Standard Chartered PLC

Quarterly Report • Jul 30, 2024

National Storage Mechanism | Additional information RNS Number : 3117Y Standard Chartered PLC 30 July 2024 Standard Chartered PLC - Half Year Results 2024 - Part 2 Table of content Risk review 2 Capital review 59 Financial statements 65 Other supplementary information 120 Glossary 133 Unless another currency is specified, the word 'dollar' or symbol '$' in this document means US dollar and the word 'cent' or symbol 'c' means one-hundredth of one US dollar. The information within this report is unaudited. Unless the context requires, within this document, 'China' refers to the People's Republic of China and, for the purposes of this document only, excludes Hong Kong Special Administrative Region (Hong Kong), Macau Special Administrative Region (Macau) and Taiwan. 'Korea' or 'South Korea' refers to the Republic of Korea. Within the tables in this report, blank spaces indicate that the number is not disclosed, dashes indicate that the number is zero and nm stands for not meaningful. Standard Chartered PLC is incorporated in England and Wales with limited liability. Standard Chartered PLC is headquartered in London. The Group's head office provides guidance on governance and regulatory standards. Standard Chartered PLC stock codes are: HKSE 02888 and LSE STAN.LN. Page 1 Risk review and Capital review Risk Index Risk profile Credit risk Basis of preparation Credit risk overview Impairment model Staging of financial instruments IFRS 9 expected credit loss principles and approaches Summary of Credit Risk Performance Maximum exposure to Credit risk Analysis of financial instrument by stage Credit quality analysis ��� Credit quality by client segment ��� Loans and advances by client segment credit quality analysis by key geography Movement in gross exposures and credit impairment for loans and advances, debt securities, undrawn commitments and financial guarantees Movement of debt securities, additional tier one and other eligible bills Analysis of stage 2 balances Credit impairment charge Problem credit management and provisioning ��� Forborne and other modified loans by client segment ��� Forborne and other modified loans by country Credit risk mitigation ��� Collateral held on loans and advances ��� Collateral - Corporate & Investment Banking ��� Collateral - Wealth & Retail Banking ��� Mortgage loan-to-value ratios by country ��� Collateral and other credit enhancements possessed or called upon ��� Other Credit risk mitigation Other portfolio analysis ��� Credit quality by industry ��� Industry analysis of loans and advances by key geography ��� Vulnerable, cyclical and high carbon sectors ��� China commercial real estate ��� Debt securities and other eligible bills IFRS 9 expected credit loss methodology Traded risk Market risk movements Counterparty Credit risk Derivative financial instruments Credit risk mitigation Liquidity and Funding risk Liquidity and Funding risk metrics Liquidity analysis of the Group's balance sheet Interest Rate risk in the Banking Book Operational and Technology risk Operational and Technology risk profile Capital Capital summary ��� Capital ratio ��� Capital base ��� Movement in total capital Risk-weighted asset Leverage ratio Page 2 The following parts of the Risk review and Capital review form part of these financial statements and are reviewed by the external auditors: a) Risk review: Disclosures marked as 'reviewed' from the start of Credit risk section to the end of Operational and Technology risk in the same section; and b) Capital review: Tables marked as 'reviewed' from the start of 'Capital base' to the end of 'Movement in total capital', excluding 'Total risk-weighted assets' Page 3 Risk review Credit Risk (reviewed) Basis of preparation Unless otherwise stated the balance sheet and income statement information presented within this section is based on the Group's management view. This is principally the location from which a client relationship is managed, which may differ from where it is financially booked and may be shared between businesses and/or regions. This view reflects how the client segments and regions are managed internally. Loans and advances to customers and banks held at amortised cost in this 'Risk profile' section include reverse repurchase agreement balances held at amortised cost, per Note 16 Reverse repurchase and repurchase agreements including other similar secured lending and borrowing. Credit Risk overview Credit Risk is the potential for loss due to the failure of a counterparty to meet its contractual obligations to pay the Group. Credit exposures arise from both the banking and trading books. Impairment model IFRS 9 mandates an impairment model that requires the recognition of expected credit losses (ECL) on all financial debt instruments held at amortised cost, Fair Value through Other Comprehensive Income (FVOCI), undrawn loan commitments and financial guarantees. Staging of financial instruments Financial instruments that are not already credit-impaired are originated into stage 1 and a 12-month expected credit loss provision is recognised. Instruments will remain in stage 1 until they are repaid, unless they experience significant credit deterioration (stage 2) or they become credit-impaired (stage 3). Instruments will transfer to stage 2 and a lifetime expected credit loss provision is recognised when there has been a significant change in the Credit Risk compared to what was expected at origination. The framework used to determine a Significant increase in Credit Risk (SICR) is set out below. Stage 1 ��� 12-month ECL ��� Performing Stage 2 ��� Lifetime expected credit loss ��� Performing but has exhibited significant increase in Credit Risk (SICR) Stage 3 ��� Credit-impaired ��� Non-performing Page 4 IFRS 9 expected credit loss principles and approaches The main methodology principles and approach adopted by the Group are set out in the following table. Title Supplementary Information Approach for determining expected credit losses IFRS 9 methodology Determining lifetime expected credit loss for revolving products Post model adjustments Incorporation of forward-looking information Incorporation of forward-looking information Forecast of key macroeconomic variables underlying the expected credit loss calculation and the impact of non-linearity Judgemental adjustments and sensitivity to macroeconomic variables SICR Quantitative and qualitative criteria Assessment of credit-impaired financial assets Consumer and Business Banking clients Corporate and Investment Banking (CIB) and Private Banking clients Write-offs Transfers between stages Movement in loan exposures and expected credit losses Modified financial assets Forbearance and other modified loans Governance and application of expert credit judgement in respect of expected credit losses Summary of Credit Risk Performance Maximum exposure The Group's on-balance sheet maximum exposure to Credit Risk increased by $9.1 billion to $807 billion (31 December 2023: $798 billion). Cash and balances at Central bank decreased by $5.8 billion to $64 billion (31 December 2023: $70 billion) due to reduced placements with a Central Bank. Loans to banks held at amortised cost remained stable at $45 billion (31 December 2023: $45 billion). Fair Value through profit and loss increased by $32 billion to $176 billion (31 December 2023: $144 billion), largely due to an increase in debt securities and reverse repos. This was partly offset by a $11 billion decrease in loans and advances to customers to $276 billion (31 December 2023: $287 billion) of which $5 billion was due to a reduction in mortgages in Korea and Hong Kong due to low new business driven by the higher interest rate environment, as well as a $4.2 billion reduction in Central and other items mainly due to matured loan exposures. Debt securities decreased by $8.7 billion to $152 billion (31 December 2023: $160 billion). Off-balance sheet instruments increased by $7.9 billion to $265 billion (31 December 2023: $257 billion), due to an increase in financial guarantees and other equivalents, which were driven by new business. Further details can be found in the 'Maximum exposure to Credit Risk' section. Loans and Advances 94 per cent (31 December 2023: 94 per cent) of the Group's gross loans and advances to customers remain in stage 1 at $281 billion (31 December 2023: $292 billion), reflecting our continued focus on high-quality origination. Stage 1 loans and advances decreased by $9.4 billion to $264 billion (31 December 2023: $274 billion). For Wealth and Retail Banking (WRB), stage 1 balances decreased by $5.4 billion to $118 billion (31 December 2023: $123 billion), of which $5 billion was mainly due to a decrease in mortgages. This was driven by a slowdown in sales in Korea and Hong Kong, due to the high interest rate environment. For Corporate and Investment Banking (CIB), stage 1 balances remained stable at $121 billion (31 December 2023: $121 billion). For Central and other items, stage 1 balances decreased by $4.5 billion to $24 billion (31 December 2023: $28 billion) due to a reduction in reverse repos. Stage 1 cover ratio remained stable at 0.2 per cent (31 December 2023: 0.2 per cent). Stage 2 loans and advances to customers decreased by $1.2 billion to $10 billion (31 December 2023: $11.2 billion). For WRB, stage 2 balances decreased by $0.5 billion to $1.8 billion (31 December 2023: $2.3 billion). This was mainly driven by the lower new bookings of the mortgage portfolio in Korea and Hong Kong, due to the high interest rate environment. Higher risk exposure net decrease of $1 billion to $0.1 billion (31 December 2023: $1 billion) from Central and other items, was due to the maturity of short-term loan exposures being replaced with debt securities in the Middle East. Total stage 2 cover ratio decreased by 0.1 per cent to 3.6 per cent (31 December 2023: 3.7 per cent). The decrease was driven by China commercial real estate (CRE) overlay releases in CIB largely due to repayments, which was partly offset by an increase in WRB due to exposure reductions. Ventures cover ratio increased by 7 per cent to 46 per cent (31 December 2023: 39 per cent) due to higher levels of delinquencies in Q1 2024, however this improved during Q2 2024 following credit measures being put in place in Q4 2023. Page 5 Stage 3 loans and advances decreased by $0.6 billion to $6.6 billion (31 December 2023: $7.2 billion) due to repayments, debt sales and write-offs in CIB. The CIB stage 3 cover ratio increased by 4 per cent to 68 per cent (31 December 2023: 64 per cent) as a result of repayments and write-offs. The WRB stage 3 loans remains broadly stable at $1.5 billion (31 December 2023: $1.5 billion). The WRB stage 3 cover ratio decreased by 5 per cent to 46 per cent (31 December 2023: 51 per cent) driven by reduction in personal loan provisions in Malaysia due to unsecured assets reclassified as held for sale. Stage 3 Central and other items decreased by $160 million to $0.1 billion (31 December 2023: $0.2 billion) as funds were reinvested into debt securities for liquidity purposes. Total stage 3 cover ratio increased by 3 per cent to 63 per cent (31 December 2023: 60 per cent) due to a decrease in exposures. The cover ratio after collateral increased by 6 per cent to 82 per cent (31 December 2023: 76 per cent). Further details can be found in the 'Analysis of financial instruments by stage' section in pages 42 and 43; 'Credit quality by client segment' section; and 'Credit quality by industry' section, Analysis of stage 2 The key SICR driver which caused exposures to be classified as stage 2 remains an increase in probability of default (PD). The proportion of exposures in CIB in stage 2 decreased due to a reduction in clients placed on non-purely precautionary early alert that have not breached PD thresholds. In WRB, the proportion of loans in stage 2 from 30 days past due trigger remained stable. In Central and other items, the decrease in CG12 was due to the maturity of short-term loan exposures being replaced with debt securities in the Middle East. Further details can be found in the 'Analysis of stage 2 balances' section. Credit impairment charges The Group's ongoing credit impairment was a net charge of $249 million (30 June 2023: $172 million). For CIB, stage 1 and 2 impairment charges decreased by $71 million to a net release of $38 million (30 June 2023: $33 million), due to $55 million China CRE overlay releases driven by repayments, and sovereign upgrades. This was partly offset by portfolio movements. CIB stage 3 impairment charges decreased by $33 million to $3 million (30 June 2023: $36 million) due to a number of recoveries, which was partly offset by additional impairments on the China CRE portfolio including one new downgrade. For WRB, stage 1 and 2 impairment charges increased by $120 million to $135 million (30 June 2023: $15 million) mainly due to the release of COVID-19 overlays and other one-off releases present in 2023. Growth in the Digital Partnership portfolio has also resulted in an increase in ECL. WRB stage 3 impairment charges increased by $54 million to $147 million (30 June 2023: $93 million). This was driven by gross charge-offs in credit cards and personal loans (mainly in China, Hong Kong, Singapore and Korea) on account of the higher interest rate environment impacting customer affordability, as well as maturation of digital partnerships (in China, Indonesia, and Vietnam). For Ventures, total impairment charges increased by $20 million to $43 million (30 June 2023: $23 million). Of the $43 million charge, Mox Bank accounts for $33 million. Stage 1 and 2 impairment charges decreased by $5 million to $7 million (30 June 2023: $12 million). Out of the $7 million charge, $2 million was from Mox Bank and $5 million was from Trust Bank. Mox Bank's delinquency and flow rates have improved on both the new and legacy books as new credit control measures have taken effect over the course of 2024. Ventures stage 3 impairment charges increased by $25 million to $36 million (30 June 2023: $11 million). Of the $36 million, $30 million was from Mox Bank due to gross charge-offs and bankruptcy-related charges. These charges declined as we progressed through H1 2024. For Central and other items, stage 1 and 2 impairment charges decreased by $4 million to a net release of $31 million (30 June 2023: net release of $27 million) due to sovereign upgrades, driven by improvements in the macroeconomic environment. The charges also declined due to a portfolio of debt securities maturing, which were being held by Treasury and accounted for under FVOCI. Central and other items stage 3 impairment charges decreased by $9 million to a net release of $10 million (30 June 2023: net release of $1 million) due to an upgrade in a sovereign's local currency position to CG12C (higher risk). Further details can be found in the 'Credit impairment charge' section. Page 6 Vulnerable and cyclical sectors Total net on-balance sheet exposure to vulnerable and cyclical sectors increased by $4.8 billion to $33 billion (31 December 2023: $29 billion) largely due to increases in the Oil and Gas and Commodity Traders sectors in stage 1. Stage 2 vulnerable and cyclical sector loans decreased by $0.3 billion to $3.1 billion (31 December 2023: $3.4 billion) mainly due to CRE. Stage 3 vulnerable and cyclical sector loans decreased by $0.3 billion to $3.3 billion (31 December 2023: $3.6 billion) mainly due to a loan sales in the CRE sector, which was partly offset by one new downgrade. The Group provides loans to CRE counterparties of which $8.9 billion is to counterparties in CIB where the source of repayment is substantially derived from rental or sale of real estate and is secured by real estate collateral. The remaining CRE loans comprise working capital loans to real estate corporates, loans with non-property collateral, unsecured loans and loans to real estate entities of diversified conglomerates. The average LTV ratio of the performing book CRE portfolio has increased to 53 per cent (31 December 2023: 52 per cent). The proportion of loans with an LTV greater than 80 per cent has increased to 4 per cent (31 December 2023: 3 per cent). Further details can be found in the 'Vulnerable, cyclical and high carbon sectors' section. China commercial real estate Total exposure to China CRE decreased by $0.4 billion to $2.2 billion (31 December 2023: $2.6 billion) mainly from repayments. The proportion of credit impaired amortised cost loans to customers increased to 67 per cent (31 December 2023: 58 per cent) largely due to repayments in the performing portfolio and a downgrade. Stage 3 provision coverage increased to 77 per cent (31 December 2023: 72 per cent) reflecting increased provisions made during the period. The proportion of the loan book rated as higher risk was stable at 0.4 per cent (31 December 2023: 0.3 per cent). The Group continues to hold a judgemental management overlay in respect of the performing portfolio, which decreased by $55 million to $86 million (31 December 2023: $141 million) due to repayments and a downgrade to stage 3. The Group is further indirectly exposed to China CRE through its associate investment in China Bohai Bank. Further details can be found in the 'China commercial real estate' section. Page 7 Maximum exposure to Credit Risk (reviewed) The table below presents the Group's maximum exposure to Credit Risk for its on-balance sheet and off-balance sheet financial instruments as at 30 June 2024, before and after taking into account any collateral held or other Credit Risk mitigation. Further details can be found in the 'Summary of Credit Risk performance' section. 30.06.24 31.12.23 Maximum exposure $million Credit risk management Net exposure $million Maximum exposure $million Credit risk management Net exposure $million Collateral8 $million Master netting agreements $million Collateral8 $million Master netting agreements $million On-balance sheet Cash and balances at central banks 64,086 64,086 69,905 69,905 Loans and advances to banks1 45,231 3,991 41,240 44,977 1,738 43,239 of which - reverse repurchase agreements and other similar secured lending7 3,991 3,991 - 1,738 1,738 - Loans and advances to customers1 275,896 115, 872 160,024 286,975 118,492 168,483 of which - reverse repurchase agreements and other similar secured lending7 7,788 7,788 - 13,996 13,996 - Investment securities - Debt securities and other eligible bills2 151,580 151,580 160,263 160,263 Fair value through profit or loss3, 7 176,460 93,202 - 83,258 144,276 81,847 - 62,429 Loans and advances to banks 2,193 2,193 2,265 2,265 Loans and advances to customers 6,877 6,877 7,212 7,212 Reverse repurchase agreements and other similar lending7 93,202 93,202 - 81,847 81,847 - Investment securities - Debt securities and other eligible bills2 74,188 74,188 52,952 52,952 Derivative financial instruments4, 7 48,647 11,285 34,398 2,964 50,434 8,440 39,293 2,701 Accrued income 2,786 2,786 2,673 2,673 Assets held for sale9 517 517 701 701 Other assets5 42,206 42,206 38,140 38,140 Total balance sheet 807,409 224,350 34,398 548,661 798,344 210,517 39,293 548,534 Off-balance sheet6 Undrawn Commitments 178,568 3,078 175,490 182,390 2,940 179,450 Financial Guarantees and other equivalents 86,094 2,351 83,743 74,414 2,590 71,824 Total off-balance sheet 264,662 5,429 - 259,233 256,804 5,530 - 251,274 Total 1,072,071 229,779 34,398 807,894 1,055,148 216,047 39,293 799,808 1. An analysis of credit quality is set out in the credit quality analysis section. Further details of collateral held by client segment and stage are set out in the collateral analysis section 2. Excludes equity and other investments of $823 million (31 December 2023: $992 million). Further details are set out in Note 13 financial instruments 3. Excludes equity and other investments of $5,264 million (31 December 2023: $2,940 million). Further details are set out in Note 13 financial instruments 4 The Group enters into master netting agreements, which in the event of default result in a single amount owed by or to the counterparty through netting the sum of the positive and negative mark-to-market values of applicable derivative transactions 5. Other assets include Hong Kong certificates of indebtedness, cash collateral, and acceptances, in addition to unsettled trades and other financial assets 6. Excludes ECL allowances which are reported under Provisions for liabilities and charges 7. Collateral capped at maximum exposure (over-collateralised) 8. Adjusted for over-collateralisation, which has been determined with reference to the drawn and undrawn component as this best reflects the effect on the amount arising from expected credit losses 9. The amount is after ECL. Further details are set out in Note 20 Assets held for sale and associated liabilities Page 8 Analysis of financial instruments by stage (reviewed) The table below presents the gross and credit impairment balances by stage for the Group's amortised cost and FVOCI financial instruments as at 30 June 2024. Further details can be found in the 'Summary of Credit Risk performance' section. 30.06.24 Stage 1 Stage 2 Stage 3 Total Gross balance1 $million Total credit impairment $million Net carrying value $million Gross balance1 $million Total credit impairment $million Net carrying value $million Gross balance1 $million Total credit impairment $million Net carrying value $million Gross balance1 $million Total credit impairment $million Net carrying value $million Cash and balances at central banks 63,238 - 63,238 339 - 339 522 (13) 509 64,099 (13) 64,086 Loans and advances to banks (amortised cost) 44,793 (4) 44,789 392 (3) 389 57 (4) 53 45,242 (11) 45,231 Loans and advances to customers (amortised cost) 264,249 (480) 263,769 10,005 (362) 9,643 6,639 (4,155) 2,484 280,893 (4,997) 275,896 Debt securities and other eligible bills��� 149,422 (23) 1,787 (10) 387 (16) 151,596 (49) Amortised cost 55,961 (16) 55,945 396 - 396 62 - 62 56,419 (16) 56,403 FVOCI2 93,461 (7) 1,391 (10) 325 (16) 95,177 (33) Accrued income (amortised cost)4 2,786 2,786 - - 2,786 - 2,786 Assets held for sale��� 429 - 429 50 (1) 49 114 (75) 39 593 (76) 517 Other assets 42,209 (3) 42,206 - - - 3 (3) - 42,212 (6) 42,206 Undrawn commitments3 173,625 (46) 4,935 (47) 8 - 178,568 (93) Financial guarantees, trade credits and irrevocable letter of credits3 83,957 (12) 1,423 (6) 714 (142) 86,094 (160) Total 824,708 (568) 18,931 (429) 8,444 (4,408) 852,083 (5,405) 1 Gross carrying amount for off-balance sheet refers to notional values 2 These instruments are held at fair value on the balance sheet. The ECL provision in respect of debt securities measured at FVOCI is held within the OCI reserve 3 These are off-balance sheet instruments. Only the ECL is recorded on-balance sheet as a financial liability and therefore there is no "net carrying amount". ECL allowances on off-balance sheet instruments are held as liability provisions to the extent that the drawn and undrawn components of loan exposures can be separately identified. Otherwise they will be reported against the drawn component 4 Stage 1 ECL is not material 5 Stage 3 gross includes $23 million (31 December 2023: $80 million) originated credit-impaired debt securities with impairment of $nil million (31 December 2023: $14 million) Page 9 31.12.23 Stage 1 Stage 2 Stage 3 Total Gross balance1 $million Total credit impairment $million Net carrying value $million Gross balance1 $million Total credit impairment $million Net carrying value $million Gross balance1 $million Total credit impairment $million Net carrying value $million Gross balance1 $million Total credit impairment $million Net carrying value $million Cash and balances at central banks 69,313 - 69,313 207 (7) 200 404 (12) 392 69,924 (19) 69,905 Loans and advances to banks (amortised cost) 44,384 (8) 44,376 540 (10) 530 77 (6) 71 45,001 (24) 44,977 Loans and advances to customers (amortised cost) 273,692 (430) 273,262 11,225 (420) 10,805 7,228 (4,320) 2,908 292,145 (5,170) 286,975 Debt securities and other eligible bills5 158,314 (26) 1,860 (34) 164 (61) 160,338 (121) Amortised cost 56,787 (16) 56,771 103 (2) 101 120 (57) 63 57,010 (75) 56,935 FVOCI2 101,527 (10) 1,757 (32) 44 (4) 103,328 (46) Accrued income (amortised cost)4 2,673 2,673 - - 2,673 - 2,673 Assets held for sale4 661 (33) 628 76 (4) 72 1 - 1 738 (37) 701 Other assets 38,139 - 38,139 - - - 4 (3) 1 38,143 (3) 38,140 Undrawn commitments3 176,654 (52) 5,733 (39) 3 - 182,390 (91) Financial guarantees, trade credits and irrevocable letter of credits3 70,832 (10) 2,910 (14) 672 (112) 74,414 (136) Total 834,662 (559) 22,551 (528) 8,553 (4,514) 865,766 (5,601) 1 Gross carrying amount for off-balance sheet refers to notional values 2 These instruments are held at fair value on the balance sheet. The ECL provision in respect of debt securities measured at FVOCI is held within the OCI reserve 3 These are off-balance sheet instruments. Only the ECL is recorded on-balance sheet as a financial liability and therefore there is no "net carrying amount". ECL allowances on off-balance sheet instruments are held as liability provisions to the extent that the drawn and undrawn components of loan exposures can be separately identified. Otherwise they will be reported against the drawn component 4 Stage 1 ECL is not material 5 Stage 3 gross includes $80 million originated credit-impaired debt securities with impairment of $14 million Page 10 Credit quality analysis Credit quality by client segment (reviewed) For CIB, exposures