last year. They're not yet where we need them to be, but definitely direction of travel is good. Your CG12 question, no, there's nothing particular I'd call out in that. It was slightly higher in the fourth quarter, but if you take the year as a whole, it was pretty much flat. It just moves around. Okay, Ed.
Thanks so much. It's Edward Firth from KBW. First, just to clarify your answer to Chris's question, the 10% is an underlying ROTE, is that right? It's not an all-in ROTE. First, great. Secondly, if we do see revenue growth, say, come in at, I don't know, 3% a year, something like that, like half what you're expecting, can you still make the 10%?
Well, it will depend upon some factors externally, impairment, et cetera. If that is benign, that will offset that in part. As I said earlier, we can pull levers on the investment and the cost front. It's not our preference to do it. We can do that. We can look at the capital returns. I think there's a variety of other things. Clearly, the lower we go, the more tricky it makes it. If we can get somewhere around the bottom of the range, I think we can achieve it. If we go below that, we'll have to look at more actions on the cost front.
Is there a sort of level we should be thinking of at the sense that you're not going to achieve it? Clearly, I guess if revenue's falling, you're not going to achieve the 10%.
No. I would focus from the 5%-7% is what we are determined to achieve.
Right.
Is there anyone who hasn't had a question who would like to before I hand out seconds? All right. There you go. Tom, sorry to you.
Sorry, being greedy. Tom again. Can I just ask you about how you see the phasing of your move from 5% to 10%? Some of those items look like they should come through as profits recover. Others look like they might be a bit backloaded. Some of the RWA optimization may be backloaded. What sort of interim targets have you set yourselves to try and gauge whether you're actually on track to hitting your 10% by the time that you've set. Can you add some color around that for us, please? Thank you.
If you look at the walk, things that will be sort of choppy in terms of timing, bank levy will be back end loaded. Evidentially, that's 2021. The timing of capital returns will be dependent upon sort of other factors. That is one which will not have necessarily a sort of straight line continuum on it. The business exits, obviously that depends a little bit in terms of how fast they go, but probably slightly more back end loaded. On the other ones, costs will be progressive, income, okay, it's not going to be exactly linear, but I think we should see that over a period of time. We haven't got a specific gradient sort of in mind, but we are determined to get to the 10% by the end of the period.
Just a few of the other metrics that you're asking about are some of the things that we called out in terms of our areas of focus. In our CIB business, we need more clients. It's been a good area of growth for us. We've got continued robust aspirations for adding clients that are intending to use and in fact, then do use our network. We have a client deepening metrics that we're looking at. There's this progression from one times to 16 times profitability as we get clients with more products and more markets. We've got a very steady stream and consistent stream of metrics around clients. On the retail side of the business, one of the big areas of focus for us has been customer satisfaction. Our customer service and customer satisfaction were somewhere between okay and mediocre three years ago.
We've invested heavily, and it's obviously shown up on the expense line. We invested heavily in customer satisfaction. We believe that that's a leading indicator of profitability. It has been so far. The big increase in our profits in Singapore and Taiwan, for example, coincided and immediately followed a major focus on improved customer satisfaction measured by Net Promoter Score and other things to measure our desirability to customers. We have a scorecard, as you'd imagine. The scorecard has a couple of dozen high level things. Many dozens as you go through business by business of key metrics that we're looking at that for the most part are leading indicators. Some are lagging. I mean, financial results obviously are a lagging indicator. It's on the scorecard, you'll be happy to know. The focus on improving our business is very granular.
We're tracking literally thousands of things down through the organization very rigorously. Andy and team have put in a system of both MIS, but also regular reviews that are allowing us to track the leading indicators as well as lagging indicators. To the extent that some of those key indicators go off track, then we'll course adjust. We'll either deploy different tactics, or we'll reallocate capital in a different way.
Thank you.
Okay.
I think we've just about exhausted everybody. I'd say thanks again for making this investment in us and your time and your attention. Some great questions and plenty for us to keep on working on. As I think Andy and I both said, we've put out a framework today. Didn't expect to answer every question you've got. Do expect to come back to what we said today and explain as we move our way from 5% to 10% plus in return on tangible equity, how we are tracking against the targets we have, the progress that we're making. We'll continue to try to be as transparent as we can. Thanks.