are analysed by credit grade (CG), which plays a central role in the quality assessment and monitoring of risk. All loans are assigned a CG, which is reviewed periodically and amended in light of changes in the borrower's circumstances or behaviour. CGs 1 to 12 are assigned to stage 1 and stage 2 (performing) clients or accounts, while CGs 13 and 14 are assigned to stage 3 (credit-impaired) clients. Consumer and Business Banking portfolios are analysed by days past due and Private Banking by the type of collateral held. Mapping of credit quality The Group uses the following internal risk mapping to determine the credit quality for loans. Credit quality description Corporate & Investment Banking Private Banking1 Wealth & Retail Banking5 Internal grade mapping S&P external ratings equivalent Regulatory PD range (%) Internal ratings Internal grade mapping Strong 1A to 5B AAA/AA+ to BBB-/BB+�� 0 to 0.425 Class I and Class IV Current loans (no past dues nor impaired) Satisfactory 6A to 11C BB+/BB to B-/CCC+�� 0.426 to 15.75 Class II and Class III Loans past due till 29 days Higher risk Grade 12 CCC+ to C��� 15.751 to 99.999 Stressed Assets Group (SAG) managed Past due loans 30 days and over till 90 days 1 For Private Banking, classes of risk represent the type of collateral held. Class I represents facilities with liquid collateral, such as cash and marketable securities. Class II represents unsecured/partially secured facilities and those with illiquid collateral, such as equity in private enterprises. Class III represents facilities with residential or commercial real estate collateral. Class IV covers margin trading facilities 2 Banks' rating: AAA/AA+ to BB+. Sovereigns' rating: AAA to BB+ 3 Banks' rating: BB to "CCC+ to C". Sovereigns' rating: BB+/BB to B-/CCC+ 4 Banks' rating: CCC+ to C. Sovereigns' rating: CCC+ to "CCC+ to C" 5 Wealth & Retail Banking excludes Private Banking. Medium enterprise clients within Business Banking are managed using the same internal credit grades as CIB The table below sets out the gross loans and advances held at amortised cost, expected credit loss provisions and expected credit loss coverage by business segment and stage. Expected credit loss coverage represents the expected credit loss reported for each segment and stage as a proportion of the gross loan balance for each segment and stage. Further details can be found in the 'Summary of Credit Risk performance' section. Page 11 Loans and advances by client segment (reviewed) Amortised cost 30.06.24 Banks $million Customers Undrawn commitments $million Financial Guarantees $million Corporate & Investment Banking $million Wealth & Retail Banking $million Ventures $million Central & other items $million Customer Total $million Stage 1 44,793 121,272 118,064 1,103 23,810 264,249 173,625 83,957 - Strong 35,029 83,625 112,547 1,088 23,424 220,684 158,620 56,826 - Satisfactory 9,764 37,647 5,517 15 386 43,565 15,005 27,131 Stage 2 392 7,980 1,848 48 129 10,005 4,935 1,423 - Strong 173 1,129 1,333 32 - 2,494 1,768 303 - Satisfactory 161 6,074 172 5 - 6,251 2,953 912 - Higher risk 58 777 343 11 129 1,260 214 208 Of which (stage 2): - Less than 30 days past due - 228 172 5 - 405 - - - More than 30 days past due 3 7 343 11 - 361 - - Stage 3, credit-impaired financial assets 57 5,048 1,518 9 64 6,639 8 714 Gross balance�� 45,242 134,300 121,430 1,160 24,003 280,893 178,568 86,094 Stage 1 (4) (110) (350) (20) - (480) (46) (12) - Strong (2) (70) (274) (19) - (363) (30) (3) - Satisfactory (2) (40) (76) (1) - (117) (16) (9) Stage 2 (3) (206) (134) (22) - (362) (47) (6) - Strong (2) (15) (49) (16) - (80) (9) (1) - Satisfactory (1) (144) (27) (3) - (174) (26) (2) - Higher risk - (47) (58) (3) - (108) (12) (3) Of which (stage 2): - Less than 30 days past due - (15) (27) (3) - (45) - - - More than 30 days past due - - (58) (3) - (61) - - Stage 3, credit-impaired financial assets (4) (3,449) (697) (9) - (4,155) - (142) Total credit impairment (11) (3,765) (1,181) (51) - (4,997) (93) (160) Net carrying value 45,231 130,535 120,249 1,109 24,003 275,896 Stage 1 0.0% 0.1% 0.3% 1.8% 0.0% 0.2% 0.0% 0.0% - Strong 0.0% 0.1% 0.2% 1.7% 0.0% 0.2% 0.0% 0.0% - Satisfactory 0.0% 0.1% 1.4% 6.7% 0.0% 0.3% 0.1% 0.0% Stage 2 0.8% 2.6% 7.3% 45.8% 0.0% 3.6% 1.0% 0.4% - Strong 1.2% 1.3% 3.7% 50.0% 0.0% 3.2% 0.5% 0.3% - Satisfactory 0.6% 2.4% 15.7% 60.0% 0.0% 2.8% 0.9% 0.2% - Higher risk 0.0% 6.0% 16.9% 27.3% 0.0% 8.6% 5.6% 1.4% Of which (stage 2): - Less than 30 days past due 0.0% 6.6% 15.7% 60.0% 0.0% 11.1% 0.0% 0.0% - More than 30 days past due 0.0% 0.0% 16.9% 27.3% 0.0% 16.9% 0.0% 0.0% Stage 3, credit-impaired financial assets (S3) 7.0% 68.3% 45.9% 100.0% 0.0% 62.6% 0.0% 19.9% - Stage 3 Collateral 2 635 664 - - 1,299 - 47 - Stage 3 Cover ratio (after collateral) 10.5% 80.9% 89.7% 100.0% 0.0% 82.2% 0.0% 26.5% Cover ratio 0.0% 2.8% 1.0% 4.4% 0.0% 1.8% 0.1% 0.2% Fair value through profit or loss Performing 42,461 59,769 9 - - 59,778 - - - Strong 37,129 40,917 6 - - 40,923 - - - Satisfactory 5,332 18,801 3 - - 18,804 - - - Higher risk - 51 - - - 51 - - Defaulted (CG13-14) - 33 - - - 33 - - Gross balance (FVTPL)2 42,461 59,802 9 - - 59,811 - - Net carrying value (incl FVTPL) 87,692 190,337 120,258 1,109 24,003 335,707 - - 1 Loans and advances includes reverse repurchase agreements and other similar secured lending of $7,788 million under Customers and of $3,991 million under Banks, held at amortised cost 2 Loans and advances includes reverse repurchase agreements and other similar secured lending of $52,934 million under Customers and of $40,268 million under Banks, held at fair value through profit or loss Page 12 Amortised cost 31.12.23 Banks $million Customers Undrawn commitments $million Financial Guarantees $million Corporate & Investment Banking $million Wealth & Retail Banking $million Ventures $million Central & other items $million Customer Total $million Stage 1 44,384 120,886 123,486 1,015 28,305 273,692 176,654 70,832 - Strong 35,284 84,248 118,193 1,000 27,967 231,408 162,643 47,885 - Satisfactory 9,100 36,638 5,293 15 338 42,284 14,011 22,947 Stage 2 540 7,902 2,304 54 965 11,225 5,733 2,910 - Strong 55 1,145 1,761 34 - 2,940 1,090 830 - Satisfactory 212 5,840 206 7 - 6,053 4,169 1,823 - Higher risk 273 917 337 13 965 2,232 474 257 Of which (stage 2): - Less than 30 days past due - 78 206 7 - 291 - - - More than 30 days past due - 10 337 13 - 360 - - Stage 3, credit-impaired financial assets 77 5,508 1,484 12 224 7,228 3 672 Gross balance1 45,001 134,296 127,274 1,081 29,494 292,145 182,390 74,414 Stage 1 (8) (101) (314) (15) - (430) (52) (10) - Strong (3) (34) (234) (14) - (282) (31) (2) - Satisfactory (5) (67) (80) (1) - (148) (21) (8) Stage 2 (10) (257) (141) (21) (1) (420) (39) (14) - Strong (1) (18) (65) (14) - (97) (5) - - Satisfactory (2) (179) (22) (3) - (204) (23) (7) - Higher risk (7) (60) (54) (4) (1) (119) (11) (7) Of which (stage 2): - Less than 30 days past due - (2) (22) (3) - (27) - - - More than 30 days past due - (1) (54) (4) - (59) - - Stage 3, credit-impaired financial assets (6) (3,533) (760) (12) (15) (4,320) - (112) Total credit impairment (24) (3,891) (1,215) (48) (16) (5,170) (91) (136) Net carrying value 44,977 130,405 126,059 1,033 29,478 286,975 - - Stage 1 0.0% 0.1% 0.3% 1.5% 0.0% 0.2% 0.0% 0.0% - Strong 0.0% 0.0% 0.2% 1.4% 0.0% 0.1% 0.0% 0.0% - Satisfactory 0.1% 0.2% 1.5% 6.7% 0.0% 0.4% 0.1% 0.0% Stage 2 1.9% 3.3% 6.1% 38.9% 0.1% 3.7% 0.7% 0.5% - Strong 1.8% 1.6% 3.7% 41.2% 0.0% 3.3% 0.5% (0.0)% - Satisfactory 0.9% 3.1% 10.7% 42.9% 0.0% 3.4% 0.6% 0.4% - Higher risk 2.6% 6.5% 16.0% 30.8% 0.1% 5.3% 2.3% 2.7% Of which (stage 2): - Less than 30 days past due 0.0% 2.6% 10.7% 42.9% 0.0% 9.3% 0.0% 0.0% - More than 30 days past due 0.0% 10.0% 16.0% 30.8% 0.0% 16.4% 0.0% 0.0% Stage 3, credit-impaired financial assets (S3) 7.8% 64.1% 51.2% 100.0% 6.7% 59.8% 0.0% 16.7% - Stage 3 Collateral 2 621 554 - - 1,175 - 34 - Stage 3 Cover ratio (after collateral) 10.4% 75.4% 88.5% 100.0% 6.7% 76.0% 0.0% 21.7% Cover ratio 0.1% 2.9% 1.0% 4.4% 0.1% 1.8% 0.0% 0.2% Fair value through profit or loss Performing 32,813 58,465 13 - - 58,478 - - - Strong 28,402 38,014 13 - - 38,027 - - - Satisfactory 4,411 20,388 - - - 20,388 - - - Higher risk - 63 - - - 63 - - Defaulted (CG13-14) - 33 - - - 33 - - Gross balance (FVTPL)2 32,813 58,498 13 - - 58,511 - - Net carrying value (incl FVTPL) 77,790 188,903 126,072 1,033 29,478 345,486 - - 1 Loans and advances includes reverse repurchase agreements and other similar secured lending of $13,996 million under Customers and of $1,738 million under Banks, held at amortised cost 2 Loans and advances includes reverse repurchase agreements and other similar secured lending of $51,299 million under Customers and of $30,548 million under Banks, held at fair value through profit or loss Page 13 Loans and advances by client segment credit quality analysis Credit grade Regulatory 1 year PD range (%) S&P external ratings equivalent Corporate & Investment Banking 30.06.24 Gross Credit impairment Stage 1 $million Stage 2 $million Stage 3 $million Total $million Stage 1 $million Stage 2 $million Stage 3 $million Total $million Total Coverage % Strong 83,625 1,129 - 84,754 (70) (15) - (85) 0.1% 1A-2B 0 - 0.045 A+ and Above 11,929 28 - 11,957 (2) - - (2) 0.0% 3A-4A 0.046 - 0.110 A/A- to BBB+/BBB 33,470 559 - 34,029 (7) (3) - (10) 0.0% 4B-5B 0.111 - 0.425 BBB to BBB-/BB+ 38,226 542 - 38,768 (61) (12) - (73) 0.2% Satisfactory 37,647 6,074 - 43,721 (40) (144) - (184) 0.4% 6A-7B 0.426 - 1.350 BB+/BB to BB- 24,516 2,010 - 26,526 (19) (80) - (99) 0.4% 8A-9B 1.351 - 4.000 BB-/B+ to B 8,614 2,557 - 11,171 (12) (49) - (61) 0.5% 10A-11C 4.001 - 15.75 B/B- to B-/CCC+ 4,517 1,507 - 6,024 (9) (15) - (24) 0.4% Higher risk - 777 - 777 - (47) - (47) 6.0% 12 15.751 - 99.999 CCC+/C - 777 - 777 - (47) - (47) 6.0% Credit-impaired - - 5,048 5,048 - - (3,449) (3,449) 68.3% 13-14 100 Defaulted - - 5,048 5,048 - - (3,449) (3,449) 68.3% Total 121,272 7,980 5,048 134,300 (110) (206) (3,449) (3,765) 2.8% Credit grade Regulatory 1 year PD range (%) S&P external ratings equivalent Corporate & Investment Banking 31.12.23 Gross Credit impairment Stage 1 $million Stage 2 $million Stage 3 $million Total $million Stage 1 $million Stage 2 $million Stage 3 $million Total $million Total Coverage % Strong 84,248 1,145 - 85,393 (34) (18) - (52) 0.1% 1A-2B 0 - 0.045 A+ and Above 10,891 81 - 10,972 (1) - - (1) 0.0% 3A-4A 0.046 - 0.110 A/A- to BBB+/BBB 31,974 558 - 32,532 (3) - - (3) 0.0% 4B-5B 0.111 - 0.425 BBB to BBB-/BB+ 41,383 506 - 41,889 (30) (18) - (48) 0.1% Satisfactory 36,638 5,840 - 42,478 (67) (179) - (246) 0.6% 6A-7B 0.426 - 1.350 BB+/BB to BB- 24,296 1,873 - 26,169 (38) (77) - (115) 0.4% 8A-9B 1.351 - 4.000 BB-/B+ to B 8,196 2,273 - 10,469 (13) (90) - (103) 1.0% 10A-11C 4.001 - 15.75 B/B- to B-/CCC+ 4,146 1,694 - 5,840 (16) (12) - (28) 0.5% Higher risk - 917 - 917 - (60) - (60) 6.5% 12 15.751 - 99.999 CCC+/C - 917 - 917 - (60) - (60) 6.5% Credit-impaired - - 5,508 5,508 - - (3,533) (3,533) 64.1% 13-14 100 Defaulted - - 5,508 5,508 - - (3,533) (3,533) 64.1% Total 120,886 7,902 5,508 134,296 (101) (257) (3,533) (3,891) 2.9% Page 14 Loans and advances by client segment credit quality analysis by key geography Corporate & Investment Banking Corporate & Investment Banking 30.06.24 Gross Credit impairment Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Coverage Strong $million Satis-factory $million Total $million Strong $million Satis-factory $million Higher Risk $million Total $million De-faulted $million Total $million Strong $million Satis-factory $million Total $million Strong $million Satis-factory $million Higher Risk $million Total $million De-faulted $million Total $million % Hong Kong 31,685 10,144 41,829 199 1,065 27 1,291 1,371 44,491 (36) (7) (43) (2) (70) (3) (75) (1,111) (1,229) 2.8% Corporate Lending 14,459 6,614 21,073 162 853 27 1,042 1,361 23,476 (36) (4) (40) (1) (70) (3) (74) (1,111) (1,225) 5.2% Non Corporate Lending�� 2,848 1,685 4,533 - 212 - 212 10 4,755 - (2) (2) - - - - - (2) 0.0% Banks 14,378 1,845 16,223 37 - - 37 - 16,260 - (1) (1) (1) - - (1) - (2) 0.0% Singapore 15,821 7,122 22,943 352 665 9 1,026 283 24,252 (5) (5) (10) - (18) (3) (21) (90) (121) 0.5% Corporate Lending 8,421 3,348 11,769 319 515 9 843 236 12,848 (5) (4) (9) - (13) (3) (16) (90) (115) 0.9% Non Corporate Lending�� 1,395 572 1,967 30 144 - 174 - 2,141 - (1) (1) - (5) - (5) - (6) 0.3% Banks 6,005 3,202 9,207 3 6 - 9 47 9,263 - - - - - - - - - 0.0% UK 16,196 3,489 19,685 189 2,085 117 2,391 349 22,425 (7) - (7) (7) (34) - (41) (198) (246) 1.1% Corporate Lending 6,957 835 7,792 188 1,670 - 1,858 224 9,874 (7) - (7) (7) (31) - (38) (173) (218) 2.2% Non Corporate Lending�� 7,096 1,023 8,119 1 353 110 464 121 8,704 - - - - (3) - (3) (21) (24) 0.3% Banks 2,143 1,631 3,774 - 62 7 69 4 3,847 - - - - - - - (4) (4) 0.1% US 14,367 4,151 18,518 104 269 13 386 4 18,908 (4) (2) (6) - - - - (4) (10) 0.1% Corporate Lending 5,706 2,056 7,762 - 264 - 264 1 8,027 (3) (2) (5) - - - - (1) (6) 0.1% Non Corporate Lending�� 7,640 441 8,081 18 5 - 23 3 8,107 (1) - (1) - - - - (3) (4) 0.0% Banks 1,021 1,654 2,675 86 - 13 99 - 2,774 - - - - - - - - - 0.0% China 11,005 2,641 13,646 - 174 21 195 249 14,090 (3) (1) (4) - - (2) (2) (131) (137) 1.0% Corporate Lending 4,976 2,069 7,045 - 174 21 195 246 7,486 (1) (1) (2) - - (2) (2) (131) (135) 1.8% Non Corporate Lending�� 3,515 309 3,824 - - - - - 3,824 (1) - (1) - - - - - (1) 0.0% Banks 2,514 263 2,777 - - - - 3 2,780 (1) - (1) - - - - - (1) 0.0% Other 29,580 19,864 49,444 458 1,977 648 3,083 2,849 55,376 (17) (27) (44) (8) (23) (39) (70) (1,919) (2,033) 3.7% Corporate Lending 16,478 15,285 31,763 394 1,160 610 2,164 2,740 36,667 (9) (21) (30) (7) (22) (39) (68) (1,813) (1,911) 5.2% Non Corporate Lending�� 4,134 3,410 7,544 17 724 - 741 106 8,391 (7) (5) (12) - - - - (106) (118) 1.4% Banks 8,968 1,169 10,137 47 93 38 178 3 10,318 (1) (1) (2) (1) (1) - (2) - (4) 0.0% Total 118,654 47,411 166,065 1,302 6,235 835 8,372 5,105 179,542 (72) (42) (114) (17) (145) (47) (209) (3,453) (3,776) 2.1% 1 Include financing, insurance and non-banking corporations and governments Page 15 Corporate & Investment Banking 31.12.23 Gross Credit impairment Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Coverage Strong $million Satis-factory $million Total $million Strong $million Satis-factory $million Higher Risk $million Total $million De-faulted $million Total $million Strong $million Satis-factory $million Total $million Strong $million Satis-factory $million Higher Risk $million Total $million De-faulted $million Total $million % Hong Kong 32,997 10,151 43,148 167 937 30 1,134 1,284 45,566 (7) (23) (30) (4) (118) (3) (125) (1,025) (1,180) 2.6% Corporate Lending 14,401 6,289 20,690 165 855 30 1,050 1,219 22,959 (5) (20) (25) (3) (118) (3) (124) (1,024) (1,173) 5.1% Non Corporate Lending�� 2,544 2,458 5,002 1 81 - 82 65 5,149 (1) (2) (3) - - - - (1) (4) 0.1% Banks 16,052 1,404 17,456 1 1 - 2 - 17,458 (1) (1) (2) (1) - - (1) - (3) 0.0% Singapore 13,180 6,046 19,226 361 509 36 906 285 20,417 (4) (4) (8) (11) (14) (4) (29) (75) (112) 0.5% Corporate Lending 5,766 2,334 8,100 304 504 36 844 221 9,165 (4) (3) (7) (11) (13) (4) (28) (74) (109) 1.2% Non Corporate Lending�� 1,687 510 2,197 57 2 - 59 - 2,256 - (1) (1) - - - - - (1) 0.0% Banks 5,727 3,202 8,929 - 3 - 3 64 8,996 - - - - (1) - (1) (1) (2) 0.0% UK 8,364 4,171 12,535 56 785 83 924 257 13,716 (5) (5) (10) - (14) (7) (21) (209) (240) 1.7% Corporate Lending 5,407 1,559 6,966 52 539 71 662 250 7,878 (4) (5) (9) - (13) (7) (20) (202) (231) 2.9% Non Corporate Lending�� 558 1,244 1,802 - 160 - 160 3 1,965 (1) - (1) - (1) - (1) (3) (5) 0.3% Banks 2,399 1,368 3,767 4 86 12 102 4 3,873 - - - - - - - (4) (4) 0.1% US 14,550 4,742 19,292 219 176 19 414 5 19,711 (2) (2) (4) - - - - (5) (9) 0.0% Corporate Lending 7,487 2,765 10,252 146 130 - 276 1 10,529 (1) (2) (3) - - - - (1) (4) 0.0% Non Corporate Lending�� 6,181 425 6,606 25 4 - 29 4 6,639 (1) - (1) - - - - (4) (5) 0.1% Banks 882 1,552 2,434 48 42 19 109 - 2,543 - - - - - - - - - 0.0% China 9,737 2,733 12,470 31 298 8 337 262 13,069 (3) (4) (7) - - - - (125) (132) 1.0% Corporate Lending 4,723 2,179 6,902 31 297 8 336 259 7,497 (2) (1) (3) - - - - (125) (128) 1.7% Non Corporate Lending�� 3,254 318 3,572 - - - - - 3,572 (1) - (1) - - - - - (1) 0.0% Banks 1,760 236 1,996 - 1 - 1 3 2,000 - (3) (3) - - - - - (3) 0.2% Other 40,704 17,895 58,599 366 3,347 1,014 4,727 3,492 66,818 (16) (34) (50) (4) (35) (53) (92) (2,100) (2,242) 3.4% Corporate Lending 16,189 15,034 31,223 345 2,322 678 3,345 3,335 37,903 (8) (27) (35) (3) (28) (46) (77) (2,012) (2,124) 5.6% Non Corporate Lending�� 16,051 1,523 17,574 19 946 94 1,059 151 18,784 (6) (6) (12) (1) (6) - (7) (87) (106) 0.6% Banks 8,464 1,338 9,802 2 79 242 323 6 10,131 (2) (1) (3) - (1) (7) (8) (1) (12) 0.1% Total 119,532 45,738 165,270 1,200 6,052 1,190 8,442 5,585 179,297 (37) (72) (109) (19) (181) (67) (267) (3,539) (3,915) 2.2% 1 Include financing, insurance and non-banking corporations and governments Page 16 Wealth & Retail Banking Wealth & Retail Banking 30.06.24 Gross Credit impairment Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Coverage Strong $million Satis-factory $million Total $million Strong $million Satis-factory $million Higher Risk $million Total $million De-faulted $million Total $million Strong $million Satis-factory $million Total $million Strong $million Satis-factory $million Higher Risk $million Total $million De-faulted $million Total $million % Hong Kong 41,284 196 41,480 351 44 36 431 189 42,100 (28) (29) (57) (12) (10) (10) (32) (49) (138) 0.3% Mortgages 31,424 151 31,575 142 30 13 185 65 31,825 - - - - - - - (4) (4) 0.0% Credit cards 3,300 28 3,328 43 10 14 67 9 3,404 (14) (28) (42) (4) (9) (5) (18) (9) (69) 2.0% Others 6,560 17 6,577 166 4 9 179 115 6,871 (14) (1) (15) (8) (1) (5) (14) (36) (65) 0.9% Singapore 26,551 73 26,624 207 39 36 282 301 27,207 (14) (15) (29) - (5) (5) (10) (249) (288) 1.1% Mortgages 14,287 21 14,308 161 31 15 207 20 14,535 - - - - - - - (4) (4) 0.0% Credit cards 1,617 21 1,638 10 5 16 31 10 1,679 (4) (15) (19) - (5) (4) (9) (8) (36) 2.1% Others 10,647 31 10,678 36 3 5 44 271 10,993 (10) - (10) - - (1) (1) (237) (248) 2.3% Korea 18,532 180 18,712 368 10 21 399 105 19,216 (26) (2) (28) (11) (2) (2) (15) (29) (72) 0.4% Mortgages 13,230 133 13,363 280 8 17 305 57 13,725 - - - - - - - (1) (1) 0.0% Credit cards 64 1 65 1 - - 1 - 66 (1) - (1) - - - - - (1) 1.5% Others 5,238 46 5,284 87 2 4 93 48 5,425 (25) (2) (27) (11) (2) (2) (15) (28) (70) 1.3% Others 26,180 5,068 31,248 407 79 250 736 923 32,907 (206) (30) (236) (26) (10) (41) (77) (370) (683) 2.1% Mortgages 14,589 2,249 16,838 137 38 136 311 444 17,593 (5) (4) (9) (1) (1) (1) (3) (123) (135) 0.8% Credit cards 1,400 88 1,488 74 1 17 92 47 1,627 (23) (8) (31) (7) - (11) (18) (21) (70) 4.3% Others 10,191 2,731 12,922 196 40 97 333 432 13,687 (178) (18) (196) (18) (9) (29) (56) (226) (478) 3.5% Total 112,547 5,517 118,064 1,333 172 343 1,848 1,518 121,430 (274) (76) (350) (49) (27) (58) (134) (697) (1,181) 1.0% Wealth & Retail Banking 31.12.23 Gross Credit impairment Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Coverage Strong $million Satis-factory $million Total $million Strong $million Satis-factory $million Higher Risk $million Total $million De-faulted $million Total $million Strong $million Satis-factory $million Total $million Strong $million Satis-factory $million Higher Risk $million Total $million De-faulted $million Total $million % Hong Kong 42,161 230 42,391 480 66 40 586 164 43,141 (17) (33) (50) (14) (10) (9) (33) (39) (122) 0.3% Mortgages 32,374 152 32,526 282 53 13 348 63 32,937 - - - (1) - - (1) (1) (2) 0.0% Credit cards 3,278 32 3,310 46 9 13 68 8 3,386 (2) (32) (34) (5) (9) (5) (19) (8) (61) 1.8% Others 6,509 46 6,555 152 4 14 170 93 6,818 (15) (1) (16) (8) (1) (4) (13) (30) (59) 0.9% Singapore 26,412 64 26,476 379 41 32 452 280 27,208 (8) (18) (26) (2) (5) (4) (11) (245) (282) 1.0% Mortgages 14,992 16 15,008 230 34 11 275 13 15,296 - - - - - - - (4) (4) 0.0% Credit cards 1,679 21 1,700 11 5 14 30 8 1,738 - (17) (17) - (5) (3) (8) (8) (33) 1.9% Others 9,741 27 9,768 138 2 7 147 259 10,174 (8) (1) (9) (2) - (1) (3) (233) (245) 2.4% Korea 22,965 211 23,176 462 20 9 491 93 23,760 (40) - (40) (18) - - (18) (19) (77) 0.3% Mortgages 16,534 164 16,698 364 18 8 390 69 17,157 - - - - - - - - - 0.0% Credit cards 113 2 115 3 - - 3 - 118 (4) - (4) - - - - - (4) 3.4% Others 6,318 45 6,363 95 2 1 98 24 6,485 (36) - (36) (18) - - (18) (19) (73) 1.1% Others 26,655 4,788 31,443 440 79 256 775 947 33,165 (169) (29) (198) (31) (7) (41) (79) (457) (734) 2.2% Mortgages 14,681 2,297 16,978 155 48 134 337 374 17,689 (5) (2) (7) (2) (1) (1) (4) (118) (129) 0.7% Credit cards 1,420 68 1,488 73 1 15 89 40 1,617 (26) (9) (35) (7) - (10) (17) (16) (68) 4.2% Others 10,554 2,423 12,977 212 30 107 349 533 13,859 (138) (18) (156) (22) (6) (30) (58) (323) (537) 3.9% Total 118,193 5,293 123,486 1,761 206 337 2,304 1,484 127,274 (234) (80) (314) (65) (22) (54) (141) (760) (1,215) 1.0% Movement in gross exposures and credit impairment for loans and advances, debt securities, undrawn commitments and financial guarantees (reviewed) The tables overleaf set out the movement in gross exposures and credit impairment by stage in respect of amortised cost loans to banks and customers, undrawn commitments, financial guarantees and debt securities classified at amortised cost and FVOCI. The tables are presented for the Group, debt securities and other eligible bills. Methodology The movement lines within the tables are an aggregation of monthly movements over the year and will therefore reflect the accumulation of multiple trades during the year. The credit impairment charge in the income statement comprises the amounts within the boxes in the table below, less recoveries of amounts previously written off. Discount unwind is reported in net interest income and related to stage 3 financial instruments only. Page 17 The approach for determining the key line items in the tables is set out below. ��� Transfers - transfers between stages are deemed to occur at the beginning of a month based on prior month closing balances. ��� Net remeasurement from stage changes - the remeasurement of credit impairment provisions arising from a change in stage is reported within the stage that the assets are transferred to. For example, assets transferred into stage 2 are remeasured from a 12-month to a lifetime expected credit loss, with the effect of remeasurement reported in stage 2. For stage 3, this represents the initial remeasurement from specific provisions recognised on individual assets transferred into stage 3 in the year. ��� Net changes in exposures - new business written less repayments in the year. Within stage 1, new business written will attract up to 12 months of expected credit loss charges. Repayments of non-amortising loans (primarily within CIB) will have low amounts of expected credit loss provisions attributed to them, due to the release of provisions over the term to maturity. In stages 2 and 3, the net change in exposures reflect repayments although stage 2 may include new facilities where clients are on non-purely precautionary early alert, are CG 12, or when non-investment grade debt securities are acquired. ��� Changes in risk parameters - for stages 1 and 2, this reflects changes in the probability of default (PD), loss given default (LGD) and exposure at default (EAD) of assets during the year, which includes the impact of releasing provisions over the term to maturity. It also includes the effect of changes in forecasts of macroeconomic variables during the year. In stage 3, this line represents additional specific provisions recognised on exposures held within stage 3. ��� Interest due but not paid - change in contractual amount of interest due in stage 3 financial instruments but not paid, being the net of accruals, repayments and write-offs, together with the corresponding change in credit impairment. Changes to ECL models, which incorporate changes to model approaches and methodologies, are not reported as a separate line item as these have an impact over a number of lines and stages. Movements during the year Stage 1 gross exposures decreased by $7.8 billion to $716 billion (31 December 2023: $724 billion). CIB increased by $20.5 billion to $358 billion (31 December 2023: $337 billion) largely due to higher amounts of financial guarantees. WRB decreased by $15.6 billion to $175 billion (31 December 2023: $191 billion), largely due to the mortgage portfolio in Korea and Hong Kong, as well as off balance sheet commitments. Stage 1 debt securities decreased by $8.9 billion to $149 billion (31 December 2023: $158 billion). Total stage 1 provisions increased by $39 million to $565 million (31 December 2023: $526 million). CIB provisions decreased by $7 million to $144 million (31 December 2023: $151 million), due to China CRE overlay releases driven by repayments. This was partly offset by increases due to portfolio movements. WRB provisions increased by $33 million to $358 million (31 December 2023: $325 million), due to delinquencies in personal loans and unsecured lending portfolio. There was also $10 million overlay charges on Hong Kong and Singapore credit cards due to an increase in industry bankruptcy trends. Stage 2 gross exposures decreased by $3.7 billion to $19 billion (31 December 2023: $22 billion), primarily driven by a net reduction in CIB exposures from off-balance sheet instruments, and in Central and other items where a portfolio of debt securities were maturing, which were being held by Treasury and accounted for under FVOCI. WRB exposures decreased by $0.5 billion to $2 billion (31 December 2023: $2.5 billion). Debt securities remained broadly stable at $1.8 billion (31 December 2023: $1.9 billion). Stage 2 provisions decreased by $89 million to $428 million (31 December 2023: $517 million). CIB provisions decreased by $59 million to $259 million (31 December 2023: $318 million) from China CRE overlay releases largely due to repayments, and releases due to a sovereign upgrade. This was partly offset by portfolio movements. Debt securities provisions decreased by $24 million to $10 million (31 December 2023: $34 million) mainly due to a sovereign upgrade, which was driven by an improvement in the macroeconomic environment. The decrease was also due to the maturity of a portfolio of debt securities, which were being held by Treasury and accounted for under FVOCI. The impact of model and methodology updates in H1 2024 reduced modelled provisions by $13 million across stages 1, 2 and 3 in WRB. Page 18 Stage 3 gross loans for CIB decreased by $0.4 billion to $5.8 billion (31 December 2023: $6.3 billion) due to repayments and write-offs, which were partly offset by new inflows. CIB provisions decreased by $58 million to $3.6 billion (31 December 2023: $3.7 billion), due to releases from repayments and write-offs, which was offset by charges from new downgrades. WRB stage 3 loans was stable at $1.5 billion (31 December 2023: $1.5 billion) but provisions decreased by $61 million to $0.7 billion (31 December 2023: $0.8 billion) due to the unsecured portfolio being classified as held for sale in Malaysia. Debt securities increased by $223 million to $387 million (31 December 2023: $164 million) due to sovereign client positions. All segments (reviewed) Stage 1 Stage 2 Stage 35 Total Gross balance3 $million Total credit impair-ment $million Net $million Gross balance3 $million Total credit impair-ment $million Net $million Gross balance3 $million Total credit impair-ment $million Net $million Gross balance3 $million Total credit impair-ment $million Net $million As at 1 January 2023 720,112 (645) 719,467 27,479 (618) 26,861 8,841 (4,724) 4,117 756,432 (5,987) 750,445 Transfers to stage 1 19,594 (661) 18,933 (19,583) 661 (18,922) (11) - (11) - - - Transfers to stage 2 (42,628) 174 (42,454) 42,793 (182) 42,611 (165) 8 (157) - - - Transfers to stage 3 (96) 6 (90) (2,329) 326 (2,003) 2,425 (332) 2,093 - - - Net change in exposures 23,717 (185) 23,532 (22,727) 22 (22,705) (1,708) 624 (1,084) (718) 461 (257) Net remeasurement from stage changes - 52 52 - (199) (199) - (163) (163) - (310) (310) Changes in risk parameters - 202 202 - (32) (32) - (1,100) (1,100) - (930) (930) Write-offs - - - - - - (1,027) 1,027 - (1,027) 1,027 - Interest due but unpaid - - - - - - (83) 83 - (83) 83 - Discount unwind - - - - - - - 180 180 - 180 180 Exchange translation differences and other movements�� 3,177 531 3,708 (3,365) (495) (3,860) (128) (102) (230) (316) (66) (382) As at 31 December 2023�� 723,876 (526) 723,350 22,268 (517) 21,751 8,144 (4,499) 3,645 754,288 (5,542) 748,746 Income statement ECL (charge)/release 69 (209) (639) (779) Recoveries of amounts previously written off - - 271 271 Total credit impairment (charge)/release 69 (209) (368) (508) As at 1 January 2024 723,876 (526) 723,350 22,268 (517) 21,751 8,144 (4,499) 3,645 754,288 (5,542) 748,746 Transfers to stage 1 8,877 (299) 8,578 (8,862) 299 (8,563) (15) - (15) - - - Transfers to stage 2 (18,521) 121 (18,400) 18,617 (122) 18,495 (96) 1 (95) - - - Transfers to stage 3 (347) 16 (331) (576) 108 (468) 923 (124) 799 - - - Net change in exposures 13,748 (72) 13,676 (11,669) 27 (11,642) (563) 165 (398) 1,516 120 1,636 Net remeasurement from stage changes - 44 44 - (117) (117) - (145) (145) - (218) (218) Changes in risk parameters - 68 68 - (25) (25) - (314) (314) - (271) (271) Write-offs - - - - - - (578) 578 - (578) 578 - Interest due but unpaid - - - - - - 13 (13) - 13 (13) - Discount unwind - - - - - - - 69 69 - 69 69 Exchange translation differences and other movements�� (11,587) 83 (11,504) (1,236) (81) (1,317) (23) (35) (58) (12,846) (33) (12,879) As at 30 June 2024�� 716,046 (565) 715,481 18,542 (428) 18,114 7,805 (4,317) 3,488 742,393 (5,310) 737,083 Income statement ECL (charge)/release��� 40 (115) (294) (369) Recoveries of amounts previously written off - - 130 130 Total credit impairment (charge)/release4 40 (115) (164) (239) 1 Includes fair value adjustments and amortisation on debt securities 2 Excludes Cash and balances at central banks, Accrued income, Assets held for sale and Other assets gross balances of $109,690 million (2023: $111,478 million) and Total credit impairment of $95 million (2023: $59 million) 3 Does not include $1 million (2023: Nil) release relating to Other assets 4 Reported basis 5 Stage 3 gross includes $23 million (2023: $80 million) originated credit-impaired debt securities with impairment of Nil (2023: $14 million) 6 The gross balance includes the notional amount of off balance sheet instruments Page 19 Of which - movement of debt securities, additional tier one and other eligible bills (reviewed) Amortised cost and FVOCI Stage 1 Stage 2 Stage 32 Total Gross balance $million Total credit impair-ment $million Net $million Gross balance $million Total credit impair-ment $million Net $million Gross balance $million Total credit impair-ment $million Net $million Gross balance $million Total credit impair-ment $million Net3 $million As at 1 January 2023 166,103 (25) 166,078 5,455 (90) 5,365 144 (106) 38 171,702 (221) 171,481 Transfers to stage 1 371 (65) 306 (371) 65 (306) - - - - - - Transfers to stage 2 (884) 14 (870) 884 (14) 870 - - - - - - Transfers to stage 3 - - - (16) - (16) 16 - 16 - - - Net change in exposures (11,583) (28) (11,611) (1,899) (44) (1,943) 7 - 7 (13,475) (72) (13,547) Net remeasurement from stage changes - 7 7 - (18) (18) - - - - (11) (11) Changes in risk parameters - 32 32 - 105 105 - (4) (4) - 133 133 Write-offs - - - - - - - - - - - - Interest due but unpaid - - - - - - - - - - - - Exchange translation differences and other movements1 4,307 39 4,346 (2,193) (38) (2,231) (3) 49 46 2,111 50 2,161 As at 31 December 2023 158,314 (26) 158,288 1,860 (34) 1,826 164 (61) 103 160,338 (121) 160,217 Income statement ECL (charge)/release 11 43 (4) 50 Recoveries of amounts previously written off - - - - Total credit impairment (charge)/release 11 43 (4) 50 As at 1 January 2024 158,314 (26) 158,288 1,860 (34) 1,826 164 (61) 103 160,338 (121) 160,217 Transfers to stage 1 125 - 125 (125) - (125) - - - - - - Transfers to stage 2 (555) 42 (513) 555 (42) 513 - - - - - - Transfers to stage 3 (131) - (131) 131 - 131 - - - - - - Net change in exposures (5,162) (4) (5,166) 2 (9) (7) 272 22 294 (4,888) 9 (4,879) Net remeasurement from stage changes - - - - 2 2 - - - - 2 2 Changes in risk parameters - 4 4 - 26 26 - - - - 30 30 Write-offs - - - - - - (51) 51 - (51) 51 - Interest due but unpaid - - - - - - - - - - - - Exchange translation differences and other movements1 (3,169) (39) (3,208) (636) 47 (589) 2 (28) (26) (3,803) (20) (3,823) As at 30 June 2024 149,422 (23) 149,399 1,787 (10) 1,777 387 (16) 371 151,596 (49) 151,547 Income statement ECL (charge)/release - 19 22 41 Recoveries of amounts previously written off - - - - Total credit impairment (charge)/release - 19 22 41 1 Includes fair value adjustments and amortisation on debt securities 2 Stage 3 includes gross of $23 million (31 December 2023: $80 million) and ECL Nil (31 December 2023: $14 million) originated credit-impaired debt securities 3 FVOCI instruments are not presented net of ECL. While the presentation is on a net basis for the table, the total net on-balance sheet amount to $151,580 million (31 December 2023: $160,263 million). Refer to the Analysis of financial instrument by stage table Page 20 Corporate & Investment Banking (reviewed) Amortised cost and FVOCI Stage 1 Stage 2 Stage 3 Total Gross balance1 $million Total credit impair-ment $million Net $million Gross balance1 $million Total credit impair-ment $million Net $million Gross balance1 $million Total credit impair-ment $million Net $million Gross balance1 $million Total credit impair-ment $million Net $million As at 1 January 2023 315,437 (194) 315,243 20,148 (411) 19,737 6,994 (3,822) 3,172 342,579 (4,427) 338,152 Transfers to stage 1 14,948 (347) 14,601 (14,948) 347 (14,601) - - - - - - Transfers to stage 2 (34,133) 80 (34,053) 34,175 (88) 34,087 (42) 8 (34) - - - Transfers to stage 3 (17) - (17) (1,270) 141 (1,129) 1,287 (141) 1,146 - - - Net change in exposures 41,314 (73) 41,241 (20,084) 89 (19,995) (1,335) 623 (712) 19,895 639 20,534 Net remeasurement from stage changes - 15 15 - (45) (45) - (82) (82) - (112) (112) Changes in risk parameters - 60 60 - (68) (68) - (668) (668) - (676) (676) Write-offs - - - - - - (340) 340 - (340) 340 - Interest due but unpaid - - - - - - (120) 120 - (120) 120 - Discount unwind - - - - - - - 155 155 - 155 155 Exchange translation differences and other movements (360) 308 (52) (1,148) (283) (1,431) (188) (184) (372) (1,696) (159) (1,855) As at 31 December 2023 337,189 (151) 337,038 16,873 (318) 16,555 6,256 (3,651) 2,605 360,318 (4,120) 356,198 Income statement ECL (charge)/release2 2 (24) (127) (149) Recoveries of amounts previously written off - - 31 31 Total credit impairment (charge)/release 2 (24) (96) (118) As at 1 January 2024 337,189 (151) 337,038 16,873 (318) 16,555 6,256 (3,651) 2,605 360,318 (4,120) 356,198 Transfers to stage 1 5,730 (144) 5,586 (5,730) 144 (5,586) - - - - - - Transfers to stage 2 (14,220) 41 (14,179) 14,245 (42) 14,203 (25) 1 (24) - - - Transfers to stage 3 (118) 13 (105) (147) (3) (150) 265 (10) 255 - - - Net change in exposures 32,957 (23) 32,934 (10,137) 39 (10,098) (479) 127 (352) 22,341 143 22,484 Net remeasurement from stage changes - 12 12 (1) (32) (33) - (83) (83) (1) (103) (104) Changes in risk parameters - 38 38 - 3 3 - (69) (69) - (28) (28) Write-offs - - - - - - (107) 107 - (107) 107 - Interest due but unpaid - - - - - - 16 (16) - 16 (16) - Discount unwind - - - - - - - 54 54 - 54 54 Exchange translation differences and other movements (3,878) 70 (3,808) (538) (50) (588) (102) (53) (155) (4,518) (33) (4,551) As at 30 June 2024 357,660 (144) 357,516 14,565 (259) 14,306 5,824 (3,593) 2,231 378,049 (3,996) 374,053 Income statement ECL (charge)/release�� 27 10 (25) 12 Recoveries of amounts previously written off - - 5 5 Total credit impairment (charge)/release 27 10 (20) 17 1 The gross balance includes the notional amount of off balance sheet instruments 2 Does not include release relating to Other assets Page 21 Wealth & Retail Banking (reviewed) Amortised cost and FVOCI Stage 1 Stage 2 Stage 3 Total Gross balance1 $million Total credit impair-ment $million Net $million Gross balance1 $million Total credit impair-ment $million Net $million Gross balance1 $million Total credit impair-ment $million Net $million Gross balance1 $million Total credit impair-ment $million Net $million As at 1 January 2023 193,239 (413) 192,826 1,821 (118) 1,703 1,454 (776) 678 196,514 (1,307) 195,207 Transfers to stage 1 4,265 (246) 4,019 (4,254) 246 (4,008) (11) - (11) - - - Transfers to stage 2 (7,544) 73 (7,471) 7,667 (73) 7,594 (123) - (123) - - - Transfers to stage 3 (64) 1 (63) (1,049) 187 (862) 1,113 (188) 925 - - - Net change in exposures 1,965 (78) 1,887 (1,713) 14 (1,699) (395) - (395) (143) (64) (207) Net remeasurement from stage changes - 31 31 - (137) (137) - (38) (38) - (144) (144) Changes in risk parameters - 110 110 - (69) (69) - (426) (426) - (385) (385) Write-offs - - - - - - (649) 649 - (649) 649 - Interest due but unpaid - - - - - - 37 (37) - 37 (37) - Discount unwind - - - - - - - 24 24 - 24 24 Exchange translation differences and other movements (862) 197 (665) - (190) (190) 59 33 92 (803) 40 (763) As at 31 December 2023 190,999 (325) 190,674 2,472 (140) 2,332 1,485 (759) 726 194,956 (1,224) 193,732 Income statement ECL (charge)/release 63 (192) (464) (593) Recoveries of amounts previously written off - - 239 239 Total credit impairment (charge)/release 63 (192) (225) (354) As at 1 January 2024 190,999 (325) 190,674 2,472 (140) 2,332 1,485 (759) 726 194,956 (1,224) 193,732 Transfers to stage 1 2,963 (146) 2,817 (2,948) 146 (2,802) (15) - (15) - - - Transfers to stage 2 (3,684) 36 (3,648) 3,755 (36) 3,719 (71) - (71) - - - Transfers to stage 3 (57) - (57) (568) 112 (456) 625 (112) 513 - - - Net change in exposures (11,173) (27) (11,200) (668) (3) (671) (196) - (196) (12,037) (30) (12,067) Net remeasurement from stage changes - 16 16 - (82) (82) - (26) (26) - (92) (92) Changes in risk parameters - 15 15 - (54) (54) - (245) (245) - (284) (284) Write-offs - - - - - - (382) 382 - (382) 382 - Interest due but unpaid - - - - - - (3) 3 - (3) 3 - Discount unwind - - - - - - - 15 15 - 15 15 Exchange translation differences and other movements (3,604) 73 (3,531) (38) (81) (119) 79 44 123 (3,563) 36 (3,527) As at 30 June 2024 175,444 (358) 175,086 2,005 (138) 1,867 1,522 (698) 824 178,971 (1,194) 177,777 Income statement ECL (charge)/release 4 (139) (271) (406) Recoveries of amounts previously written off - - 124 124 Total credit impairment (charge)/release 4 (139) (147) (282) 1 The gross balance includes the notional amount of off-balance sheet instruments Page 22 Wealth & Retail Banking - Secured (reviewed) Amortised cost and FVOCI Stage 1 Stage 2 Stage 3 Total Gross balance1 $million Total credit impair-ment $million Net $million Gross balance1 $million Total credit impair-ment $million Net $million Gross balance1 $million Total credit impair-ment $million Net $million Gross balance1 $million Total credit impair-ment $million Net $million As at 1 January 2023 135,362 (60) 135,302 1,413 (17) 1,396 1,028 (552) 476 137,803 (629) 137,174 Transfers to stage 1 3,311 (20) 3,291 (3,302) 20 (3,282) (9) - (9) - - - Transfers to stage 2 (5,340) 11 (5,329) 5,436 (9) 5,427 (96) (2) (98) - - - Transfers to stage 3 (28) 1 (27) (463) 1 (462) 491 (2) 489 - - - Net change in exposures (3,138) (16) (3,154) (1,250) 3 (1,247) (216) - (216) (4,604) (13) (4,617) Net remeasurement from stage changes - 4 4 - (16) (16) - (3) (3) - (15) (15) Changes in risk parameters - 22 22 - 24 24 - (110) (110) - (64) (64) Write-offs - - - - - - (109) 109 - (109) 109 - Interest due but unpaid - - - - - - (3) 3 - (3) 3 - Discount unwind - - - - - - - 12 12 - 12 12 Exchange translation differences and other movements (369) 25 (344) (7) (22) (29) (24) 20 (4) (400) 23 (377) As at 31 December 2023 129,798 (33) 129,765 1,827 (16) 1,811 1,062 (525) 537 132,687 (574) 132,113 Income statement ECL (charge)/release 10 11 (113) (92) Recoveries of amounts previously written off - - 68 68 Total credit impairment (charge)/release 10 11 (45) (24) As at 1 January 2024 129,798 (33) 129,765 1,827 (16) 1,811 1,062 (525) 537 132,687 (574) 132,113 Transfers to stage 1 2,353 (13) 2,340 (2,342) 13 (2,329) (11) - (11) - - - Transfers to stage 2 (2,542) 3 (2,539) 2,591 (3) 2,588 (49) - (49) - - - Transfers to stage 3 (16) - (16) (234) 2 (232) 250 (2) 248 - - - Net change in exposures (6,534) (4) (6,538) (431) 2 (429) (113) - (113) (7,078) (2) (7,080) Net remeasurement from stage changes - 4 4 - (10) (10) - (1) (1) - (7) (7) Changes in risk parameters - (9) (9) - 17 17 - (62) (62) - (54) (54) Write-offs - - - - - - (63) 63 - (63) 63 - Interest due but unpaid - - - - - - 23 (23) - 23 (23) - Discount unwind - - - - - - - 8 8 - 8 8 Exchange translation differences and other movements (2,768) 13 (2,755) (26) (17) (43) 37 24 61 (2,757) 20 (2,737) As at 30 June 2024 120,291 (39) 120,252 1,385 (12) 1,373 1,136 (518) 618 122,812 (569) 122,243 Income statement ECL (charge)/release (9) 9 (63) (63) Recoveries of amounts previously written off - - 43 43 Total credit impairment (charge)/release (9) 9 (20) (20) 1 The gross balance includes the notional amount of off balance sheet instruments Page 23 Wealth & Retail Banking - Unsecured (reviewed) Amortised cost and FVOCI Stage 1 Stage 2 Stage 3 Total Gross balance1 $million Total credit impair-ment $million Net $million Gross balance1 $million Total credit impair-ment $million Net $million Gross balance1 $million Total credit impair-ment $million Net $million Gross balance1 $million Total credit impair-ment $million Net $million As at 1 January 2023 57,877 (353) 57,524 408 (101) 307 426 (224) 202 58,711 (678) 58,033 Transfers to stage 1 954 (226) 728 (952) 226 (726) (2) - (2) - - - Transfers to stage 2 (2,204) 62 (2,142) 2,231 (64) 2,167 (27) 2 (25) - - - Transfers to stage 3 (36) - (36) (586) 186 (400) 622 (186) 436 - - - Net change in exposures 5,103 (62) 5,041 (463) 11 (452) (179) - (179) 4,461 (51) 4,410 Net remeasurement from stage changes - 27 27 - (121) (121) - (35) (35) - (129) (129) Changes in risk parameters - 88 88 - (93) (93) - (316) (316) - (321) (321) Write-offs - - - - - - (540) 540 - (540) 540 - Interest due but unpaid - - - - - - 40 (40) - 40 (40) - Discount unwind - - - - - - - 12 12 - 12 12 Exchange translation differences and other movements (493) 172 (321) 7 (168) (161) 83 13 96 (403) 17 (386) As at 31 December 2023 61,201 (292) 60,909 645 (124) 521 423 (234) 189 62,269 (650) 61,619 Income statement ECL (charge)/release 53 (203) (351) (501) Recoveries of amounts previously written off - - 171 171 Total credit impairment (charge)/release 53 (203) (180) (330) As at 1 January 2024 61,201 (292) 60,909 645 (124) 521 423 (234) 189 62,269 (650) 61,619 Transfers to stage 1 610 (133) 477 (606) 133 (473) (4) - (4) - - - Transfers to stage 2 (1,142) 33 (1,109) 1,164 (33) 1,131 (22) - (22) - - - Transfers to stage 3 (41) - (41) (334) 110 (224) 375 (110) 265 - - - Net change in exposures (4,639) (23) (4,662) (237) (5) (242) (83) - (83) (4,959) (28) (4,987) Net remeasurement from stage changes - 12 12 - (72) (72) - (25) (25) - (85) (85) Changes in risk parameters - 24 24 - (71) (71) - (183) (183) - (230) (230) Write-offs - - - - - - (319) 319 - (319) 319 - Interest due but unpaid - - - - - - (26) 26 - (26) 26 - Discount unwind - - - - - - - 7 7 - 7 7 Exchange translation differences and other movements (836) 60 (776) (12) (64) (76) 42 20 62 (806) 16 (790) As at 30 June 2024 55,153 (319) 54,834 620 (126) 494 386 (180) 206 56,159 (625) 55,534 Income statement ECL (charge)/release 13 (148) (208) (343) Recoveries of amounts previously written off - - 81 81 Total credit impairment (charge)/release 13 (148) (127) (262) 1 The gross balance includes the notional amount of off balance sheet instruments Page 24 Analysis of stage 2 balances The table below analyses total stage 2 gross on-and off-balance sheet exposures and associated expected credit provisions by the key SICR driver that caused the exposures to be classified as stage 2 as at 30 June 2024 and 31 December 2023 for each segment. Where multiple drivers apply, the exposure is allocated based on the table order. For example, a loan may have breached the PD thresholds and could also be on non-purely precautionary early alert; in this instance, the exposure is reported under 'Increase in PD'. Further details can be found in the 'Summary of Credit Risk performance' section. 30.06.24 Corporate & Investment Banking Wealth & Retail Banking Ventures Central & other items1 Total Gross $million ECL $million Cove-rage % Gross $million ECL $million Cove-rage % Gross $million ECL $million Cove-rage % Gross $million ECL $million Cove-rage % Gross $million ECL $million Cove-rage % Increase in PD 7,885 115 1.5% 1,626 125 7.7% 51 25 49.0% 452 4 0.9% 10,014 269 2.7% Non-purely precautionary early alert 4,019 35 0.9% 30 - 0.0% - - 0.0% - - 0.0% 4,049 35 0.9% Higher risk (CG12) 674 22 3.3% 17 - 0.0% - - 0.0% 1,427 3 0.2% 2,118 25 1.2% Sub-investment grade - - 0.0% - - 0.0% - - 0.0% - - 0.0% - - 0.0% Top up/Sell down (Private Banking) - - 0.0% 39 - 0.0% - - 0.0% - - 0.0% 39 - 0.0% Others 1,987 1 0.1% 147 4 2.7% - - 0.0% 426 - 0.0% 2,560 5 0.2% 30 days past due - - 0.0% 146 9 6.2% 5 - 0.0% - - 0.0% 151 9 6.0% Management overlay - 86 0.0% - - 0.0% - - 0.0% - - 0.0% - 86 0.0% Total stage 2 14,565 259 1.8% 2,005 138 6.9% 56 25 44.6% 2,305 7 0.3% 18,931 429 2.3% 31.12.23 Corporate & Investment Banking Wealth & Retail Banking Ventures Central & other items1 Total Gross $million ECL $million Cove-rage % Gross $million ECL $million Cove-rage % Gross $million ECL $million Cove-rage % Gross $million ECL $million Cove-rage % Gross $million ECL $million Cove-rage % Increase in PD 8,262 75 0.9% 1,962 109 5.6% 96 23 24.0% 599 13 2.2% 10,919 220 2.0% Non-purely precautionary early alert 5,136 26 0.5% 37 - 0.0% - - 0.0% - - 0.0% 5,173 26 0.5% Higher risk (CG12) 1,008 56 5.6% 26 1 3.8% - - 0.0% 2,020 17 0.8% 3,054 74 2.4% Sub-investment grade - - 0.0% - - 0.0% - - 0.0% - - 0.0% - - 0.0% Top up/Sell down (Private Banking) - - 0.0% 148 2 1.4% - - 0.0% - - 0.0% 148 2 1.4% Others 2,467 37 1.5% 151 16 10.6% - - 0.0% 489 - 0.0% 3,107 53 1.7% 30 days past due - - 0.0% 148 12 8.1% 2 - 0.0% - - 0.0% 150 12 8.0% Management overlay - 124 0.0% - - 0.0% - - 0.0% - 17 0.0% - 141 0.0% Total stage 2 16,873 318 1.9% 2,472 140 5.7% 98 23 23.5% 3,108 47 1.5% 22,551 528 2.3% 1 Includes Gross and ECL for Cash and balances at central banks and Assets held for sale Page 25 Credit impairment charge (reviewed) The table below analyses credit impairment charges or releases of the ongoing business portfolio and restructuring business portfolio for the half year ended 30 June 2024. Further details can be found in the 'Summary of Credit Risk performance' section. 30.06.24 30.06.23 Stage 1 & 2 $million Stage 3 $million Total $million Stage 1 & 2 $million Stage 3 $million Total $million Ongoing business portfolio Corporate & Investment Banking (38) 3 (35) 33 36 69 Wealth & Retail Banking 135 147 282 15 93 108 Ventures 7 36 43 12 11 23 Central & other items (31) (10) (41) (27) (1) (28) Credit impairment charge/(release) 73 176 249 33 139 172 Restructuring business portfolio Others 2 (11) (9) (2) (9) (11) Credit impairment charge/(release) 2 (11) (9) (2) (9) (11) Total credit impairment charge/ (release) 75 165 240 31 130 161 Problem credit management and provisioning Forborne and other modified loans by client segment (reviewed) A forborne loan arises when a concession has been made to the contractual terms of a loan in response to a customer's financial difficulties. Net forborne loans decreased by $139 million to $866 million (31 December 2023: $1,005 million), largely on the non-performing forborne loans stock. The net non-performing forborne loans decreased by $136 million to $831 million (31 December 2023: $967 million) largely due to write-offs and repayments. Amortised cost 30.06.24 31.12.23 Corporate & Investment Banking $million Wealth & Retail Banking $million Ventures $million Total $million Corporate & Investment Banking $million Wealth & Retail Banking $million Ventures $million Total $million All loans with forbearance measures 2,139 299 - 2,438 2,340 314 - 2,654 Credit impairment (stage 1 and 2) - (2) - (2) - (2) - (2) Credit impairment (stage 3) (1,450) (120) - (1,570) (1,529) (118) - (1,647) Net carrying value 689 177 - 866 811 194 - 1,005 Included within the above table Gross performing forborne loans 4 33 - 37 - 40 - 40 Modification of terms and conditions1 4 33 - 37 - 40 - 40 Refinancing2 - - - - - - - - Impairment provisions - (2) - (2) - (2) - (2) Modification of terms and conditions1 - (2) - (2) - (2) - (2) Refinancing2 - - - - - - - - Net performing forborne loans 4 31 - 35 - 38 - 38 Collateral - 22 - 22 - 31 - 31 Gross non-performing forborne loans 2,135 266 - 2,401 2,340 274 - 2,614 Modification of terms and conditions1 1,906 266 - 2,172 2,113 274 - 2,387 Refinancing2 229 - - 229 227 - - 227 Impairment provisions (1,450) (120) - (1,570) (1,529) (118) - (1,647) Modification of terms and conditions1 (1,240) (120) - (1,360) (1,337) (118) - (1,455) Refinancing2 (210) - - (210) (192) - - (192) Net non-performing forborne loans 685 146 - 831 811 156 - 967 Collateral 296 49 - 345 341 49 - 390 1 Modification of terms is any contractual change apart from refinancing, as a result of credit stress of the counterparty, i.e. interest reductions, loan covenant waivers 2 Refinancing is a new contract to a borrower in credit stress, such that they are refinanced and can pay other debt contracts that they were unable to honour Page 26 Forborne and other modified loans by country Net forborne loans decreased by $139 million to $866 million (31 December 2023: $1,005 million), mainly on the non-performing forborne loans stock. Stage 3 forborne loans reductions in the 'Other' category, were largely in CIB and driven by UAE ($53 million) and Bahrain ($30 million). Amortised cost 30.06.24 31.12.23 Hong Kong $million Korea $million China $million Singa-pore $million UK $million US $million Other $million Total $million Hong Kong $million Korea $million China $million Singa-pore $million UK $million US $million Other $million Total $million Performing forborne loans 2 6 - 3 - - 24 35 - 6 - 3 - - 29 38 Stage 3 forborne loans 135 20 91 34 49 1 501 831 104 22 114 37 46 1 643 967 Net forborne loans 137 26 91 37 49 1 525 866 104 28 114 40 46 1 672 1,005 Credit Risk mitigation Potential credit losses from any given account, customer or portfolio are mitigated using a range of tools such as collateral, netting arrangements, credit insurance and credit derivatives, taking into account expected volatility and guarantees. The reliance that can be placed on these mitigants is carefully assessed in light of issues such as legal certainty and enforceability, market valuation correlation and counterparty risk of the guarantor. The unadjusted market value of collateral across all asset types, in respect of CIB, without adjusting for over-collateralisation, increased to $343 billion (31 December 2023: $290 billion) predominantly due to an increase in reverse repos. Collateral held on loans and advances The table below details collateral held against exposures, separately disclosing stage 2 and stage 3 exposure and corresponding collateral. Amortised cost 30.06.24 Net amount outstanding Collateral Net exposure Total $million Stage 2 financial assets $million Credit-impaired financial assets (S3) $million Total2 $million Stage 2 financial assets $million Credit-impaired financial assets (S3) $million Total $million Stage 2 financial assets $million Credit-impaired financial assets (S3) $million Corporate & Investment Banking1 175,766 8,163 1,652 32,993 2,797 638 142,773 5,366 1,014 Wealth & Retail Banking 120,249 1,714 821 85,192 810 664 35,057 904 157 Ventures 1,109 26 - - - - 1,109 26 - Central & other items 24,003 129 64 1,678 128 - 22,325 1 64 Total 321,127 10,032 2,537 119,863 3,735 1,302 201,264 6,297 1,235 Amortised cost 31.12.23 Net amount outstanding Collateral Net exposure Total $million Stage 2 financial assets $million Credit-impaired financial assets (S3) $million Total2 $million Stage 2 financial assets $million Credit-impaired financial assets (S3) $million Total $million Stage 2 financial assets $million Credit-impaired financial assets (S3) $million Corporate & Investment Banking1 175,382 8,175 2,046 36,458 2,972 623 138,924 5,203 1,423 Wealth & Retail Banking 126,059 2,163 724 86,827 1,136 554 39,232 1,027 170 Ventures 1,033 33 - - - - 1,033 33 - Central & other items 29,478 964 209 2,475 964 - 27,003 - 209 Total 331,952 11,335 2,979 125,760 5,072 1,177 206,192 6,263 1,802 1 Includes loans and advances to banks 2 Adjusted for over-collateralisation based on the drawn and undrawn components of exposures Page 27 Collateral - Corporate & Investment Banking (reviewed) Collateral taken for longer-term and sub-investment grade corporate loans was stable at 40 per cent (31 December 2023: 41 per cent). Our underwriting standards encourage taking specific charges on assets and we consistently seek high-quality, investment-grade collateral. 84 per cent (31 December 2023: 83 per cent) of tangible collateral excluding reverse repurchase agreements and financial guarantees held comprises physical assets or is property based, with the remainder held in cash. Overall collateral decreased by $3.5 billion to $33 billion (31 December 2023: $36 billion) mainly due to a decrease in reverse repos. Non-tangible collateral, such as guarantees and standby letters of credit, is also held against corporate exposures, although the financial effect of this type of collateral is less significant in terms of recoveries. However, this is considered when determining the loss given default and other credit-related factors. Collateral is also held against off balance sheet exposures, including undrawn commitments and trade-related instruments. Corporate & Investment Banking Amortised cost 30.06.24 $million 31.12.23 $million Maximum exposure 175,766 175,382 Property 8,634 9,339 Plant, machinery and other stock 947 933 Cash 2,782 2,985 Reverse repos 10,303 13,826 AAA 616 - AA- to AA+ 383 1,036 A- to A+ 5,378 10,606 BBB- to BBB+ 758 855 Lower than BBB- 35 169 Unrated 3,133 1,160 Financial guarantees and insurance 5,274 5,057 Commodities 14 5 Ships and aircraft 5,039 4,313 Total value of collateral1 32,993 36,458 Net exposure 142,773 138,924 1 Adjusted for over-collateralisation based on the drawn and undrawn components of exposures Collateral - Wealth & Retail Banking (reviewed) In WRB, fully secured products remain stable at 85 per cent of the total portfolio (31 December 2023: 85 per cent). The following table presents an analysis of loans to individuals by product; split between fully secured, partially secured and unsecured. Amortised cost 30.06.24 31.12.23 Fully secured $million Partially secured $million Unsecured $million Total $million Fully secured $million Partially secured $million Unsecured $million Total $million Maximum exposure 101,615 522 18,112 120,249 106,914 505 18,640 126,059 Loans to individuals Mortgages 77,535 - - 77,535 82,943 - - 82,943 Credit Cards & Personal Loans 423 - 16,850 17,273 375 - 17,395 17,770 Auto 224 - - 224 312 - - 312 Secured wealth products 21,197 - - 21,197 20,303 - - 20,303 Other 2,236 522 1,262 4,020 2,981 505 1,245 4,731 Total collateral1 85,192 86,827 Net exposure2 35,057 39,232 Percentage of total loans 85% 0% 15% 85% 0% 15% 1 Collateral values are adjusted where appropriate in accordance with our risk mitigation policy and for the effect of over-collateralisation 2 Amounts net of ECL Page 28 Mortgage loan-to-value ratios by country (reviewed) Loan-to-value (LTV) ratios measure the ratio of the current mortgage outstanding to the current fair value of the properties on which they are secured. In a majority of mortgages, the value of property held as security significantly exceeds principal outstanding of the mortgage loans. The average LTV of the overall mortgage portfolio remains broadly stable at 47.9 per cent (31 December 2023: 47.1 per cent). The top three markets (Hong Kong, Singapore and Korea) which represents 79 per cent of the mortgage portfolio continue to have low portfolio LTVs (Hong Kong, Singapore and Korea at 56.8 per cent, 43.0 per cent and 40.6 per cent respectively). An analysis of LTV ratios by geography for the mortgage portfolio is presented in the table below. For the Hong Kong residential mortgage portfolio, 8.1 per cent of the portfolio was in negative equity, representing approximately 4,000 accounts that exceeded their property values by a total of $196 million. Of these, 13 accounts with a total loan balance of $9.4 million were more than 90 days past due. Under local regulations, mortgages with LTV exceeding 70 per cent (including those in negative equity) are generally required to be insured by the Mortgage Insurance Program (MIP). Amortised cost 30.06.24 Hong Kong % Gross Singapore % Gross Korea % Gross Other % Gross Total % Gross Less than 50 per cent 43.3 53.5 68.2 51.7 53.8 50 per cent to 59 per cent 18.8 23.5 11.6 15.7 16.9 60 per cent to 69 per cent 10.6 14.4 10.9 16.6 12.6 70 per cent to 79 per cent 4.8 8.2 8.4 11.3 7.7 80 per cent to 89 per cent 6.3 0.3 0.7 4.1 3.3 90 per cent to 99 per cent 8.1 0.0 0.1 0.4 2.9 100 per cent and greater 8.1 0.0 0.1 0.2 2.8 Average portfolio loan-to-value 56.8 43.0 40.6 47.6 47.9 Loans to individuals - mortgages ($million) 31,821 14,531 13,724 17,458 77,534 Amortised cost 31.12.23 Hong Kong % Gross Singapore % Gross Korea % Gross Other % Gross Total % Gross Less than 50 per cent 44.9 50.9 69.5 51.0 54.9 50 per cent to 59 per cent 19.5 24.7 11.0 16.7 17.1 60 per cent to 69 per cent 9.7 15.2 9.7 16.3 11.9 70 per cent to 79 per cent 4.3 8.7 8.9 11.6 7.9 80 per cent to 89 per cent 7.3 0.5 0.6 3.6 3.3 90 per cent to 99 per cent 7.4 - 0.1 0.4 2.5 100 per cent and greater 7.0 - 0.1 0.4 2.4 Average portfolio loan-to-value 55.7 43.4 40.4 47.8 47.1 Loans to individuals - mortgages ($million) 32,935 15,292 17,157 17,559 82,943 Page 29 Collateral and other credit enhancements possessed or called upon (reviewed) The Group obtains assets by taking possession of collateral or calling upon other credit enhancements (such as guarantees). Repossessed properties are sold in an orderly fashion. Where the proceeds are in excess of the outstanding loan balance the excess is returned to the borrower. Certain equity securities acquired may be held by the Group for investment purposes and are classified as fair value through profit or loss, and the related loan written off. The carrying value of collateral possessed and held by the Group is $11.9 million (31 December 2023: $16.5 million). 30.06.24 $million 31.12.23 $million Property, plant and equipment 9.0 10.5 Guarantees 2.9 6.0 Total 11.9 16.5 Other Credit risk mitigation (reviewed) Other forms of credit risk mitigation are set out below. Credit default swaps The Group has entered into credit default swaps for portfolio management purposes, referencing loan assets with a notional value of $3.5 billion (31 December 2023: $3.5 billion). These credit default swaps are accounted for as financial guarantees as per IFRS 9 as they will only reimburse the holder for an incurred loss on an underlying debt instrument. The Group continues to hold the underlying assets referenced in the credit default swaps and it continues to be exposed to related Credit Risk and Foreign Exchange Rate Risk on these assets. Credit linked notes The Group has issued credit linked notes for portfolio management purposes, referencing loan assets with a notional value of $29.0 billion (31 December 2023: $22.5 billion). The Group continues to hold the underlying assets for which the credit linked notes provide mitigation. The credit linked notes are recognised as a financial liability at amortised cost on the balance sheet. Derivative financial instruments The Group enters into master netting agreements which, in the event of default, result in a single amount owed by or to the counterparty through netting the sum of the positive and negative mark-to-market values of applicable derivative transactions. Credit Risk mitigation for derivative financial instruments is set out below. Off-balance sheet exposures For certain types of exposures, such as letters of credit and guarantees, the Group obtains collateral such as cash depending on internal Credit Risk assessments, as well as in the case of letters of credit holding legal title to the underlying assets should a default take place. Other portfolio analysis This section provides analysis of Credit quality by industry and Industry analysis of loans and advances by key geography. Page 30 Credit quality by industry Loans and advances This section provides an analysis of the Group's amortised cost portfolio by industry on a gross, total credit impairment and net basis. Further details can be found in the 'Summary of Credit Risk performance' section. Amortised cost 30.06.24 Stage 1 Stage 2 Stage 3 Total Gross balance $million Total credit impair-ment $million Net carrying amount Gross balance $million Total credit impair-ment $million Net carrying amount Gross balance $million Total credit impair-ment $million Net carrying amount Gross balance $million Total credit impair-ment $million Net carrying amount Industry: Energy 11,879 (15) 11,864 554 (19) 535 894 (570) 324 13,327 (604) 12,723 Manufacturing 19,050 (9) 19,041 712 (14) 698 500 (383) 117 20,262 (406) 19,856 Financing, insurance and non-banking 30,566 (9) 30,557 666 (5) 661 107 (103) 4 31,339 (117) 31,222 Transport, telecom and utilities 15,188 (10) 15,178 2,178 (48) 2,130 431 (152) 279 17,797 (210) 17,587 Food and household products 8,335 (6) 8,329 356 (8) 348 290 (226) 64 8,981 (240) 8,741 Commercial real estate 12,650 (45) 12,605 1,769 (73) 1,696 1,606 (1,194) 412 16,025 (1,312) 14,713 Mining and quarrying 5,622 (2) 5,620 219 (9) 210 101 (59) 42 5,942 (70) 5,872 Consumer durables 6,166 (3) 6,163 249 (18) 231 311 (277) 34 6,726 (298) 6,428 Construction 2,415 (2) 2,413 466 (3) 463 368 (325) 43 3,249 (330) 2,919 Trading companies & distributors 623 - 623 36 - 36 86 (53) 33 745 (53) 692 Government 27,566 (4) 27,562 771 (3) 768 197 (19) 178 28,534 (26) 28,508 Other 5,022 (5) 5,017 133 (6) 127 221 (88) 133 5,376 (99) 5,277 Total 145,082 (110) 144,972 8,109 (206) 7,903 5,112 (3,449) 1,663 158,303 (3,765) 154,538 Retail Products: Mortgage 76,084 (8) 76,076 1,008 (4) 1,004 586 (132) 454 77,678 (144) 77,534 Credit Cards 7,628 (112) 7,516 240 (67) 173 74 (53) 21 7,942 (232) 7,710 Personal loans and other unsecured lending 10,488 (215) 10,273 331 (75) 256 243 (100) 143 11,062 (390) 10,672 Auto 223 - 223 1 - 1 - - - 224 - 224 Secured wealth products 20,888 (28) 20,860 183 (8) 175 488 (328) 160 21,559 (364) 21,195 Other 3,856 (7) 3,849 133 (2) 131 136 (93) 43 4,125 (102) 4,023 Total 119,167 (370) 118,797 1,896 (156) 1,740 1,527 (706) 821 122,590 (1,232) 121,358 Net carrying value (customers)�� 264,249 (480) 263,769 10,005 (362) 9,643 6,639 (4,155) 2,484 280,893 (4,997) 275,896 Net carrying value (Banks)�� 44,793 (4) 44,789 392 (3) 389 57 (4) 53 45,242 (11) 45,231 1 Includes reverse repurchase agreements and other similar secured lending held at amortised cost of $3,991 million (Loans to Banks) and $7,788 million (Loans to customers) Page 31 Amortised cost 31.12.23 Stage 1 Stage 2 Stage 3 Total Gross balance $million Total credit impair-ment $million Net carrying amount Gross balance $million Total credit impair-ment $million Net carrying amount Gross balance $million Total credit impair-ment $million Net carrying amount Gross balance $million Total credit impair-ment $million Net carrying amount Industry: Energy 9,397 (8) 9,389 672 (22) 650 949 (535) 414 11,018 (565) 10,453 Manufacturing 21,239 (8) 21,231 708 (16) 692 656 (436) 220 22,603 (460) 22,143 Financing, insurance and non-banking 31,633 (13) 31,620 571 (1) 570 80 (77) 3 32,284 (91) 32,193 Transport, telecom and utilities 14,710 (8) 14,702 1,722 (36) 1,686 481 (178) 303 16,913 (222) 16,691 Food and household products 7,668 (15) 7,653 323 (7) 316 355 (262) 93 8,346 (284) 8,062 Commercial real estate 12,261 (30) 12,231 1,848 (129) 1,719 1,712 (1,191) 521 15,821 (1,350) 14,471 Mining and quarrying 5,995 (4) 5,991 220 (10) 210 151 (84) 67 6,366 (98) 6,268 Consumer durables 5,815 (3) 5,812 300 (21) 279 329 (298) 31 6,444 (322) 6,122 Construction 2,230 (2) 2,228 502 (8) 494 358 (326) 32 3,090 (336) 2,754 Trading companies & distributors 581 - 581 57 - 57 107 (58) 49 745 (58) 687 Government 33,400 (6) 33,394 1,783 (5) 1,778 367 (33) 334 35,550 (44) 35,506 Other 4,262 (4) 4,258 161 (3) 158 187 (70) 117 4,610 (77) 4,533 Total 149,191 (101) 149,090 8,867 (258) 8,609 5,732 (3,548) 2,184 163,790 (3,907) 159,883 Retail Products: Mortgage 81,210 (8) 81,202 1,350 (5) 1,345 519 (123) 396 83,079 (136) 82,943 Credit Cards 7,633 (104) 7,529 244 (65) 179 69 (50) 19 7,946 (219) 7,727 Personal loans and other unsecured lending 10,867 (188) 10,679 324 (77) 247 315 (165) 150 11,506 (430) 11,076 Auto 310 - 310 1 - 1 1 - 1 312 - 312 Secured wealth products 19,923 (22) 19,901 278 (10) 268 474 (340) 134 20,675 (372) 20,303 Other 4,558 (7) 4,551 161 (5) 156 118 (94) 24 4,837 (106) 4,731 Total 124,501 (329) 124,172 2,358 (162) 2,196 1,496 (772) 724 128,355 (1,263) 127,092 Net carrying value (customers)�� 273,692 (430) 273,262 11,225 (420) 10,805 7,228 (4,320) 2,908 292,145 (5,170) 286,975 Net carrying value (Banks)�� 44,384 (8) 44,376 540 (10) 530 77 (6) 71 45,001 (24) 44,977 1 Includes reverse repurchase agreements and other similar secured lending held at amortised cost of $1,738 million (Loans to Banks) and $13,996 million (Loans to customers) Industry analysis of loans and advances by key geography This section provides an analysis of the Group's amortised cost loan portfolio, net of provisions, by industry and geography. The Manufacturing sector group is spread across a diverse range of industries, including automobiles and components, capital goods, pharmaceuticals, biotech and life sciences, technology hardware and equipment, chemicals, paper products and packaging, with lending spread over 3269 clients. Page 32 Corporate & Investment Banking Amortised cost 30.06.24 31.12.23 Hong Kong $million China $million Singa-pore $million UK $million US $million Other $million Total $million Hong Kong $million China $million Singa-pore $million UK $million US $million Other $million Total $million Industry: Energy 2,840 56 3,014 3,646 1,594 1,560 12,710 3,118 42 1,162 1,341 3,638 1,130 10,431 Manufacturing 3,299 4,353 1,302 436 2,111 8,333 19,834 3,570 4,309 1,666 694 2,921 8,982 22,142 Financing, insurance and non-banking 3,505 3,823 2,031 8,535 8,098 3,943 29,935 3,700 3,570 1,708 1,724 6,627 14,864 32,193 Transport, telecom and utilities 5,140 410 3,022 1,336 595 7,078 17,581 4,634 429 2,499 1,030 630 7,470 16,692 Food and household products 359 467 1,746 1,004 626 4,539 8,741 541 519 911 816 664 4,611 8,062 Commercial real estate 4,030 411 1,549 1,100 1,823 5,800 14,713 3,895 588 1,125 1,436 1,236 6,192 14,472 Mining and quarrying 955 691 506 1,520 195 2,005 5,872 1,028 735 427 1,729 279 2,071 6,269 Consumer durables 3,028 310 282 114 487 2,207 6,428 3,030 244 180 177 483 2,008 6,122 Construction 233 146 525 119 385 1,511 2,919 176 163 319 137 389 1,569 2,753 Trading companies and distributors 119 185 125 31 37 195 692 119 75 121 31 20 321 687 Government 1,248 - 103 145 5 4,332 5,833 1,445 1 547 236 6 3,814 6,049 Other 2,247 321 661 349 167 1,532 5,277 1,676 265 646 257 264 1,425 4,533 Net loans and advances to customers - CIB 27,003 11,173 14,866 18,335 16,123 43,035 130,535 26,932 10,940 11,311 9,608 17,157 54,457 130,405 Net loans and advances to banks 16,258 2,779 9,263 3,843 2,774 10,314 45,231 17,457 1,996 8,994 3,868 2,544 10,119 44,978 Wealth & Retail Banking Amortised cost 30.06.24 31.12.23 Hong Kong $million Korea $million Singapore $million Other $million Total $million Hong Kong $million Korea $million Singapore $million Other $million Total $million Retail Products: Mortgages 31,821 13,724 14,531 17,458 77,534 32,935 17,157 15,292 17,559 82,943 Credit Cards 3,335 65 1,643 1,558 6,601 3,325 114 1,705 1,549 6,693 Personal Loans and other unsecured lending 1,015 2,907 255 6,495 10,672 950 3,230 220 6,676 11,076 Auto - - 171 53 224 - - 240 72 312 Secured wealth products 5,199 25 10,229 5,742 21,195 5,164 33 9,388 5,718 20,303 Other 592 2,423 90 918 4,023 644 3,149 82 856 4,731 Net loans and advances to customers - WRB 41,962 19,144 26,919 32,224 120,249 43,018 23,683 26,927 32,430 126,058 Vulnerable, cyclical and high carbon sectors Vulnerable and cyclical sectors are those that the Group considers to be most at risk from current economic stresses, including volatile energy and commodity prices, and we continue to monitor exposures to these sectors particularly carefully. Sectors are identified and grouped as per the International Standard Industrial Classification (ISIC) system and exposure numbers have been updated to include all in-scope ISIC codes used for target setting among the high carbon sectors. The maximum exposures shown in the table include Loans and Advances to Customers at Amortised cost, Fair Value through profit or loss, and committed facilities available as per IFRS 9 - Financial Instruments in $million. Further details can be found in the 'Summary of Credit Risk performance' section. Page 33 Maximum exposure 30.06.24 Maximum on Balance Sheet Exposure (net of credit impairment) $million Collateral $million Net On Balance Sheet Exposure $million Undrawn Commitments (net of credit impairment) $million Financial Guarantees (net of credit impairment) $million Net Off Balance Sheet Exposure $million Total On & Off Balance Sheet Net Exposure $million Industry: Automotive manufacturers1 3,120 61 3,059 3,350 290 3,640 6,699 Aviation1,2 1,751 935 816 1,964 676 2,640 3,456 Of which: High Carbon Sector 1,395 970 425 1,202 632 1,834 2,259 Commodity Traders2 8,429 324 8,105 2,213 6,539 8,752 16,857 Metals & Mining1,2 4,651 325 4,326 3,653 1,632 5,285 9,611 Of which: Steel1 2,068 216 1,852 692 376 1,068 2,920 Of which: Coal Mining1 13 5 8 50 101 151 159 Of which: Aluminium1 535 33 502 388 118 506 1,008 Shipping1 7,285 4,621 2,664 2,851 433 3,284 5,948 Construction2 3,013 351 2,662 2,577 5,910 8,487 11,149 Of which: Cement1 949 55 894 621 277 898 1,792 Commercial Real Estate2 15,127 5,964 9,163 5,042 802 5,844 15,007 Of which: High Carbon Sector 8,511 3,460 5,051 2,421 659 3,080 8,131 Hotels & Tourism2 1,950 689 1,261 1,290 360 1,650 2,911 Oil & Gas1,2 8,100 1,026 7,074 8,543 7,070 15,613 22,687 Power1 5,356 1,103 4,253 3,516 918 4,434 8,687 Total3 58,782 15,399 43,383 34,999 24,630 59,629 103,012 Of which: Vulnerable and cyclical sectors 43,021 9,614 33,407 25,282 22,989 48,271 81,678 Of which: High carbon sectors 37,332 11,550 25,782 23,634 10,874 34,508 60,290 Total Corporate & Investment Banking4 190,337 27,434 162,903 110,067 74,551 184,618 347,521 Total Group5 423,399 119,863 303,536 178,475 85,934 264,409 567,945 1 High-carbon sectors 2 Vulnerable and cyclical sectors 3 Maximum On Balance sheet exposure include FVTPL portion of $2,254 million, of which Vulnerable sector is $1,650 million and High Carbon sector is $1,186 million 4 Include On Balance sheet FVTPL amount of $59,802 million for Corporate & Investment Banking loans to customers 5 Total Group includes net loans and advances to banks and net loans and advances to customers held at amortised cost of $45,231 million and $275,896 million respectively and loans to banks and loans and advances to customers held at FVTPL of $42,461 million and $59,811 million respectively. Refer to credit quality table Page 34 31.12.23 Maximum On Balance Sheet Exposure (net of credit impairment) Million Collateral Million Net On Balance Sheet Exposure Million Undrawn Commitments (net of credit impairment) Million Financial Guarantees (net of credit impairment) Million Net Off Balance Sheet Exposure Million Total On & Off Balance Sheet Net Exposure Million Industry: Automotive manufacturers1 3,564 65 3,499 3,791 538 4,329 7,828 Aviation1,2 1,775 974 801 1,794 668 2,462 3,263 Of which: High Carbon Sector 1,330 974 356 944 615 1,559 1,915 Commodity Traders2 7,406 303 7,103 2,591 6,281 8,872 15,975 Metals & Mining1,2,4 4,136 354 3,782 3,862 1,153 5,015 8,797 Of which: Steel1 1,596 193 1,403 601 358 959 2,362 Of which: Coal Mining1 29 9 20 51 99 150 170 Of which: Aluminium1 526 9 517 338 188 526 1,043 Shipping1 5,964 3,557 2,407 2,261 291 2,552 4,959 Construction2 2,853 448 2,405 2,753 5,927 8,680 11,085 Of which: Cement1,4 671 47 624 769 259 1,028 1,652 Commercial Real Estate2 14,533 6,363 8,170 4,658 311 4,969 13,139 Of which: High Carbon Sector 7,498 3,383 4,115 1,587 112 1,699 5,814 Hotels & Tourism2 1,680 715 965 1,339 227 1,566 2,531 Oil & Gas1,2 6,278 894 5,384 7,845 6,944 14,789 20,173 Power1 5,411 1,231 4,180 3,982 732 4,714 8,894 Total3 53,600 14,904 38,696 34,876 23,072 57,948 96,644 Of which: Vulnerable and cyclical sectors 38,661 10,051 28,610 24,842 21,511 46,353 74,963 Of which: High carbon sectors 32,867 10,362 22,505 22,169 10,136 32,305 54,810 Total Corporate & Investment Banking5 188,903 32,744 156,159 104,437 63,183 167,620 323,779 Total Group6 423,276 125,760 297,516 182,299 74,278 256,577 554,093 1 High-carbon sectors 2 Vulnerable and cyclical sectors 3 Maximum On Balance sheet exposure include FVTPL portion of $640 million, of which Vulnerable sector is $602 million and High Carbon sector is $125 million 4 Restated Metals & Mining to align the vulnerable and cyclical sector definition to that used for climate reporting. Other Metals and Mining has been removed from high carbon sectors and Cement added to provide consistency with climate reporting and individual high carbon sectors 5 Represented to include On Balance sheet FVTPL amount of $58,498 million for Corporate & Investment Banking loans to customers 6 Represented to include On Balance sheet FVTPL amount. In 2023, total Group includes net loans and advances to banks and net loans and advances to customers held at amortised cost of $44,977 million and $286,975 million respectively and loans to banks and loans and advances to customers held at FVTPL of $32,813 million and $58,511 million respectively. Refer to credit quality table Page 35 Loans and advances by stage Amortised Cost 30.06.24 Stage 1 Stage 2 Stage 3 Total Gross Balance $million Total Credit Impair-ment $million Net Carrying Amount $million Gross Balance $million Total Credit Impair-ment $million Net Carrying Amount $million Gross Balance $million Total Credit Impair-ment $million Net Carrying Amount $million Gross Balance $million Total Credit Impair-ment $million Net Carrying Amount $million Industry: Aviation 1,605 (1) 1,604 77 - 77 63 (12) 51 1,745 (13) 1,732 Commodity Traders 7,838 (2) 7,836 31 (1) 30 503 (491) 12 8,372 (494) 7,878 Metals & Mining 3,889 (2) 3,887 188 (8) 180 110 (66) 44 4,187 (76) 4,111 Construction 2,415 (2) 2,413 466 (3) 463 368 (325) 43 3,249 (330) 2,919 Commercial Real Estate 12,650 (45) 12,605 1,769 (73) 1,696 1,606 (1,194) 412 16,025 (1,312) 14,713 Hotels & Tourism 1,789 (2) 1,787 35 - 35 125 (28) 97 1,949 (30) 1,919 Oil & Gas 7,211 (6) 7,205 530 (11) 519 524 (149) 375 8,265 (166) 8,099 Total 37,397 (60) 37,337 3,096 (96) 3,000 3,299 (2,265) 1,034 43,792 (2,421) 41,371 Total CIB 121,272 (110) 121,162 7,980 (206) 7,774 5,048 (3,449) 1,599 134,300 (3,765) 130,535 Total Group 309,042 (482) 308,560 10,397 (367) 10,030 6,696 (4,159) 2,537 326,135 (5,008) 321,127 Amortised Cost 31.12.23 Stage 1 Stage 2 Stage 3 Total Gross Balance $million Total Credit Impair-ment $million Net Carrying Amount $million Gross Balance $million Total Credit Impair-ment $million Net Carrying Amount $million Gross Balance $million Total Credit Impair-ment $million Net Carrying Amount $million Gross Balance $million Total Credit Impair-ment $million Net Carrying Amount $million Industry: Aviation 1,619 - 1,619 55 (1) 54 74 (15) 59 1,748 (16) 1,732 Commodity Traders 6,912 (2) 6,910 129 (1) 128 555 (504) 51 7,596 (507) 7,089 Metals & Mining 3,934 (1) 3,933 140 (8) 132 154 (88) 66 4,228 (97) 4,131 Construction 2,230 (2) 2,228 502 (8) 494 358 (326) 32 3,090 (336) 2,754 Commercial Real Estate 12,261 (30) 12,231 1,848 (129) 1,719 1,712 (1,191) 521 15,821 (1,350) 14,471 Hotels & Tourism 1,468 (2) 1,466 61 - 61 126 (25) 101 1,655 (27) 1,628 Oil & Gas 5,234 (4) 5,230 615 (15) 600 571 (147) 424 6,420 (166) 6,254 Total 33,658 (41) 33,617 3,350 (162) 3,188 3,550 (2,296) 1,254 40,558 (2,499) 38,059 Total CIB 120,886 (101) 120,785 7,902 (257) 7,645 5,508 (3,533) 1,975 134,296 (3,891) 130,405 Total Group 318,076 (438) 317,638 11,765 (430) 11,335 7,305 (4,326) 2,979 337,146 (5,194) 331,952 Loans and advances by geography (net of credit impairment) 30.06.24 31.12.23 Hong Kong $million China $million Singa-pore $million UK $million US $million Other $million Total $million Hong Kong $million China $million Singa-pore $million UK $million US $million Other $million Total $million Industry: Aviation1,2 232 32 473 628 198 169 1,732 238 5 480 447 201 361 1,732 Commodity Traders 1,020 673 1,948 1,943 674 1,620 7,878 1,313 493 1,560 2,294 312 1,117 7,089 Metals & Mining 313 404 357 458 98 2,481 4,111 346 430 115 773 209 2,258 4,131 Construction 233 146 525 119 385 1,511 2,919 176 163 319 137 389 1,570 2,754 Commercial Real Estate 4,030 411 1,549 1,100 1,823 5,800 14,713 3,895 588 1,125 1,436 1,236 6,192 14,472 Hotel & Tourism 693 95 238 357 90 446 1,919 355 85 123 289 163 613 1,628 Oil & Gas 2,127 - 885 598 3,840 649 8,099 1,410 4 694 554 2,073 1,518 6,253 Total 8,648 1,761 5,975 5,203 7,108 12,676 41,371 7,733 1,768 4,416 5,930 4,583 13,629 38,059 Page 36 Credit quality - loans and advances Amortised Cost Credit Grade 30.06.24 Aviation Gross $million Commodity Traders Gross $million Construction Gross $million Metals & Mining Gross $million Commercial Real Estate Gross $million Hotel & Tourism Gross $million Oil & Gas Gross $million Total Gross $million Strong 1,430 5,171 962 3,011 8,344 1,464 4,693 25,075 Satisfactory 252 2,696 1,904 1,015 6,067 354 3,033 15,321 Higher risk - 2 15 51 8 5 15 96 Credit impaired (stage 3) 63 503 368 110 1,606 126 524 3,300 Total Gross Balance 1,745 8,372 3,249 4,187 16,025 1,949 8,265 43,792 Strong - (1) - (1) (43) (1) (1) (47) Satisfactory (1) (2) (5) (4) (75) (1) (16) (104) Higher risk - - - (6) - - - (6) Credit impaired (stage 3) (12) (491) (325) (65) (1,194) (28) (149) (2,264) Total Credit Impairment (13) (494) (330) (76) (1,312) (30) (166) (2,421) Strong 0.0% 0.0% 0.0% 0.0% 0.5% 0.1% 0.0% 0.2% Satisfactory 0.4% 0.1% 0.3% 0.4% 1.2% 0.3% 0.5% 0.7% Higher risk 0.0% 0.0% 0.0% 11.8% 0.0% 0.0% 0.0% 6.3% Credit impaired (stage 3) 19.0% 97.6% 88.3% 59.1% 74.3% 22.2% 28.4% 68.6% Cover Ratio 0.7% 5.9% 10.2% 1.8% 8.2% 1.5% 2.0% 5.5% Credit Grade 31.12.23 Aviation Gross $million Commodity Traders Gross $million Construction Gross $million Metals & Mining Gross $million Commercial Real Estate Gross $million Hotel & Tourism Gross $million Oil & Gas Gross $million Total Gross $million Strong 1,452 4,444 1,012 3,213 7,326 1,090 4,024 22,561 Satisfactory 222 2,592 1,702 788 6,751 439 1,726 14,220 Higher risk - 5 18 73 32 - 101 229 Credit impaired (stage 3) 74 555 358 154 1,712 126 569 3,548 Total Gross Balance 1,748 7,596 3,090 4,228 15,821 1,655 6,420 40,558 Strong - (1) (1) - (20) (1) (3) (26) Satisfactory (1) (2) (6) (1) (139) (1) (12) (162) Higher risk - - (4) (8) - - (4) (16) Credit impaired (stage 3) (15) (504) (325) (88) (1,191) (25) (147) (2,295) Total Credit Impairment (16) (507) (336) (97) (1,350) (27) (166) (2,499) Strong 0.0% 0.0% 0.1% 0.0% 0.3% 0.1% 0.1% 0.1% Satisfactory 0.5% 0.1% 0.4% 0.1% 2.1% 0.2% 0.7% 1.1% Higher risk 0.0% 0.0% 22.2% 11.0% 0.0% 0.0% 4.0% 7.0% Credit impaired (stage 3) 20.3% 90.8% 90.8% 57.1% 69.6% 19.8% 25.8% 64.7% Cover Ratio 0.9% 6.7% 10.9% 2.3% 8.5% 1.6% 2.6% 6.2% Page 37 Maturity and expected credit loss for high-carbon sectors Sector 30.06.24 Maturity Buckets1 Expected Credit Loss $million Loans and advances (Drawn funding) $million Less than 1 year $million More than 1 to 5 years $million More than 5 years $million Automotive Manufacturers 3,121 2,615 506 - 1 Aviation 1,403 181 133 1,089 8 Cement 984 586 398 - 35 Coal Mining 24 - 24 - 11 Steel 2,122 1,535 228 359 54 Aluminium 544 439 83 22 9 Oil & Gas 8,265 3,962 1,612 2,691 165 Power 5,453 1,753 1,083 2,617 97 Shipping 7,298 1,241 2,505 3,552 13 Commercial Real Estate 8,640 4,584 3,758 298 129 Total balance2,3 37,854 16,896 10,330 10,628 522 1 Maturity bucketing of gross balances 2 Other metals and mining sector excluded to align with climate reporting 3 Includes FVTPL Sector 31.12.23 Maturity Buckets1 Expected Credit Loss $million Loans and advances (Drawn funding) $million Less than 1 year $million More than 1 to 5 years $million More than 5 years $million Automotive Manufacturers 3,566 3,106 460 - 2 Aviation 1,339 149 145 1,045 9 Cement 719 512 189 18 48 Coal Mining 42 9 33 - 13 Steel 1,649 1,258 185 206 53 Aluminium 537 442 63 32 11 Oil & Gas 6,444 2,980 1,576 1,888 166 Power 5,516 1,933 1,533 2,050 105 Shipping 5,971 1,051 2,568 2,352 7 Commercial Real Estate 7,664 3,722 3,935 7 166 Total balance2,3 33,447 15,162 10,687 7,598 580 1 Maturity bucketing of gross balances 2 Other metals and mining sector excluded to align with climate reporting 3 Include FVTPL China commercial real estate The table below represents the on and off-balance sheet items that are exposed to China CRE by credit quality. Further details can be found in the 'Summary of Credit Risk performance' section. Amortised cost 30.06.2024 China $million Hong Kong $million Rest of Group1 $million Total $million Loans to customers 398 1,696 37 2,131 Off balance sheet 6 38 - 44 Total as at 30 June 2024 404 1,734 37 2,175 Loans to customers - By Credit quality Gross Strong 9 11 - 20 Satisfactory 214 422 37 673 Higher risk 8 - - 8 Credit impaired (stage 3) 167 1,263 - 1,430 Total as at 30 June 2024 398 1,696 37 2,131 Loans to customers - ECL Strong - - - - Satisfactory (3) (79) (12) (94) Higher risk - - - - Credit impaired (stage 3) (61) (1,035) - (1,096) Total as at 30 June 2024 (64) (1,114) (12) (1,190) 1 Rest of Group mainly includes Singapore Page 38 Amortised cost 31.12.2023 China $million Hong Kong $million Rest of Group1 $million Total $million Loans to customers 584 1,821 39 2,444 Off balance sheet 42 82 - 124 Total as at 31 December 2023 626 1,903 39 2,568 Loans to customers - By Credit quality Gross Strong 33 - - 33 Satisfactory 339 619 39 997 Higher risk 8 - - 8 Credit impaired (stage 3) 204 1,202 - 1,406 Total as at 31 December 2023 584 1,821 39 2,444 Loans to customers - ECL Strong - - - - Satisfactory (3) (134) (12) (149) Higher risk - - - - Credit impaired (stage 3) (70) (941) - (1,011) Total as at 31 December 2023 (73) (1,075) (12) (1,160) 1 Rest of Group mainly includes Singapore Debt securities and other eligible bills (reviewed) This section provides further detail on gross debt securities and treasury bills. The standard credit ratings used by the Group are those used by Standard & Poor's or its equivalent. Debt securities held that have a short-term rating are reported against the long-term rating of the issuer. For securities that are unrated, the Group applies an internal credit rating, as described under the credit rating and measurement section on page 321 of the 2023 Annual Report. Total gross debt securities and other eligible bills decreased by $8.7 billion to $152 billion (31 December 2023: $160 billion) due to capital efficiency, primarily in stage 1. Stage 1 gross balance decreased by $8.9 billion to $149 billion (31 December 2023: $158 billion) of which $5.1 billion of the decrease was from A- to A+ rating, mainly in Hong Kong. Stage 2 gross balance remained stable at $1.8 billion (31 December 2023: $1.9 billion). Stage 3 gross balance increased by $0.2 billion to $0.4 billion (31 December 2023: $0.2 billion) due to an increase in Sri Lanka so as to rebuild the liquidity portfolio. Page 39 Amortised cost and FVOCI 30.06.24 31.12.23 Gross $million ECL $million Net2 $million Gross $million ECL $million Net2 $million Stage 1 149,422 (23) 149,399 158,314 (26) 158,288 AAA 62,664 (9) 62,655 61,920 (5) 61,915 AA- to AA+ 32,206 (2) 32,204 34,244 (2) 34,242 A- to A+ 33,759 (3) 33,756 38,891 (2) 38,889 BBB- to BBB+ 10,980 (4) 10,976 13,098 (7) 13,091 Lower than BBB- 2,766 (2) 2,764 1,611 (2) 1,609 Unrated 7,047 (3) 7,044 8,550 (8) 8,542 - Strong 6,107 (2) 6,105 7,415 (7) 7,408 - Satisfactory 940 (1) 939 1,135 (1) 1,134 Stage 2 1,787 (10) 1,777 1,860 (34) 1,826 AAA 11 (1) 10 98 - 98 AA- to AA+ 21 - 21 22 - 22 A- to A+ 344 - 344 81 - 81 BBB- to BBB+ 541 (4) 537 499 (3) 496 Lower than BBB- 826 (4) 822 893 (30) 863 Unrated 44 (1) 43 267 (1) 266 - Strong 1 - 1 217 - 217 - Satisfactory 43 (1) 42 50 (1) 49 - High Risk - - - - - - Stage 3 387 (16) 371 164 (61) 103 Lower than BBB- 346 (10) 336 72 (4) 68 Defaulted 41 (6) 35 92 (57) 35 Gross balance�� 151,596 (49) 151,547 160,338 (121) 160,217 1 Stage 3 gross includes $23 million (31 December 2023: $80 million) originated credit-impaired debt securities with impairment of Nil (31 December 2023: $14 million) 2 FVOCI instrument are not presented net of ECL. While the presentation is on a net basis for the table, the total net on-balance sheet amount is $151,580 million (31 December 2023: $160,263 million). Refer to the Analysis of financial instrument by stage table IFRS 9 expected credit loss methodology (reviewed) Refer to page 273 in the 2023 Annual Report for the 'Approach for determining expected credit losses', 'Application of lifetime' and pages 282 to 285 for 'SICR', 'Assessment of credit-impaired financial assets' and 'Governance and application of expert credit judgement in respect of expected credit losses'. There have been no changes to the Group's approach in determining SICR compared to 31 December 2023. Composition of credit impairment provisions The table below summarises the key components of the Group's credit impairment provision balances at 30 June 2024 and 31 December 2023. 30 June 2024 Corporate & Investment Banking $ million Wealth & Retail Banking $ million Ventures $ million Central & other items4 $ million Total $ million Modelled ECL provisions (base forecast) 342 595 41 80 1,058 Modelled Impact of multiple economic scenarios 48 14�� - - 62 Total ECL provisions before management judgements 390 609 41 80 1,120 Includes: Model performance post model adjustments (23) - - (23) Judgemental post model adjustments - (21)2 10 - (11) Judgemental management adjustments3 - China commercial real estate 86 - - - 86 - Other - 13 - - 13 Total modelled provisions 476 601 51 80 1,208 Of which: Stage 1 144 358 20 46 568 Stage 2 259 138 22 10 429 Stage 3 73 105 9 24 211 Stage 3 non-modelled provisions 3,521 593 - 83 4,197 Total credit impairment provisions 3,997 1,194 51 163 5,405 Page 40 31 December 2023 Corporate & Investment Banking $ million Wealth & Retail Banking $ million Ventures $ million Central & other items4 $ million Total $ million Modelled ECL provisions (base forecast) 372 553 48 98 1,071 Modelled impact of multiple economic scenarios 20 18 - 6 44 Total ECL provisions before management judgements 392 571 48 104 1,115 Includes: Model performance post model adjustments (3) (28) - - (31) Judgemental post model adjustments - 4 - - 4 Judgemental management adjustments3 - China commercial real estate 141 - - - 141 - Other - 3 - 17 20 Total modelled provisions 533 578 48 121 1,280 Of which: Stage 1 151 325 15 68 559 Stage 2 318 140 21 49 528 Stage 3 64 113 12 4 193 Stage 3 non-modelled provisions 3,587 646 - 88 4,321 Total credit impairment provisions 4,120 1,224 48 209 5,601 1 Net of a judgemental post model adjustment to reduce ECL by $4 million (31 December 2023: $nil) 2 Excludes $4 million (31 December 2023: $nil) reduction in ECL which is reported within the 'Modelled impact of multiple economic scenarios' 3 $13 million (31 December 2023: $27 million) is in stage 1, $86 million (31 December 2023: $138 million) in stage 2 4 Includes ECL on cash and balances at central banks, accrued income, assets held for sale and other assets Model performance post model adjustments (PMA) As part of normal model monitoring and validation operational processes, where a model's performance breaches the monitoring thresholds or validation standards, an assessment is performed to determine whether a model performance post model adjustment is required to correct for the identified model issue. Model performance post model adjustments are approved by the Group Credit Model Assessment Committee and will be removed when the models are enhanced to correct for the identified model issue or the model estimates return to being within the monitoring thresholds or validation standards. As at 30 June 2024, model performance post model adjustments have been applied for five models out of the total of 167 models. In aggregate, these post model adjustments reduce the Group's impairment provisions by $23 million (2 per cent of modelled provisions) compared with a $31 million decrease at 31 December 2023. The most significant of these relates to an adjustment to decrease ECL for Korea personal loans as the IFRS 9 PD model is sensitive to the higher range of interest rates. In addition to these model performance post model adjustments, separate judgemental post model and management adjustments have also been applied as set out below. 30.06.24 $ million 31.12.23 $ million Model performance PMAs Corporate & Investment Banking - (3) Wealth & Retail Banking (23) (28) Total model performance PMAs (23) (31) Key assumptions and judgements in determining expected credit loss Incorporation of forward-looking information The evolving economic environment is a key determinant of the ability of a bank's clients to meet their obligations as they fall due. It is a fundamental principle of IFRS 9 that the provisions banks hold against potential future Credit Risk losses should depend, not just on the health of the economy today, but should also take into account potential changes to the economic environment. For example, if a bank were to anticipate a sharp slowdown in the world economy over the coming year, it should hold more provisions today to absorb the credit losses likely to occur in the near future. To capture the effect of changes to the economic environment, the PDs and LGDs used to calculate ECL incorporate forward-looking information in the form of forecasts of the values of economic variables and asset prices that are likely to have an effect on the repayment ability of the Group's clients. Page 41 The 'base forecast' of the economic variables and asset prices is based on management's view of the five-year outlook, supported by projections from the Group's in-house research team and outputs from a third-party model that project specific economic variables and asset prices. The research team takes consensus views into consideration, and senior management review projections for some core country variables against consensus when forming their view of the outlook. For the period beyond five years, management utilises the in-house research view and third-party model outputs, which allow for a reversion to long-term growth rates or norms. All projections are updated on a quarterly basis. Forecast of key macroeconomic variables underlying the expected credit loss calculation and the impact on non-linearity In the Base Forecast - management's view of the most likely outcome - the world economy is expected grow by 3.1 per cent in 2024 and 3.2 per cent in 2025 with Asia set to remain the primary engine of global growth. This compares to the average of 3.7 per cent for the 10 years prior to COVID-19 (between 2010 and 2019). Growth was over 3 per cent in both 2022 and 2023 at 3.4 per cent and 3.1 per cent, respectively. Significant uncertainties remain around the outlook. High geopolitical tensions remain a significant near-term adverse risk, particularly if the evolving conflicts in the Middle East were to intensify and disrupt energy and financial markets. Key elections in multiple countries this year may temporarily weigh on investment activity. The US election in particular could have consequences for global trade in 2025. Major central banks are likely to start their rate-cutting cycles in the coming months, opening doors for Asian countries to ease monetary policy. While the quarterly Base Forecasts inform the Group's strategic plan, one key requirement of IFRS 9 is that the assessment of provisions should consider multiple future economic environments. For example, the global economy may grow more quickly or more slowly than the Base Forecast, and these variations would have different implications for the provisions that the Group should hold today. As the negative impact of an economic downturn on credit losses tends to be greater than the positive impact of an economic upturn, if the Group sets provisions only on the ECL under the Base Forecast it might maintain a level of provisions that does not appropriately capture the range of potential outcomes. To address the inherent uncertainty in economic forecast, and the property of skewness (or non-linearity), IFRS 9 requires reported ECL to be a probability-weighted ECL, calculated over a range of possible outcomes. To assess the range of possible outcomes the Group simulates a set of 50 scenarios around the Base Forecast, calculates the ECL under each of them and assigns an equal weight of 2 per cent to each scenario outcome. These scenarios are generated by a Monte Carlo simulation, which addresses the challenges of crafting many realistic alternative scenarios in the many countries in which the Group operates by means of a model, which produces these alternative scenarios while considering the degree of historical uncertainty (or volatility) observed from Q1 1990 to Q1 2024 around economic outcomes, the trends in each macroeconomic variable modelled and the correlation in the unexplained movements around these trends. This naturally means that each of the 50 scenarios do not have a specific narrative, although collectively they explore a range of hypothetical alternative outcomes for the global economy, including scenarios that turn out better than expected and scenarios that amplify anticipated stresses. The GDP graphs below illustrate the shape of the Base Forecast for key footprint markets in relation to prior periods' actuals. The long-term growth rates are based on the pace of economic expansion expected for 2030. The tables below provide a summary of the Group's Base Forecast for these markets. The peak/trough amount show the highest and lowest points within the Base Forecast. China's GDP growth is expected to ease to 4.8 per cent in 2024 and then to 4.5 per cent in 2025. This follows growth of 5.2 per cent in 2023. Weak consumer confidence and a persistent housing-market downturn cloud the economic outlook. The slower growth for China will also temper economic expansion of Hong Kong. Growth there is expected to be 2.6 per cent in 2024 and 2.9 per cent in 2025, down from the 3.2 per cent for 2023. The recent weakness in domestic business confidence will also slow the recovery in Hong Kong. Growth in India is also expected to slow to 7 per cent in 2024 and 6.5 per cent in 2025 from 7.6 per cent last year. Supportive one-off factors are expected to fade. Growth was recently supported by construction activity and electricity demand (amid below-normal rains), higher corporate profitability due to lower commodity prices, and a still-strong global economy. In contrast, GDP growth for Singapore is expected to accelerate from 1.0 per cent in 2023 to just over 2.6 per cent in 2024 and to 2.9 per cent in 2025. Favourable base effects to exports and the recovery in the global electronics and semiconductor industry are expected to continue to support the economy. Korea's economic growth will also benefit from the turnaround in this key sector and the current AI 'super-cycle'. The economy is also expected to be supported by more demand for new ships on stricter environmental regulations and export-related facility investment. Korea's economic growth is expected to improve to 2.5 per cent in 2024 and 2.1 per cent in 2025 from 1.3 per cent in 2023. Page 42 30.06.24 China Hong Kong GDP growth (YoY%) Unemployment % 3-month interest rates % House prices (YoY %) GDP growth (YoY %) Unemployment % 3-month interest rates % House prices (YoY %) Base forecast1 2024 4.8 3.6 1.9 (2.9) 2.6 3.1 4.5 4.3 2025 4.5 3.5 2.0 0.0 2.9 3.2 3.7 5.5 2026 4.3 3.3 2.2 2.7 2.5 3.2 3.2 3.3 2027 4.0 3.2 2.4 3.7 2.3 3.2 2.7 2.7 2028 3.8 3.2 2.6 4.3 2.2 3.2 2.7 2.6 5-year average2 4.1 3.3 2.3 2.3 2.5 3.2 3.1 4.0 Peak 5.6 3.6 2.7 4.4 4.0 3.2 4.3 11.1 Trough 2.8 3.1 1.8 (3.9) 1.9 3.2 2.7 2.6 Monte Carlo Low3 (0.8) 2.8 0.8 (6.0) (4.5) 1.4 0.0 (19.7) High4 9.3 3.8 4.5 10.1 8.6 6.1 6.5 26.8 30.06.24 Singapore Korea GDP growth (YoY%) Unemployment % 3-month interest rates % House prices (YoY%) GDP growth (YoY%) Unemployment % 3-month interest rates % House prices (YoY %) Base forecast1 2024 2.6 3.1 3.8 2.7 2.5 3.3 3.6 2.9 2025 2.9 2.8 3.1 2.5 2.1 3.3 3.2 5.7 2026 2.5 2.8 2.9 2.2 2.2 3.1 3.2 3.5 2027 2.5 2.8 2.7 3.0 2.1 3.0 3.2 2.4 2028 2.7 2.8 2.6 3.7 2.0 3.0 3.2 2.1 5-year average2 2.6 2.8 2.9 2.8 2.1 3.1 3.2 3.5 Peak 3.2 3.1 3.7 3.9 3.0 3.4 3.6 8.0 Trough 2.3 2.8 2.6 0.4 1.0 2.9 3.2 2.0 Monte Carlo Low3 (2.6) 1.9 0.9 (16.1) (2.7) 1.2 0.5 (5.7) High4 8.3 4.0 5.2 23.9 7.0 5.7 6.4 12.3 30.06.24 India Brent Crude $ pb GDP growth (YoY%) Unemployment7 % 3 month interest rates % House prices (YoY%) Base forecast1 2024 7.0 NA 6.3 6.6 83.2 2025 6.5 NA 6.0 6.1 82.7 2026 6.5 NA 6.0 6.4 82.6 2027 6.4 NA 6.0 6.4 83.2 2028 6.5 NA 6.0 6.3 81.3 5-year average2 6.6 NA 6.0 6.4 82.4 Peak 7.7 NA 6.5 7.5 83.4 Trough 6.3 NA 6.0 5.9 80.9 Monte Carlo Low3 1.7 NA 1.7 (0.9) 40.1 High4 11.5 NA 9.8 11.7 140.4 Page 43 31.12.23 China Hong Kong GDP growth (YoY%) Unemployment % 3-month interest rates % House prices (YoY%)��� GDP growth (YoY%) Unemployment % 3-month interest rates % House prices (YoY%) 5-year average2 4.3 4.0 2.1 4.6 2.5 3.4 3.4 2.8 Peak 5.7 4.1 2.5 7.2 3.8 3.4 5.0 4.6 Trough 3.8 3.8 1.7 1.5 1.5 3.4 2.3 (1.1) Monte Carlo Low3 0.6 3.3 0.8 (1.5) (3.8) 1.4 0.3 (19.3) High4 7.7 4.4 3.8 12.0 8.2 6.4 8.3 25.5 31.12.23 Singapore Korea GDP growth (YoY%) Unemployment %6 3-month interest rates % House prices (YoY%) GDP growth (YoY%) Unemployment % 3-month interest rates % House prices (YoY%) 5-year average2 2.9 2.8 2.9 2.2 2.3 3.1 3.1 3.3 Peak 3.8 2.9 4.1 3.9 2.6 3.5 3.7 5.3 Trough 1.9 2.8 2.3 (0.7) 2.0 3.0 3.1 (0.3) Monte Carlo Low3 (2.4) 1.7 0.6 (16.2) (2.3) 1.4 0.7 (6.1) High4 8.5 3.8 5.9 19.2 7.0 5.8 6.3 12.5 31.12.23 India Brent crude $ pb GDP growth (YoY%) Unemployment7 % 3-month interest rates % House prices (YoY%) 5-year average2 6.2 NA 6.2 6.1 88.2 Peak 9.1 NA 6.3 6.5 93.8 Trough 4.4 NA 5.8 4.7 82.8 Monte Carlo Low3 2.1 NA 2.7 (0.5) 46.0 High4 10.5 NA 9.9 13.8 137.8 1 Data presented are those used in the calculation of ECL. These may differ slightly to forecasts presented elsewhere in this Report as they are finalised before the period end. 2 5 year averages reported for 30.06.24 cover Q3 2024 to Q2 2029. They cover Q1 2024 to Q4 2028 for the numbers reported for the 2023 annual report. 3 Represents the 10th percentile in the range of economic scenarios used to determine non-linearity. 4 Represents the 90th percentile in the range of economic scenarios used to determine non-linearity. 5 A judgemental management adjustment is held in respect of the China commercial real estate sector as discussed. 6 Singapore unemployment rate covers the resident unemployment rate, which refers to citizens and permanent residents. 7 India unemployment is not available due to insufficient data Impact of multiple economic scenarios The final probability-weighted ECL reported by the Group is a simple average of the ECL for each of the 50 scenarios simulated using a Monte Carlo model. The Monte Carlo approach has the advantage that it generates many alternative scenarios that cover our global footprint. The total amount of non-linearity, calculated as the difference between the probability-weighted ECL calculated by the Monte Carlo model and the unweighted base forecast ECL, is $62 million (31 December 2023: $44 million). The CIB and Central and other items portfolios accounted for $48 million (31 December 2023: $26 million) of the calculated non-linearity, with the increase from 31 December 2023 driven by the Project Finance portfolio. The remaining $14 million (31 December 2023: $18 million) was attributable to WRB portfolios (net of a $4 million judgemental post model adjustment). Page 44 The impact of multiple economic scenarios on stage 1, stage 2 and stage 3 modelled ECL is set out in the table below, together with the management overlay and other judgemental adjustments. Base forecast $million Multiple economic scenarios1 $million Management overlays and other judgemental adjustments $million Total modelled ECL2,3 $million Total expected credit loss at 30 June 2024 1,058 62 88 1,208 Total expected credit loss at 31 December 2023 1,071 44 165 1,280 1 Includes judgemental post model adjustment of $4 million (31 December 2023: $nil million) relating to WRB 2 Total modelled ECL comprises stage 1 and stage 2 balances of $997 million (31 December 2023: $1,105 million) and $194 million (31 December 2023: $193 million) of modelled ECL on stage 3 loans 3 Includes ECL on Assets held for sale of $17 million (31 December 2023: $34 million) The average expected credit loss under multiple scenarios is 6 per cent (31 December 2023: 4 per cent) higher than the expected credit loss calculated using only the most likely scenario (the Base Forecast). Portfolios that are more sensitive to non-linearity include those with greater leverage and/or a longer tenor, such as Project and Shipping Finance portfolios. Other portfolios display minimal non-linearity owing to limited responsiveness to macroeconomic impacts for structural reasons, such as significant collateralisation as with the WRB mortgage portfolios. Judgemental management adjustments As at 30 June 2024, the Group held judgemental adjustments for ECL as set out in the table below. All of the judgemental adjustments have been determined after taking account of the model performance post model adjustments reported. They are reassessed quarterly and are reviewed and approved by the IFRS 9 Impairment Committee and will be released when no longer relevant. 30 June 2024 Corporate & Investment Banking $ million Wealth & Retail Banking Ventures $ million Central & other $ million Total $ million Mortgages $ million Credit Cards $ million Other $ million Total $ million Judgemental post model adjustments - 1 (4) (22) (25) 10 - (15) Judgemental management adjustments: - China CRE 86 - - - - - - 86 - Other - 1 11 1 13 - - 13 Total judgemental adjustments 86 2 8 (22) (12) 10 - 84 Judgemental adjustments by stage: - Stage 1 - 1 8 (9) - 10 - 10 - Stage 2 86 1 - (11) (10) - - 76 - Stage 3 - - - (2) (2) - - (2) 31 December 2023 Corporate & Investment Banking $ million Wealth & Retail Banking Ventures $ million Central & other $ million Total $ million Mortgages $ million Credit Cards $ million Other $ million Total $ million Judgemental post model adjustments - - 1 1 2 - - 2 Judgemental management adjustments: - China CRE 141 - - - - - - 141 - Other - 1 2 2 5 - 17 22 Total judgemental adjustments 141 1 3 3 7 - 17 165 Judgemental adjustments by stage: - Stage 1 17 1 3 6 10 - - 27 - Stage 2 124 - - (3) (3) - 17 138 - Stage 3 - - - - - - - - Judgemental post model adjustments Judgemental post model adjustments that decreased ECL by a net $15 million (31 December 2023: $2 million increase) have been applied to certain WRB and Ventures models. This includes a $13 million (31 December 2023: $nil) reduction in ECL in WRB due to the expected migration of a number of non-material portfolios to a simplified modelling approach and a $4 million (31 December 2023: $nil) reduction in ECL relating to non-linearity. The remaining adjustments primarily relate to temporary factors impacting modelled outputs. These will be released when these factors normalise. Page 45 China commercial real estate The real estate market in China has been in a downturn since late 2021 as evidenced by continued decline in sales, and investments in the sector. Liquidity issues experienced by Chinese property developers continued into 2023 with more developers defaulting on their obligations both offshore and onshore. During 2023, authorities on the mainland have introduced a slew of policies to help revive the sector and restore buying sentiments. This has helped stabilise the market to an extent in some cities, but demand and home prices remain muted overall. Continued policy relaxations, including those related to house purchase restrictions, completion support for eligible projects from onshore financial institutions, relaxation in mortgage rates, and further support for affordable housing, are key for reversing the continued decline in sales and investments and ensuring a stable outlook for 2024. The Group's loans and advances to China CRE clients was $2.1 billion at 30 June 2024 (31 December 2023: $2.4 billion). Client level analysis continues to be done, with clients being placed on purely precautionary or non-purely precautionary early alert, where appropriate, for closer monitoring. Given the evolving nature of the risks in the China CRE sector, a management overlay of $86 million (31 December 2023: $141 million) has been taken by estimating the impact of further deterioration to exposures in this sector. The decrease from 31 December 2023 was primarily driven by repayments and movement of one exposure to Stage 3. Other Overlays of $13 million (31 December 2023: $5 million) have also been applied in WRB to capture risks from increased credit card bankruptcy industry trends in Singapore and Hong Kong and macroeconomic environment challenges caused by sovereign defaults or heightened sovereign risk, the impact of which is not fully captured in the modelled outcomes. An overlay of $17 million held in Central & Other at 31 December 2023, due to a temporary market dislocation in the Middle East, was fully released in the six months to 30 June 2024 as conditions normalised. Stage 3 assets Credit-impaired assets managed by Stressed Asset Group (SAG) incorporate forward-looking economic assumptions in respect of the recovery outcomes identified and are assigned individual probability weightings per IFRS 9. These assumptions are not based on a Monte Carlo simulation but are informed by the Base Forecast. Sensitivity of expected credit loss calculation to macroeconomic variables The ECL calculation relies on multiple variables and is inherently non-linear and portfolio-dependent, which implies that no single analysis can fully demonstrate the sensitivity of the ECL to changes in the macroeconomic variables. The Group has conducted a series of analyses with the aim of identifying the macroeconomic variables which might have the greatest impact on the overall ECL. These encompassed single variable and multi-variable exercises, using simple up/down variation and extracts from actual calculation data, as well as bespoke scenario design assessments. The primary conclusion of these exercises is that no individual macroeconomic variable is materially influential. The Group believes this is plausible as the number of variables used in the ECL calculation is large. This does not mean that macroeconomic variables are uninfluential; rather, that the Group believes that consideration of macroeconomics should involve whole scenarios, as this aligns with the multi-variable nature of the calculation. The Group faces downside risks in the operating environment related to the uncertainties surrounding the macroeconomic outlook. To explore this, a sensitivity analysis of ECL was undertaken to explore the effect of slower economic recoveries across the Group's footprint markets. Two downside scenarios were considered. The first scenario, Renewed Global Trade Tensions (RGTT), explores an escalating trade war between the US and China and other economies and increased geopolitical tensions in Europe. The second more severe scenario is based on the US Federal Reserve's regulatory Dodd-Frank Act Stress Test scenario (Fed DFAST) which explores a deep global downturn with weakness in developing Asia reflecting a significant slowdown in economic growth in China. Interest rates and inflation are much lower than base and there is a prolonged decline in property prices. Page 46 Baseline RGTT Fed DFAST Five year average Peak/Trough Five year average Peak/Trough Five year average Peak/Trough China GDP 4.1 5.6/2.8 3.2 4.0/0.0 3.2 6.0/(1.5) China unemployment 3.3 3.6/3.1 3.9 4.7/3.1 4.5 5.4/3.4 China property prices 2.3 4.4/(3.9) 1.4 4.4/(4.5) 0.5 4.4/(5.7) Hong Kong GDP 2.5 4.0/1.9 1.6 2.1/0.1 1.6 4.3/(2.4) Hong Kong unemployment 3.2 3.2/3.2 3.6 4.2/3.2 3.8 4.5/3.3 Hong Kong property prices 4.0 11.1/2.6 3.3 8.4/0.9 2.7 7.1/(2.0) US GDP 1.8 2.6/1.4 0.9 1.6/(1.0) 1.3 6.4/(7.7) Singapore GDP 2.6 3.2/2.3 1.9 2.7/0.0 1.8 4.7/(1.8) India GDP 6.6 7.7/6.3 6.3 6.6/5.7 5.8 7.5/3.3 Crude oil 82.4 83.4/80.9 79.5 83.4/73.4 61.6 80.5/30.1 Period covered from Q3 2024 to Q2 2029. Base (GDP, YoY%) Fed DFAST (GDP, YoY%) Difference from Base 2024 2025 2026 2027 2028 2024 2025 2026 2027 2028 2024 2025 2026 2027 2028 China 3.8 5.0 4.0 3.9 3.7 (0.1) 2.0 5.4 4.6 4.0 (3.9) (3.0) 1.4 0.6 0.2 Hong Kong 3.3 2.6 2.4 2.3 2.0 (0.6) (0.5) 3.7 3.0 2.2 (3.9) (3.0) 1.3 0.7 0.2 US 1.7 1.6 2.4 1.9 1.6 (4.6) (2.5) 5.3 4.8 3.3 (6.3) (4.1) 2.9 2.9 1.7 Singapore 2.8 2.7 2.4 2.6 2.7 (0.3) (0.8) 4.0 3.3 2.7 (3.1) (3.6) 1.6 0.6 0.0 India 7.3 6.5 6.4 6.4 6.5 5.2 3.8 7.0 6.4 6.3 (2.1) (2.7) 0.6 0.0 (0.1) Each year is from Q3 to Q2. For example, 2024 is from Q3 2024 to Q2 2025. Base (GDP, YoY%) RGTT (GDP, YoY%) Difference from Base 2024 2025 2026 2027 2028 2024 2025 2026 2027 2028 2024 2025 2026 2027 2028 China 3.8 5.0 4.0 3.9 3.7 1.4 3.7 3.7 3.7 3.7 (2.4) (1.3) (0.4) (0.2) 0.0 Hong Kong 3.3 2.6 2.4 2.3 2.0 0.9 1.5 1.7 1.9 2.0 (2.4) (1.0) (0.7) (0.4) 0.0 US 1.7 1.6 2.4 1.9 1.6 (0.3) 0.7 1.0 1.3 1.6 (1.9) (0.9) (1.4) (0.6) 0.0 Singapore 2.8 2.7 2.4 2.6 2.7 0.5 1.9 2.2 2.4 2.7 (2.4) (0.8) (0.2) (0.2) 0.0 India 7.3 6.5 6.4 6.4 6.5 6.1 6.3 6.4 6.4 6.5 (1.2) (0.1) (0.1) 0.0 0.0 Each year is from Q3 to Q2. For example, 2024 is from Q3 2024 to Q2 2025. The total modelled stage 1 and 2 ECL provisions (including both on and off-balance sheet instruments) would be approximately $122 million higher under the RGTT scenario, and $175 million higher under the Fed DFAST scenario than the baseline ECL provisions (which excluded the impact of multiple economic scenarios and management overlays which may already capture some of the risks in these scenarios). Stage 2 exposures as a proportion of stage 1 and 2 exposures would increase from 4.8 per cent in the base case to 5.1 per cent and 5.7 per cent respectively under the RGTT and Fed DFAST scenarios. This includes the impact of exposures transferring to stage 2 from stage 1 but does not consider an increase in stage 3 defaults. Under both scenarios, the majority of the increase in ECL in CIB came from the main corporate, CRE and Project Finance portfolios. For the portfolios under the main corporate models, ECL would increase by $29 million and $84 million for the RGTT and Fed DFAST scenarios respectively and the proportion of stage 2 exposures would increase from 3.9 per cent in the base case to 4.3 per cent and 6.8 per cent respectively. For the WRB portfolios, most of the increase in ECL came from the unsecured retail portfolios. The reduction in ECL under the Fed DFAST scenario compared to RGTT reflects the impact of interest rate cuts on the personal loan portfolios in Korea and Taiwan, where interest rates are highly correlated to defaults. Under the Fed DFAST scenario, interest rates have a peak-to-trough range of 1.5% to 0.8% for Taiwan and 2.7% to 1.1% for Korea, compared to 3.0% to 1.5% and 4.2% to 3.2% respectively in the RGTT scenario. Under the RGTT and Fed DFAST scenarios, credit card ECL would increase by $8 million and $15 million respectively, largely in the Singapore and Hong Kong portfolios and the proportion of stage 2 credit card exposures would increase from 1.6 per cent in the base case to 1.7 per cent and 1.9 per cent for each scenario respectively, with the Singapore portfolio most impacted. Mortgages ECL would increase by under $1 million in both scenarios and the proportion of exposures would be broadly stable around 1 per cent. There was no material change in modelled stage 3 provisions as these primarily relate to unsecured WRB exposures for which the LGD is not sensitive to changes in the macroeconomic forecasts. There is also no material change for non-modelled stage 3 exposures as these are more sensitive to client specific factors than to alternative macroeconomic scenarios. Page 47 The actual outcome of any scenario may be materially different due to, among other factors, the effect of management actions to mitigate potential increases in risk and changes in the underlying portfolio. Gross as reported1 $ million ECL as reported2 $ million ECL Base case $ million ECL RGTT $ million ECL Fed DFAST $ million Stage 1 modelled Corporate & Investment Banking 357,660 144 139 165 215 Wealth & Retail Banking 175,444 358 351 400 354 Ventures 1,103 5 5 5 5 Central & Other items 181,839 48 47 52 57 Total stage 1 excluding management judgements 716,046 555 543 622 631 Stage 2 modelled Corporate & Investment Banking 14,565 173 130 149 211 Wealth & Retail Banking 2,005 148 141 165 147 Ventures 48 21 21 21 21 Central & Other items 1,924 10 10 9 10 Total excluding management overlays 18,542 352 302 345 389 Total Stage 1 & 2 modelled Corporate & Investment Banking 372,225 317 269 315 426 Wealth & Retail Banking 177,449 506 492 565 501 Ventures 1,151 26 26 26 26 Central & Other items 183,763 58 57 61 67 Total excluding management overlays 734,588 907 845 967 1,020 Stage 3 exposures excluding management overlays 7,805 4,319 Other financial assets3 109,690 95 ECL from management overlays 84 Total financial assets reported at 30 June 2024 852,083 5,405 1 Gross balances includes both on- and off- balance sheet instruments; allocation between stage 1 and 2 will differ by scenario 2 Includes ECL for both on- and off- balance sheet instruments 3 Includes cash and balances at central banks, Accrued income, Other financial assets; and Assets held for sale Traded Risk Traded Risk is the potential for loss resulting from activities undertaken by the Group in financial markets. Under the Enterprise Risk Management Framework, the Traded Risk Framework brings together Market Risk, Counterparty Credit Risk and Algorithmic Trading. Traded Risk Management is the core risk management function supporting market-facing businesses, predominantly Trading and Treasury. Market Risk (reviewed) Market Risk is the potential for fair value loss due to adverse moves in financial markets. The Group's exposure to Market Risk arises predominantly from the following sources: ��� Trading book: - The Group provides clients with access to financial markets, facilitation of which entails the Group taking moderate Market Risk positions. All trading teams support client activity. There are no proprietary trading teams. Hence, income earned from Market Risk-related activities is primarily driven by the volume of client activity. ��� Non-trading book: - The Treasury Markets desk is required to hold a liquid assets buffer, much of which is held in high-quality marketable debt securities. - The Group has capital invested and related income streams denominated in currencies other than US dollars. To the extent that these income streams are not hedged, the Group is subject to Structural Foreign Exchange Risk which is reflected in reserves. A summary of our current policies and practices regarding Market Risk management is provided in the Principal Risks section. Page 48 The primary categories of Market Risk for the Group are: ��� Interest Rate Risk: arising from changes in yield curves and implied volatilities on interest rate options. ��� Foreign Exchange Rate Risk: arising from changes in currency exchange rates and implied volatilities on foreign exchange options. ��� Commodity Risk: arising from changes in commodity prices and implied volatilities on commodity options ��� Credit Spread Risk: arising from changes in the price of debt instruments and credit-linked derivatives and driven by factors other than the level of risk-free interest rates. ��� Equity Risk: arising from changes in the prices of equities and implied volatilities on equity options. Market Risk movements (reviewed) Value at Risk (VaR) allows the Group to manage Market Risk across the trading book and most of the fair valued non-trading books. The average level of total trading and non-trading VaR in H1 2024 was $42.9 million, 20 per cent lower than H2 2023 ($53.4 million) and 19 per cent lower than H1 2023 ($53.1 million). The half year-end level of total trading and non-trading VaR in H1 2024 was $42.3 million, 5 per cent lower than H2 2023 ($44.5 million) and 16 per cent lower than H1 2023 ($50.2 million). The decrease in trading and non-trading average VaR was driven by a reduction in market volatility. The average trading VaR remained relatively unchanged in H1 2024 at $21.5 million, 9 per cent lower than H2 2023 ($23.5 million) and 11 per cent higher than H1 2023 ($19.4 million). Daily value at risk (VaR at 97.5%, one day) (reviewed) Trading1 and non-trading2 6 months ended 30.06.24 6 months ended 31.12.23 6 months ended 30.06.23 Average $million High $million Low $million Half Year $million Average $million High $million Low $million Half Year $million Average $million High $million Low $million Half Year $million Interest Rate Risk 35.5 43.9 26.3 34.9 45.0 54.1 29.2 30.5 34.2 47.3 23.2 46.0 Credit Spread Risk 21.9 31.3 12.8 20.2 30.0 34.1 25.0 31.7 37.5 48.0 31.9 34.9 Foreign Exchange Risk 8.9 14.5 5.2 9.1 7.9 12.2 5.3 7.4 6.1 9.7 4.2 5.1 Commodity Risk 5.6 10.0 2.9 6.4 5.2 8.6 3.7 4.3 6.4 9.7 3.7 5.3 Equity Risk 0.4 0.9 - 0.1 - 0.1 - - 0.1 0.4 - 0.1 Diversification effect3 (29.4) NA NA (28.4) (34.7) NA NA (29.4) (31.2) NA NA (41.2) Total 42.9 53.1 37.0 42.3 53.4 65.4 44.4 44.5 53.1 65.5 44.2 50.2 Trading1 6 months ended 30.06.24 6 months ended 31.12.23 6 months ended 30.06.23 Average $million High $million Low $million Half Year $million Average $million High $million Low $million Half Year $million Average $million High $million Low $million Half Year $million Interest Rate Risk 13.2 22.0 9.1 10.6 14.7 20.4 8.7 11.6 11.5 16.9 7.7 13.0 Credit Spread Risk 7.2 9.6 4.8 6.0 9.3 10.6 7.9 9.4 9.6 12.4 7.4 10.2 Foreign Exchange Risk 8.9 14.5 5.2 9.1 7.9 12.2 5.3 7.4 6.1 9.7 4.2 5.1 Commodity Risk 5.2 10.0 2.4 5.7 5.2 8.6 3.7 4.4 6.4 9.7 3.7 5.3 Equity Risk - - - - - - - - - - - - Diversification effect3 (13.0) NA NA (15.9) (13.6) NA NA (11.5) (14.2) NA NA (13.7) Total 21.5 33.1 13.0 15.5 23.5 30.6 16.3 21.3 19.4 24.0 14.7 19.9 Non-trading2 6 months ended 30.06.24 6 months ended 31.12.23 6 months ended 30.06.23 Average $million High $million Low $million Half Year $million Average $million High $million Low $million Half Year $million Average $million High $million Low $million Half Year $million Interest Rate Risk 30.8 35.5 26.4 32.4 38.0 43.6 23.7 23.9 30.4 43.1 19.7 37.7 Credit Spread Risk 17.7 24.8 10.0 17.8 24.7 28.9 21.5 24.4 31.8 40.1 26.5 28.5 Foreign Exchange Risk - - - - - - - - - - - - Commodity Risk 1.3 1.8 0.6 1.5 0.1 0.5 - 0.5 - - - - Equity Risk 0.4 0.9 - 0.1 - 0.1 - - 0.1 0.4 - 0.1 Diversification effect3 (16.3) NA NA (11.0) (21.6) NA NA (13.2) (15.5) NA NA (22.0) Total 33.9 44.1 29.2 40.8 41.2 46.0 32.0 35.6 46.8 53.4 41.7 44.3 1 The trading book for Market Risk is defined in the Trading Book (CRR) section of the PRA Rulebook which transposes the requirements of the Capital Requirements Regulation Part 3 Title I Chapter 3. This restricts the positions permitted in the trading book. 2 The non-trading book VaR does not include syndicated loans 3 The total VaR is non-additive across risk types due to diversification effects, which is measured as the difference between the sum of the VaR by individual risk type or business and the combined total VaR. As the maximum and minimum occur on different days for different risk types or businesses, it is not meaningful to calculate a portfolio diversification benefit for these measures Page 49 Risks not in VaR In H1 2024, the main market risks not reflected in VaR were: ��� Basis risks for which the historical market price data is limited and is therefore proxied, giving rise to potential proxy basis risk that is not captured in VaR ��� Potential depeg risk from currencies currently pegged or managed, where the historical one-year VaR observation period may not reflect the possibility of a change in the currency regime or a sudden depegging ��� Potential understatement of VaR when abrupt increases in market volatility are not adequately captured by the VaR model Additional capital is set aside to cover such 'risks not in VaR'. Backtesting In H1 2024, there were no regulatory backtesting exceptions. In the one year period to 28 June 2024, there have been two Group level backtesting exceptions: ��� 1 November and 3 November: After the Nigerian government announced on 30 October that it planned to target an exchange rate of 750 Naira per dollar, the onshore spot market became more volatile on low volumes. An enhancement to the VaR model has been approved by the PRA and once implemented is expected to increase its responsiveness to abrupt upturns in market volatility. Average daily income earned from Market Risk-related activities1 (reviewed) Trading: The average level of total trading daily income in H1 2024 was $14.3 million, 33.6 per cent higher than H2 2023 ($10.7million) and 7.5 per cent higher than H1 2023 ($13.3 million). The increase in 2024 is largely attributable to double-digit growth from higher flow income in Credit Trading & Commodities, offsetting with lower income in FX & Rates business. Non-trading: The average level of non-trading daily income in H1 2024 was $2.1 million, largely attributable to a one-off FX revaluation gain in Treasury due to the devaluation of the Egyptian Pound against the US Dollar, and FX Revaluation gains across currencies in Credit Trading. Trading 6 months ended 30.06.24 $milion 6 months ended 31.12.23 $million 6 months ended 30.06.23 $million Interest Rate Risk 5.5 4.5 4.6 Credit Spread Risk 1.9 0.9 1.5 Foreign Exchange Risk 5.8 4.4 6.4 Commodity Risk 1.1 0.9 0.8 Equity Risk - - - Total 14.3 10.7 13.3 Non-trading 6 months ended 30.06.24 $million 6 months ended 31.12.23 $million 6 months ended 30.06.23 $million Interest Rate Risk 1.3 (0.1) - Credit Spread Risk 0.8 (0.6) (0.8) Equity Risk - 0.1 0.1 Total 2.1 (0.6) (0.7) 1 Reflects total product income which is the sum of client income and own account income. Includes elements of trading income, interest income and non funded income which are generated from Market Risk-related activities. Rates, XVA and Treasury income are included under Interest Rate Risk whilst Credit Trading income is included under Credit Spread Risk Page 50 Counterparty Credit Risk Counterparty Credit Risk is the potential for loss in the event of the default of a derivative counterparty, after taking into account the value of eligible collaterals and risk mitigation techniques. The Group's counterparty credit exposures are included in the Credit Risk section. Derivative financial instruments Credit Risk mitigation The Group enters into master netting agreements, which in the event of default result in a single amount owed by or to the counterparty through netting the sum of the positive and negative mark-to-market values of applicable derivative transactions. In addition, the Group enters into credit support annexes (CSAs) with counterparties where collateral is deemed a necessary or desirable mitigant to the exposure. Cash collateral includes collateral called under a variation margin process from counterparties if total uncollateralised mark-to-market exposure exceeds the threshold and minimum transfer amount specified in the CSA. With certain counterparties, the CSA is reciprocal and requires us to post collateral if the overall mark-to-market values of positions are in the counterparty's favour and exceed an agreed threshold. Liquidity and Funding Risk Liquidity and Funding Risk is the risk that the Group may not have sufficient stable or diverse sources of funding to meet its obligations as they fall due. The Group's Liquidity and Funding Risk framework requires each country to ensure that it operates within predefined liquidity limits and remains in compliance with Group liquidity policies and practices, as well as local regulatory requirements. The Group achieves this through a combination of setting Risk Appetite and associated limits, policy formation, risk measurement and monitoring, prudential and internal stress testing, governance and review. The Group has maintained resilience and retained a robust liquidity position. The Group continues to focus on improving the quality and diversification of its funding mix and remains committed to supporting its clients. Liquidity and Funding Risk metrics The Group continually monitors key liquidity metrics, both on a country basis and consolidated across the Group. The following liquidity and funding Board Risk Appetite metrics define the maximum amount and type of risk that the Group is willing to assume in pursuit of its strategy: liquidity coverage ratio (LCR), liquidity stress survival horizons, recovery capacity and net stable funding ratio (NSFR). In addition to the Board Risk Appetite, there are further limits that apply at Group and country level such as external wholesale borrowing (WBE) and advances-to-deposit-ratio (ADR). Liquidity coverage ratio (LCR) The LCR is a regulatory requirement set to ensure the Group has sufficient unencumbered high-quality liquid assets to meet its liquidity needs in a 30-calendar-day liquidity stress scenario. The Group monitors and reports its liquidity positions under the Liquidity Coverage Ratio per PRA rulebook and has maintained its LCR above the prudential requirement. At the reporting date, the Group LCR was 148 per cent (31 December 2023: 145 per cent), with a surplus to both Board-approved Risk Appetite and regulatory requirements. Adequate liquidity was held across our footprint to meet all local prudential LCR requirements where applicable. 30.06.24 $million 31.12.23 $million Liquidity buffer 173,493 185,643 Total net cash outflows 116,884 128,111 Liquidity coverage ratio 148% 145% Page 51 Stress coverage The Group intends to maintain a prudent and sustainable funding and liquidity position, in all countries and currencies, such that it can withstand a severe but plausible liquidity stress. Our approach to managing liquidity and funding is reflected in the Board-level Risk Appetite Statement which includes the following: "The Group should have sufficient stable and diverse sources of funding to meet its contractual and contingent obligations as they fall due." The Group's internal liquidity stress testing framework covers the following stress scenarios: ��� Standard Chartered-specific - Captures the liquidity impact from an idiosyncratic event affecting Standard Chartered only with the rest of the market assumed to be operating normally. ��� Market wide - Captures the liquidity impact from a market-wide crisis affecting all participants in a country, region or globally. ��� Combined - Assumes both Standard Chartered-specific and market-wide events affect the Group simultaneously and hence is the most severe scenario. All scenarios include, but are not limited to, modelled outflows for retail and wholesale funding, off-balance sheet funding risk, cross-currency funding risk, intraday risk, franchise risk, risks associated with a deterioration of a firm's credit rating and concentration risk from single name and industry concentration. Stress testing results show that a positive surplus was maintained under all scenarios at 30 June 2024, and respective countries were able to survive for a period of time as defined under each scenario. The results take into account currency convertibility and portability constraints while calculating the liquidity surplus at Group level. Standard Chartered Bank's credit ratings as at 30 June 2024 were A+ with stable outlook (Fitch), A+ with stable outlook (S&P) and A1 with stable outlook (Moody's). As of 30 June 2024, the estimated contractual outflow of a three-notch long-term ratings downgrade is $1.1 billion. External wholesale borrowing A risk limit is set to prevent excessive reliance on wholesale borrowing. Within the definition of wholesale borrowing, limits are applied to all branches and operating subsidiaries in the Group and as at the reporting date, the Group remained within the limit. Advances-to-deposits ratio This is defined as the ratio of total loans and advances to customers relative to total customer deposits, excluding approved balances held with central banks, confirmed as repayable at the point of stress. An advances-to-deposits ratio below 100 per cent demonstrates that customer deposits exceed customer loans as a result of the emphasis placed on generating a high level of stable funding from customers. The Group's advances-to-deposits ratio has decreased by 0.8 per cent to 52.6 per cent during H1 2024, driven by an increase in customer deposits of 1 per cent and with a reduction of 3 per cent in customer loans and advances. Deposits from customers as at 30 June 2024 are $488,007 million (31 December 2023: $486,666 million). 30.06.24 $million 31.12.23 $million Total loans and advances to customers1,2 256,566 259,481 Total customer accounts3 488,007 486,666 Advances-to-deposits ratio 52.6% 53.3% 1 Excludes reverse repurchase agreement and other similar secured lending of $7,788 million and includes loans and advances to customers held at fair value through profit and loss of $6,877 million 2 Loans and advances to customers for the purpose of the advances-to-deposits ratio excludes $18,419 million of approved balances held with central banks, confirmed as repayable at the point of stress (31 December 2023: $20,710 million) 3 Includes customer accounts held at fair value through profit or loss of $19,850 million (31 December 2023: $17,248 million) Page 52 Net stable funding ratio (NSFR) The NSFR is a PRA regulatory requirement that stipulates institutions to maintain a stable funding profile in relation to an assumed duration of their assets and off-balance sheet activities over a one-year horizon. It is the ratio between the amount of available stable funding (ASF) and the amount of required stable funding (RSF). ASF factors are applied to balance sheet liabilities and capital, based on the tenor and/or their perceived stability to quantify the amount of stable funding they provide. Likewise, RSF factors are applied to assets and off-balance sheet exposures according to the amount of stable funding they require. The regulatory requirements for NSFR are to maintain a ratio of at least 100 per cent. The average ratio for the past four quarters is 136 per cent. Liquidity pool The liquidity value of the Group's LCR eligible liquidity pool at the reporting date was $173 billion. The figures in the table below account for haircuts, currency convertibility and portability constraints per PRA rules for transfer restrictions, and therefore are not directly comparable with the consolidated balance sheet. A liquidity pool is held to offset stress outflows as defined in the LCR per PRA rulebook. 30.06.24 $million 31.12.23 $million Level 1 securities Cash and balances at central banks 74,141 81,675 Central banks, governments/public sector entities 74,632 71,768 Multilateral development banks and international organisations 15,789 16,917 Other 1,240 1,291 Total Level 1 securities 165,802 171,651 Level 2 A securities 6,165 13,268 Level 2 B securities 1,526 724 Total LCR eligible assets 173,493 185,643 Liquidity analysis of the Group's balance sheet (reviewed) Contractual maturity of assets and liabilities The following table presents assets and liabilities by maturity groupings based on the remaining period to the contractual maturity date as at the balance sheet date on a discounted basis. Contractual maturities do not necessarily reflect actual repayments or cash flows. Within the tables below, cash and balances with central banks, interbank placements and investment securities that are fair valued through other comprehensive income are used by the Group principally for liquidity management purposes. As at the reporting date, assets remain predominantly short-dated, with 60 per cent maturing in less than one year. Page 53 30.06.24 One month or less $million Between one month and three months $million Between three months and six months $million Between six months and nine months $million Between nine months and one year $million Between one year and two years $million Between two years and five years $million More than five years and undated $million Total $million Assets Cash and balances at central banks 54,216 - - - - - - 9,870 64,086 Derivative financial instruments 10,026 6,008 7,662 5,234 2,818 5,261 6,924 4,714 48,647 Loans and advances to banks1,2 31,438 21,293 12,292 5,050 4,579 8,414 3,424 1,202 87,692 Loans and advances to customers1,2 83,116 51,429 21,244 15,126 11,686 33,798 25,855 93,453 335,707 Investment securities1 11,746 23,660 23,513 20,820 18,813 26,188 48,845 58,270 231,855 Other assets1 22,827 30,911 1,457 335 619 129 44 11,118 67,440 Total assets 213,369 133,301 66,168 46,565 38,515 73,790 85,092 178,627 835,427 Liabilities Deposits by banks1,3 27,480 3,237 1,938 913 465 3,794 2,647 4 40,478 Customer accounts1,4 379,475 46,011 28,154 9,360 11,613 9,805 45,223 2,621 532,262 Derivative financial instruments 8,837 8,975 7,076 5,436 3,201 5,216 6,874 4,969 50,584 Senior debt5 1,180 910 1,249 1,584 4,031 9,049 19,481 16,575 54,059 Other debt securities in issue1 1,944 5,123 8,107 4,206 2,989 907 264 415 23,955 Other liabilities 17,794 39,284 2,983 1,870 762 1,225 2,044 5,944 71,906 Subordinated liabilities and other borrowed funds 10 72 508 160 43 358 1,954 7,751 10,856 Total liabilities 436,720 103,612 50,015 23,529 23,104 30,354 78,487 38,279 784,100 Net liquidity gap (223,351) 29,689 16,153 23,036 15,411 43,436 6,605 140,348 51,327 1 Loans and advances, investment securities, other assets, deposits by banks, customer accounts and debt securities in issue include financial instruments held at fair value through profit or loss, see Note 13 Financial instruments 2 Loans and advances include reverse repurchase agreements and other similar secured lending of $105.0 billion 3 Deposits by banks include repurchase agreements and other similar secured borrowing of $10.3 billion 4 Customer accounts include repurchase agreements and other similar secured borrowing of $44.3 billion 5 Senior debt maturity profiles are based upon contractual maturity, which may be later than call options over the debt held by the Group Page 54 31.12.23 One month or less $million Between one month and three months $million Between three months and six months $million Between six months and nine months $million Between nine months and one year $million Between one year and two years $million Between two years and five years $million More than five years and undated $million Total $million Assets Cash and balances at central banks 63,752 - - - - - - 6,153 69,905 Derivative financial instruments 12,269 10,632 6,910 3,611 2,921 4,650 6,038 3,403 50,434 Loans and advances to banks1,2 28,814 23,384 10,086 4,929 5,504 1,583 2,392 1,098 77,790 Loans and advances to customers1,2 86,695 55,009 25,492 15,392 14,537 25,987 26,545 95,829 345,486 Investment securities1 12,187 28,999 17,131 18,993 20,590 24,244 44,835 50,168 217,147 Other assets1 17,611 31,729 1,286 409 587 67 93 10,300 62,082 Total assets 221,328 149,753 60,905 43,334 44,139 56,531 79,903 166,951 822,844 Liabilities Deposits by banks1,3 26,745 1,909 1,398 503 778 1,326 2,848 2 35,509 Customer accounts1,4 384,444 47,723 28,288 13,647 11,806 7,787 38,578 2,349 534,622 Derivative financial instruments 13,111 12,472 6,655 4,001 3,433 5,142 6,932 4,315 56,061 Senior debt5 130 1,111 1,537 1,389 624 11,507 20,127 14,443 50,868 Other debt securities in issue1 3,123 5,822 6,109 3,235 3,037 492 482 195 22,495 Other liabilities 14,929 26,447 1,695 544 883 1,830 1,809 12,763 60,900 Subordinated liabilities and other borrowed funds 980 68 19 172 453 312 1,936 8,096 12,036 Total liabilities 443,462 95,552 45,701 23,491 21,014 28,396 72,712 42,163 772,491 Net liquidity gap (222,134) 54,201 15,204 19,843 23,125 28,135 7,191 124,788 50,353 1 Loans and advances, investment securities, other assets, deposits by banks, customer accounts and debt securities in issue include financial instruments held at fair value through profit or loss, see Note 13 Financial instruments 2 Loans and advances include reverse repurchase agreements and other similar secured lending of $97.6 billion 3 Deposits by banks include repurchase agreements and other similar secured borrowing of $5.6 billion 4 Customer accounts include repurchase agreements and other similar secured borrowing of $48 billion 5 Senior debt maturity profiles are based upon contractual maturity, which may be later than call options over the debt held by the Group Page 55 Behavioural maturity of financial assets and liabilities The cash flows presented in the previous section reflect the cash flows that will be contractually payable over the residual maturity of the instruments. However, contractual maturities do not necessarily reflect the timing of actual repayments or cash flow. In practice, certain assets and liabilities behave differently from their contractual terms, especially for short-term customer accounts, credit card balances and overdrafts, which extend to a longer period than their contractual maturity. On the other hand, mortgage balances tend to have a shorter repayment period than their contractual maturity date. Expected customer behaviour is assessed and managed on a country basis using qualitative and quantitative techniques, including analysis of observed customer behaviour over time. Maturity of financial liabilities on an undiscounted basis (reviewed) The following table analyses the contractual cash flows payable for the Group's financial liabilities by remaining contractual maturities on an undiscounted basis. The financial liability balances in the table below will not agree with the balances reported in the consolidated balance sheet as the table incorporates all contractual cash flows, on an undiscounted basis, relating to both principal and interest payments. Derivatives not treated as hedging derivatives are included in the 'On demand' time bucket and not by contractual maturity. Within the 'More than five years and undated' maturity band are undated financial liabilities, the majority of which relate to subordinated debt, on which interest payments are not included as this information would not be meaningful, given the instruments are undated. Interest payments on these instruments are included within the relevant maturities up to five years. 30.06.24 One month or less $million Between one month and three months $million Between three months and six months $million Between six months and nine months $million Between nine months and one year $million Between one year and two years $million Between two years and five years $million More than five years and undated $million Total $million Deposits by banks 27,493 3,257 1,974 919 480 3,794 2,647 4 40,568 Customer accounts 380,360 46,413 28,652 9,584 12,017 10,147 45,513 3,379 536,065 Derivative financial instruments 48,345 4 37 83 44 184 760 1,127 50,584 Debt securities in issue 3,403 6,062 9,706 6,210 7,478 11,444 22,754 19,967 87,024 Subordinated liabilities and other borrowed funds 15 174 558 167 48 185 2,355 16,017 19,519 Other liabilities 17,365 39,101 2,900 1,852 753 1,227 2,044 5,787 71,029 Total liabilities 476,981 95,011 43,827 18,815 20,820 26,981 76,073 46,281 804,789 31.12.23 One month or less $million Between one month and three months $million Between three months and six months $million Between six months and nine months $million Between nine months and one year $million Between one year and two years $million Between two years and five years $million More than five years and undated $million Total $million Deposits by banks 26,759 1,921 1,417 513 790 1,328 2,848 4 35,580 Customer accounts 385,361 48,140 28,763 14,049 12,190 8,118 39,000 3,036 538,657 Derivative financial instruments 53,054 517 46 44 103 202 887 1,208 56,061 Debt securities in issue 3,507 6,995 8,015 5,070 4,002 13,663 23,413 16,396 81,061 Subordinated liabilities and other borrowed funds 1,043 134 46 208 570 395 2,389 14,367 19,152 Other liabilities 12,200 26,291 1,560 515 884 1,832 1,810 11,513 56,605 Total liabilities 481,924 83,998 39,847 20,399 18,539 25,538 70,347 46,524 787,116 Interest Rate Risk in the Banking Book (reviewed) The following table provides the estimated impact to a hypothetical base case projection of the Group's earnings under the following scenarios: ��� A 50 basis point parallel interest rate shock (up and down) to the current market-implied path of rates, across all yield curves ��� A 100 basis point parallel interest rate shock (up and down) to the current market-implied path of rates, across all yield curves These interest rate shock scenarios assume all other economic variables remain constant. The sensitivities shown represent the estimated change to a hypothetical base case projected net interest income (NII), plus the change in interest rate implied income and expense from FX swaps used to manage banking book currency positions, under the different interest rate shock scenarios. Page 56 The base case projected NII is based on the current market-implied path of rates and forward rate expectations. The NII sensitivities below stress this base case by a further 50 or 100bps. Actual observed interest rate changes will likely differ from market expectation. Accordingly, the shocked NII sensitivity does not represent a forecast of the Group's net interest income. The interest rate sensitivities are indicative stress tests and based on simplified scenarios, estimating the aggregate impact of an unanticipated, instantaneous parallel shock across all yield curves over a one-year horizon, including the time taken to implement changes to pricing before becoming effective. The assessment assumes that the size and mix of the balance sheet remain constant and that there are no specific management actions in response to the change in rates. No assumptions are made in relation to the impact on credit spreads in a changing rate environment. Significant modelling and behavioural assumptions are made regarding scenario simplification, market competition, pass-through rates, asset and liability re-pricing tenors, and price flooring. In particular, the assumption that interest rates of all currencies and maturities shift by the same amount concurrently, and that no actions are taken to mitigate the impacts arising from this are considered unlikely. Reported sensitivities will vary over time due to a number of factors including changes in balance sheet composition, market conditions, customer behaviour and risk management strategy. Therefore, while the NII sensitivities are a relevant measure of the Group's interest rate exposure, they should not be considered an income or profit forecast. Estimated one-year impact to earnings from a parallel shift in yield curves at the beginning of the period of: 30.06.24 USD bloc $million HKD bloc $million SGD bloc $million CNY bloc $million Other currency bloc �� $million Total $million + 50 basis points 50 20 10 20 110 210 - 50 basis points (100) (30) (20) (40) (140) (330) + 100 basis points 100 30 20 50 200 400 - 100 basis points (210) (60) (40) (70) (270) (650) Estimated one-year impact to earnings from a parallel shift in yield curves at the beginning of the period of: 31.12.23 USD bloc $million HKD bloc $million SGD bloc $million CNY bloc $million Other currency bloc $million Total $million + 50 basis points 90 10 50 30 170 350 - 50 basis points (150) (30) (50) (40) (200) (470) + 100 basis points 180 10 100 60 340 690 - 100 basis points (280) (40) (100) (80) (390) (890) 1 The currency blocs broken out in the table are not necessarily the most material at the reporting date as this can change year to year. The majority of the Other currency bloc sensitivity relates to the currencies EUR, GBP, INR, KRW, MYR, TWD As at 30 June 2024, the Group estimates the one-year impact of an instantaneous, parallel increase across all yield curves of 50 basis points to increase projected NII by $210 million. The equivalent impact from a parallel decrease of 50 basis points would result in a reduction in projected NII of $330 million. The Group estimates the one-year impact of an instantaneous, parallel increase across all yield curves of 100 basis points to increase projected NII by $400 million. The equivalent impact from a parallel decrease of 100 basis points would result in a reduction in projected NII of $650 million. The benefit from rising interest rates is primarily from reinvesting at higher yields and from assets re-pricing faster and to a greater extent than deposits. NII sensitivity in falling rate scenarios has decreased versus 31 December 2023, due to an increase in programmatic hedging as well as actions taken in discretionary portfolios to increase asset duration. Over the course of 2024 the notional of interest rate swaps and HTC-accounted bond portfolios used to reduce NII sensitivity through the cycle increased from $47 billion to $51 billion. As at 30 June 2024, the portfolios had a weighted average maturity of 3.1 years, which reflects the behaviouralised lives of the rate-insensitive deposit and equity balances that they hedge, and a yield of 3.4 per cent. Operational and Technology Risk The Group defines Operational and Technology Risk as the potential for loss from inadequate or failed internal processes, technology events, human error, or from the impact of external events (including legal risks). Operational and Technology risk may occur anywhere in the Group, including third-party processes. Page 57 Operational and Technology Risk profile Risk management practices help the business grow safely and ensure governance and management of Operational and Technology risk through the delivery and embedding of effective frameworks and policies, together with continuous oversight and assurance. Managing Operational and Technology risk makes the Group more efficient and enables it to offer better, sustainable service to its customers. The Group's Operational and Technology Risk Type Framework (O&T RTF) enable the Group to govern, identify, measure, monitor and test, manage and report on its Operational and Technology risk. The Group continues to ensure the O&T RTF supports the business and functions in effectively managing risk and controls within Risk Appetite to meet their strategic objectives. The Group has demonstrated progress on ensuring visibility of risks and risk management through implementation of a standardised risk taxonomy. Standardising the risk taxonomy enables improved risk aggregation and reporting and provides opportunities for simplifying the process of risk identification and assessment. A revised Process Universe along with taxonomies for causes and controls have been designed and are being implemented in 2024, with control categories supporting the streamlining and removal of duplicate controls, reducing complexity, and improving risk and control management. Macro processes will provide a client-centric view and enable clearer accountability for delivery as well as management of risks in line with business objectives. The Group's Operational and Technology risk profile remained stable with improvements to the quality of risk understanding and identification in a fast-changing technology landscape. Operational and Technology risk is elevated in areas such as Information and Cyber Security, Data Management and Transaction Processing, which are subject to ongoing control enhancement programmes. Other key areas of focus are Change, Systems Health/Technology risk, Third Party risk, Resilience and Regulatory Compliance. Management has focused on addressing these areas, improving the sustainable operating environment, and initiated several programmes to enhance the control environment. The Group continues to monitor and manage Operational and Technology risks associated with the external environment such as geopolitical factors and the increasing risk of cyber attacks. Digitalisation and inappropriate use of Artificial Intelligence, various regulatory expectations across our footprint and the changing technology landscape remain key emerging areas to manage, allowing the Group to keep pace with new business developments, whilst ensuring that risk and control frameworks evolve accordingly. The Group continues to strengthen its risk management to understand the full spectrum of risks in the operating environment, enhance its defences and improve resilience. Other principal risks Losses arising from operational failures for other principal and integrated risks are reported as operational losses. Operational losses do not include operational risk-related credit impairments. Page 58 Capital review The Capital review provides an analysis of the Group's capital and leverage position, and requirements. Capital summary The Group's capital, leverage and minimum requirements for own funds and eligible liabilities (MREL) position is managed within the Board-approved risk appetite. The Group is well capitalised with low leverage and high levels of loss-absorbing capacity. 30.06.24 31.12.23 CET1 capital 14.6% 14.1% Tier 1 capital 17.3% 16.3% Total capital 22.1% 21.2% Leverage ratio 4.8% 4.7% MREL ratio 35.4% 33.3% Risk-weighted assets (RWA) $million 241,926 244,151 The Group's capital, leverage and MREL positions were all above current requirements and Board-approved risk appetite. For further detail see the Capital section in the Standard Chartered PLC Pillar 3 Disclosures for H1 2024. The Group's CET1 capital increased 59 basis points to 14.6 percent of RWA since FY2023. Profits, movements in FVOCI, lower regulatory deductions and RWA optimisations were partly offset by distributions (including ordinary share buybacks of $1.0 billion during the year) and FX translation reserves. As at 30 June 2024 the Group's Pillar 2A was 3.8 percent of RWA, of which at least 2.1 per cent must be held in CET1 capital. The Group's minimum CET1 capital requirement was 10.6 per cent at H1 2024. The Korea countercyclical buffer increased to 1.0 per cent in the second quarter which impacts the Group's CET1 minimum requirement by approximately 7 basis points from December 2023. The Group CET1 capital ratio at H1 2024 reflects the share buybacks of $1.0 billion completed during the year. The CET1 capital ratio also includes an accrual for the FY 2024 interim dividend. The Board has recommended an interim dividend for H1 2024 of $230 million or 9 cents per share representing a third of the total 2023 dividend. In addition, the Board has announced a further share buyback of $1.5 billion, the impact of this will reduce the Group's CET1 capital by around 60 basis points in the third quarter of 2024. The Group expects to manage CET1 capital dynamically within our 13-14 per cent target range, in support of our aim of delivering future sustainable shareholder distributions. The Group's MREL requirement as at H1 2024 was equivalent to 28.4 per cent of RWA. This is composed of a minimum requirement of 24.5 per cent of RWA and the Group's combined buffer (comprising the capital conservation buffer, the G-SII buffer and the countercyclical buffer). The Group's MREL ratio was 35.4 per cent of RWA and 9.8 per cent of leverage exposure at H1 2024. During the period, the Group successfully raised $7.0 billion of MREL eligible securities from its holding company, Standard Chartered PLC. Issuance include $1.0 billion of Additional Tier1 and $6.0 billion of callable senior debt. The Group is a G-SII, with a 1.0 per cent G-SII CET1 capital buffer. The Standard Chartered PLC G-SII disclosure is published at: sc.com/en/investors/financial-results. Page 59 Capital base1 (reviewed) 30.06.24 $million 31.12.23 $million CET1 capital instruments and reserves Capital instruments and the related share premium accounts 5,264 5,321 Of which: share premium accounts 3,989 3,989 Retained earnings 27,017 24,930 Accumulated other comprehensive income (and other reserves) 8,274 9,171 Non-controlling interests (amount allowed in consolidated CET1) 236 217 Independently reviewed interim and year-end profits 2,409 3,542 Foreseeable dividends (478) (768) CET1 capital before regulatory adjustments 42,722 42,413 CET1 regulatory adjustments Additional value adjustments (prudential valuation adjustments) (678) (730) Intangible assets (net of related tax liability) (6,006) (6,128) Deferred tax assets that rely on future profitability (excludes those arising from temporary differences) (44) (41) Fair value reserves related to net losses on cash flow hedges 56 (91) Deduction of amounts resulting from the calculation of excess expected loss (653) (754) Net gains on liabilities at fair value resulting from changes in own credit risk 260 (100) Defined-benefit pension fund assets (110) (95) Fair value gains arising from the institution's own credit risk related to derivative liabilities (90) (116) Exposure amounts which could qualify for risk weighting of 1250% (39) (44) Other regulatory adjustments to CET1 capital - - Total regulatory adjustments to CET1 (7,304) (8,099) CET1 capital 35,418 34,314 Additional Tier 1 capital (AT1) instruments 6,504 5,512 AT1 regulatory adjustments (20) (20) Tier 1 capital 41,902 39,806 Tier 2 capital instruments 11,697 11,965 Tier 2 regulatory adjustments (30) (30) Tier 2 capital 11,667 11,935 Total capital 53,569 51,741 Total risk-weighted assets2 241,926 244,151 1 Capital base is prepared on the regulatory scope of consolidation 2 Total risk-weighted assets are not in scope of EY's review Page 60 Movement in total capital (reviewed) 30.06.24 $million 31.12.23 $million CET1 at 1 January/1 July 34,314 34,896 Ordinary shares issued in the period and share premium - - Share buyback (1,000) (1,000) Profit for the period/year 2,409 1,156 Foreseeable dividends deducted from CET1 (478) (391) Difference between dividends paid and foreseeable dividends 8 (376) Movement in goodwill and other intangible assets 122 (303) Foreign currency translation differences (510) 164 Non-controlling interests 19 27 Movement in eligible other comprehensive income 368 54 Deferred tax assets that rely on future profitability (3) 45 Decrease/(increase) in excess expected loss 101 33 Additional value adjustments (prudential valuation adjustment) 52 (37) IFRS 9 transitional impact on regulatory reserves including day one - - Exposure amounts which could qualify for risk weighting 5 8 Fair value gains arising from the institution's own Credit Risk related to derivative liabilities 26 (52) Others (15) 90 CET1 at 30 June/31 December 35,418 34,314 AT1 at 1 January/1 July 5,492 5,492 Net issuances (redemptions) 992 - Foreign currency translation difference - - Excess on AT1 grandfathered limit (ineligible) - - AT1 at 30 June/31 December 6,484 5,492 Tier 2 capital at 1 January/1 July 11,935 12,281 Regulatory amortisation 822 (287) Net issuances (redemptions) (1,000) (118) Foreign currency translation difference (91) 36 Tier 2 ineligible minority interest (2) 22 Recognition of ineligible AT1 - - Others 3 1 Tier 2 capital at 30 June/31 December 11,667 11,935 Total capital at 30 June/31 December 53,569 51,741 The main movements in capital in the period were: ��� CET1 capital increased by $1.1 billion as retained profits of $2.4 billion, movement in FVOCI of $0.2bn and decrease in regulatory deductions and other movements of $0.5 billion were partly offset by share buybacks of $1.0 billion, distributions paid and foreseeable of $0.5 billion and foreign currency translation impact of $0.5 billion. ��� AT1 capital increased by $1.0 billion following the issuance of $1.0 billion of 7.875 per cent securities. ��� Tier 2 capital decreased by $0.3 billion due to the redemption of $1.0 billion of Tier 2 during the period partly offset by the reversal of regulatory amortisation and foreign currency translation impact. Page 61 Risk-weighted assets by business 30.06.24 Credit risk $million Operational risk $million Market risk $million Total risk $million Corporate & Investment Banking 105,356 19,987 23,790 149,133 Wealth & Retail Banking 42,936 9,523 - 52,459 Ventures 1,981 142 6 2,129 Central & Other items 34,731 (173) 3,647 38,205 Total risk-weighted assets 185,004 29,479 27,443 241,926 31.12.23 Credit risk $million Operational risk $million Market risk $million Total risk $million Corporate & Investment Banking 102,675 18,083 21,221 141,979 Wealth & Retail Banking 42,559 8,783 - 51,342 Ventures 1,885 35 3 1,923 Central & Other items 44,304 960 3,643 48,907 Total risk-weighted assets 191,423 27,861 24,867 244,151 Movement in risk-weighted assets Credit risk Operational risk $million Market risk $million Total risk $million Corporate & Investment Banking $million Wealth & Retail Banking $million Ventures $million Central & Other items $million Total $million At 31 December 2022 110,103 42,091 1,350 43,311 196,855 27,177 20,679 244,711 At 1 January 2023 110,103 42,091 1,350 43,311 196,855 27,177 20,679 244,711 Assets growth & mix (726) 693 538 2,000 2,505 - - 2,505 Asset quality (157) (125) - 420 138 - - 138 Risk-weighted assets efficiencies - - - - - - - - Model Updates 800 - - - 800 - 700 1,500 Methodology and policy changes - (200) - - (200) - - (200) Acquisitions and disposals - - - - - - - - Foreign currency translation (677) (578) - (1,692) (2,947) - - (2,947) Other, Including non-credit risk movements - - - - - 684 2,726 3,410 At 30 June 2023 109,343 41,881 1,888 44,039 197,151 27,861 24,105 249,117 Assets growth & mix (3,698) 35 (3) (817) (4,483) - - (4,483) Asset quality (234) 515 - 2,264 2,545 - - 2,545 Risk-weighted assets efficiencies - - - (688) (688) - - (688) Model Updates (1,397) (151) - (151) (1,699) - (200) (1,899) Methodology and policy changes - 4 - - 4 - (800) (796) Acquisitions and disposals (1,630) - - - (1,630) - - (1,630) Foreign currency translation 291 275 - (343) 223 - - 223 Other, Including non-credit risk movements - - - - - - 1,762 1,762 At 31 December 2023 102,675 42,559 1,885 44,304 191,423 27,861 24,867 244,151 Assets growth & mix 4,273 53 96 (5,051) (629) - - (629) Asset quality (741) 401 - (2,334) (2,674) - - (2,674) Risk-weighted assets efficiencies - - - - - - - - Model Updates 462 818 - - 1,280 - - 1,280 Methodology and policy changes - - - - - - (1,300) (1,300) Acquisitions and disposals - - - - - - - - Foreign currency translation (1,313) (895) - (954) (3,162) - - (3,162) Other, Including non-credit risk movements - - - (1,234) (1,234) 1,618 3,876 4,260 At 30 June 2024 105,356 42,936 1,981 34,731 185,004 29,479 27,443 241,926 Page 62 Movements in risk-weighted assets RWA decreased by $2.2 billion, or 0.9 per cent from 31 December 2023 to $241.9 billion. This was mainly due to a decrease in Credit Risk RWA of $6.4 billion, partially offset by increases in Market Risk RWA of $2.6 billion and Operational Risk RWA of $1.6 billion. Corporate & Investment Banking Credit Risk RWA increased by $2.7 billion, or 2.6 per cent from 31 December 2023 to $105.4 billion mainly due to: ��� $4.3 billion increase from changes in asset growth & mix, of which: - $5.1 billion increase from asset balance growth - $0.8 billion decrease from optimisation activities ��� $0.5 billion increase from industry-wide regulatory changes to align IRB model performance ��� $1.3 billion decrease from foreign currency translation ��� $0.7 billion decrease mainly due to an improvement in asset quality reflecting client upgrades Wealth & Retail Banking Credit Risk RWA increased by $0.4 billion, or 0.9 per cent from 31 December 2023 to $42.9 billion mainly due to: ��� $0.8 billion increase from industry-wide regulatory changes to align IRB model performance ��� $0.4 billion increase mainly due to deterioration in asset quality mainly in Asia ��� $0.1 billion increase from changes in asset growth & mix ��� $0.9 billion decrease from foreign currency translation Ventures Ventures is comprised of Mox Bank Limited, Trust Bank and SC Ventures. Credit Risk RWA increased by $0.1 billion, or 5.1 per cent from 31 December 2023 to $2.0 billion from asset balance growth, mainly from SC Ventures. Central & Other items Central & Other items RWA mainly relate to the Treasury Markets liquidity portfolio, equity investments and current & deferred tax assets. Credit Risk RWA decreased by $9.6 billion, or 21.6 per cent from 31 December 2023 to $34.7 billion mainly due to: ��� $5.1 billion decrease from changes in asset growth & mix primarily from optimisation activities ��� $2.3 billion decrease due to improvement in asset quality mainly from sovereign upgrades in Asia ��� $1.2 billion decrease due to reporting enhancements ��� $1.0 billion decrease from foreign currency translation Market Risk Total Market Risk RWA increased by $2.6 billion, or 10 per cent from 31 December 2023 to $27.4 billion due primarily to: ��� $2.5 billion increase in Standardised Approach (SA) Specific Interest Rate Risk RWA due primarily to increases in the Trading Book government bond portfolio ��� $1.1 billion increase in Internal Models Approach (IMA) stressed VaR RWA due to increased IMA positions attributable mainly to interest rate exposures, offset by a reduction of VaR RWA due to lower FX market volatility, and a reduction of addons for Risks not in VaR ��� $1.3 billion decrease in the first quarter due to a reduction in the IMA RWA multiplier resulting from fewer back-testing exceptions Operational Risk ��� Operational Risk RWA increased by $1.6 billion, or 5.8 per cent from 31 December 2023 to $29.5 billion, mainly due to an increase in average income as measured over a rolling three-year time horizon for certain products. Page 63 Leverage ratio The Group's leverage ratio, which excludes qualifying claims on central banks, was 4.8 per cent at H1 2024, which was above the current minimum requirement of 3.8 per cent. The leverage ratio was 7 basis points higher than FY2023. Tier1 capital increased by $2.1 billion as CET1 capital increased by $1.1 billion and AT1 capital increased following the issuance of $1.0 billion of 7.875 percent securities in February 2024. Leverage exposure increased by $30.6 billion predominantly due to growth in on balance sheet assets, decrease in eligible central bank claims deduction forming part of regulatory adjustments, and decrease in derivative netting adjustments. Leverage ratio 30.06.24 $million 31.12.23 $million Tier 1 capital (end point) 41,902 39,806 Derivative financial instruments 48,647 50,434 Derivative cash collateral 8,099 10,337 Securities financing transactions (SFTs) 104,981 97,581 Loans and advances and other assets 673,700 664,492 Total on-balance sheet assets 835,427 822,844 Regulatory consolidation adjustments1 (82,607) (92,709) Derivatives adjustments Derivatives netting (36,580) (39,031) Adjustments to cash collateral (6,876) (9,833) Net written credit protection 1,316 1,359 Potential future exposure on derivatives 45,488 42,184 Total derivatives adjustments 3,348 (5,321) Counterparty risk leverage exposure measure for SFTs 3,885 6,639 Off-balance sheet items 125,194 123,572 Regulatory deductions from Tier 1 capital (7,474) (7,883) Total exposure measure excluding claims on central banks 877,773 847,142 Leverage ratio excluding claims on central banks (%) 4.8% 4.7% Average leverage exposure measure excluding claims on central banks 870,657 853,968 Average leverage ratio excluding claims on central banks (%) 4.7% 4.6% Countercyclical leverage ratio buffer 0.2% 0.1% G-SII additional leverage ratio buffer 0.4% 0.4% 1 Includes adjustment for qualifying central bank claims and unsettled regular way trades Page 64 Statement of directors' responsibilities We confirm that to the best of our knowledge: ��� The condensed consolidated interim financial statements have been prepared in accordance with UK-adopted IAS 34 Interim Financial Reporting and IAS 34 as adopted by the EU. ��� The interim management report includes a fair review of the information required by: (a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the six months ended 30 June 2024 and their impact on the condensed consolidated interim financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year (b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place during the six months ended 30 June 2024 that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could have materially affected the financial position or performance of the entity during that period By order of the Board Diego De Giorgi Group Chief Financial Officer 30 July 2024 Standard Chartered PLC Board of Directors Chairman Executive Directors Non-Executive Directors Jos�� Vi��als Bill Winters Shirish Apte Diego De Giorgi David Conner Jackie Hunt Diane Jurgens Robin Lawther Maria Ramos Phil Rivett David Tang Linda Yueh Page 65 Independent review report to Standard Chartered PLC Conclusion We have been engaged by Standard Chartered PLC (the 'Company' or, together with its subsidiaries, the 'Group') to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2024 which comprises the condensed consolidated interim income statement, the condensed consolidated interim statement of comprehensive income, the condensed consolidated interim balance sheet, the condensed consolidated interim statement of changes in equity, the condensed consolidated interim cash flow statement, the related notes 1 to 31, and the risk and capital disclosures marked as 'reviewed' (together the 'condensed consolidated interim financial statements'). We have read the other information contained in the half yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements. Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated interim financial statements in the half-yearly financial report for the six months ended 30 June 2024 are not prepared, in all material respects, in accordance with United Kingdom (UK) adopted International Accounting Standard 34 (IAS 34), IAS 34 as adopted by the European Union (EU), and the Disclosure Guidance and Transparency Rules (DTR) of the UK's Financial Conduct Authority (FCA). Basis for Conclusion We conducted our review in accordance with International Standard on Review Engagements 2410 (UK) 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' (ISRE) issued by the Financial Reporting Council (FRC). A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with UK adopted international accounting standards and international financial reporting standard as adopted by the EU. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with UK adopted IAS 34 and IAS 34 as adopted by the EU, and the DTR of the UK's FCA. Conclusions Relating to Going Concern Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis of Conclusion section of this report, nothing has come to our attention to suggest that management have inappropriately adopted the going concern basis of accounting or that management have identified material uncertainties relating to going concern that are not appropriately disclosed. This conclusion is based on the review procedures performed in accordance with this ISRE, however future events or conditions may cause the entity to cease to continue as a going concern. Responsibilities of the directors The directors are responsible for preparing the half-yearly financial report in accordance with UK adopted IAS 34 and IAS 34 as adopted by the EU, and the DTR of the UK's FCA. In preparing the half-yearly financial report, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so. Auditor's Responsibilities for the review of the financial information In reviewing the half-yearly report, we are responsible for expressing to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report. Our conclusion, including our Conclusions Relating to Going Concern, are based on procedures that are less extensive than audit procedures, as described in the Basis for Conclusion paragraph of this report. Page 66 Use of our report This report is made solely to the company in accordance with guidance contained in ISRE 2410 (UK) 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the FRC. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our work, for this report, or for the conclusions we have formed. Ernst & Young LLP London 30 July 2024 Page 67 Condensed consolidated interim income statement For the six months ended 30 June 2024 Notes 6 months ended 30.06.24 $million 6 months ended 30.06.23 $million Interest income 14,194 12,826 Interest expense (11,019) (8,842) Net interest income 3 3,175 3,984 Fees and commission income 2,363 2,079 Fees and commission expense (442) (434) Net fee and commission income 4 1,921 1,645 Net trading income 5 4,749 3,233 Other operating income 6 (54) 265 Operating income 9,791 9,127 Staff costs (4,336) (4,158) Premises costs (177) (208) General administrative expenses (1,027) (741) Depreciation and amortisation (516) (561) Operating expenses 7 (6,056) (5,668) Operating profit before impairment losses and taxation 3,735 3,459 Credit impairment 8 (240) (161) Goodwill, property, plant and equipment and other impairment 9 (147) (77) Profit from associates and joint ventures 19 144 102 Profit before taxation 3,492 3,323 Taxation 10 (1,123) (938) Profit for the period 2,369 2,385 Profit attributable to: Non-controlling interests (9) (3) Parent company shareholders 2,378 2,388 Profit for the period 2,369 2,385 Basic earnings per ordinary share 12 83.3 75.6 Diluted earnings per ordinary share 12 81.3 73.9 The notes form an integral part of these financial statements. Page 68 Condensed consolidated interim statement of comprehensive income For the six months ended 30 June 2024 Notes 6 months ended 30.06.2024 $million 6 months ended 30.06.2023 $million Profit for the period 2,369 2,385 Other comprehensive loss Items that will not be reclassified to income statement: (265) (53) Own credit losses on financial liabilities designated at fair value through profit or loss (410) (141) Equity instruments at fair value through other comprehensive (loss)/income (25) 67 Actuarial gains on retirement benefit obligations 26 31 35 Revaluation Surplus 15 - Taxation relating to components of other comprehensive income 124 (14) Items that may be reclassified subsequently to income statement: (649) (233) Exchange differences on translation of foreign operations: Net loss taken to equity (1,017) (979) Net gains on net investment hedges 377 294 Share of other comprehensive income/(loss) from associates and joint ventures 9 (11) Debt instruments at fair value through other comprehensive income : Net valuation gains taken to equity 56 167 Reclassified to income statement 90 84 Net impact of expected credit losses (19) (41) Cash flow hedges: Net movements in cash flow hedge reserve (171) 271 Taxation relating to components of other comprehensive income 26 (18) Other comprehensive loss for the period, net of taxation (914) (286) Total comprehensive income for the period 1,455 2,099 Total comprehensive income attributable to: Non-controlling interests (16) (31) Parent company shareholders 1,471 2,130 Total comprehensive income for the period 1,455 2,099 Page 69 Condensed consolidated interim balance sheet As at 30 June 2024 Notes 30.06.24 $million 31.12.23 $million Assets Cash and balances at central banks 64,086 69,905 Financial assets held at fair value through profit or loss 13 181,725 147,222 Derivative financial instruments 13,14 48,647 50,434 Loans and advances to banks 13 45,231 44,977 Loans and advances to customers 13 275,896 286,975 Investment securities 13 152,403 161,255 Other assets 18 53,016 47,594 Current tax assets 491 484 Prepayments and accrued income 3,224 3,033 Interests in associates and joint ventures 19 1,088 966 Goodwill and intangible assets 16 6,103 6,214 Property, plant and equipment 17 2,202 2,274 Deferred tax assets 10 593 702 Retirement benefit schemes in surplus 26 111 - Assets classified as held for sale 20 611 809 Total assets 835,427 822,844 Liabilities Deposits by banks 13 28,087 28,030 Customer accounts 13 468,157 469,418 Repurchase agreements and other similar secured borrowing 13,15 7,539 12,258 Financial liabilities held at fair value through profit or loss 13 96,882 83,096 Derivative financial instruments 13,14 50,584 56,061 Debt securities in issue 13 65,199 62,546 Other liabilities 21 47,440 39,221 Current tax liabilities 1,061 811 Accruals and deferred income 6,491 6,975 Subordinated liabilities and other borrowed funds 13,24 10,856 12,036 Deferred tax liabilities 10 558 770 Provisions for liabilities and charges 401 299 Retirement benefit schemes in deficit 26 268 183 Liabilities included in disposal groups held for sale 20 577 787 Total liabilities 784,100 772,491 Equity Share capital and share premium account 25 6,758 6,815 Other reserves 8,274 9,171 Retained earnings 29,381 28,459 Total parent company shareholders' equity 44,413 44,445 Other equity instruments 25 6,504 5,512 Total equity excluding non-controlling interests 50,917 49,957 Non-controlling interests 410 396 Total equity 51,327 50,353 Total equity and liabilities 835,427 822,844 The notes form an integral part of these financial statements. These financial statements were approved by the Board of directors and authorised for issue on 30 July 2024 and signed on its behalf by: Diego De Giorgi Group Chief Financial Officer Page 70 Condensed consolidated interim statement of changes in equity For the six months ended 30 June 2024 Ordinary share capital and share premium account $million Preference share capital and share premium account $million Capital and merger reserves 1 $million Own credit adjustment reserve $million Fair value through other compre-hensive income reserve - debt $million Fair value through other compre-hensive income reserve - equity $million Cash flow hedge reserve $million Translation reserve $million Retained earnings $million Parent company share-holders' equity $million Other equity instru-ments $million Non-controlling interests $million Total $million As at 01 January 2023 5,436 1,494 17,338 (63) (1,116) 206 (564) (7,636) 28,067 43,162 6,504 350 50,016 Profit for the period - - - - - - - - 2,388 2,388 - (3) 2,385 Other comprehensive (loss)/income7 - - - (140) 204 50 247 (666) 47�� (258) - (28) (286) Distributions - - - - - - - - - - - (17) (17) Redemption of other equity instruments - - - - - - - - - - (1,000) - (1,000) Treasury shares net movement - - - - - - - - 23 23 - - 23 Share option expense, net of taxation - - - - - - - - 90 90 - - 90 Dividends on ordinary shares - - - - - - - - (401) (401) - - (401) Dividends on preference shares and AT1 securities - - - - - - - - (243) (243) - - (243) Share buyback3 (47) - 47 - - - - - (1,000) (1,000) - - (1,000) Other movements - - - - - - - 25��� 17 42 8��� 64��� 114 As at 30 June 2023 5,389 1,494 17,385 (203) (912) 256 (317) (8,277) 28,988 43,803 5,512 366 49,681 Profit for the period - - - - - - - - 1,081 1,081 - (4) 1,077 Other comprehensive income/(loss)7 - - - 303 222 74 408 177 (94)�� 1,090 - (3) 1,087 Distributions - - - - - - - - - - - (9) (9) Treasury shares net movement - - - - - - - - (212) (212) - - (212) Share option expense, net of taxation - - - - - - - - 83 83 - - 83 Dividends on ordinary shares - - - - - - - - (167) (167) - - (167) Dividends on preference shares and AT1 securities - - - - - - - - (209) (209) - - (209) Share buyback3,6 (68) - 68 - - - - - (1,000) (1,000) - - (1,000) Other movements - - - - - - - (13)��� (11)��� (24) - 46��� 22 As at 31 December 2023 5,321 1,494 17,453 100 (690) 330 91 (8,113) 28,459 44,445 5,512 396 50,353 Profit for the period - - - - - - - - 2,378 2,378 - (9) 2,369 Other comprehensive (loss)/income7 - - - (360) 137 (81)���� (147) (644) 1882,12 (907) - (7) (914) Distributions - - - - - - - - - - - (25) (25) Other equity instruments issued, net of expenses - - - - - - - - - - 992 - 992 Treasury shares net movement - - - - - - - - 29 29 - - 29 Share option expense, net of taxation - - - - - - - - 148 148 - - 148 Dividends on ordinary shares - - - - - - - - (551) (551) - - (551) Dividends on preference shares and AT1 securities - - - - - - - - (209) (209) - - (209) Share buyback8 (57) - 57 - - - - - (1,000) (1,000) - - (1,000) Other movements - - - - 7 - - 134��� (61)��� 80 - 55����� 135 As at 30 June 2024 5,264 1,494 17,510 (260) (546) 249 (56) (8,623) 29,381 44,413 6,504 410 51,327 1 Includes capital reserve of $5 million, capital redemption reserve of $394 million and merger reserve of $17,111 million 2 Comprises actuarial gain, net of taxation on Group defined benefit schemes 3 On 16 February 2023, the Group announced an additional buyback programme for a share buyback of its ordinary shares of $0.50 each. Nominal value of share purchases was $58 million (June 2023: $47 million) of which $11m were purchased following 30 June 2023 in the period to 29 September 2023 when the programme was completed. Total consideration paid was $1,000 million (June 2023: $732 million). The total number of shares purchased was 116,710,492 (June 2023: 93,894,706) representing 4.03 per cent (June 2023: 3.24 per cent) of the ordinary shares in issue. The nominal value of the shares were transferred from the share capital to the capital redemption reserve account 4 Movement related to Translation adjustment and AT1 Securities charges (June 2023). June 2024 balance includes $190 million translation adjustment loss from sale of SCB Zimbabwe Limited transferred to other operating income 5 Movements primarily related to non-controlling interest from Zodia Custody Limited ($27 million), Mox Bank Limited ($17 million) and Trust Bank Singapore Ltd ($17 million) pertaining to half year ending June 2023. Further movement in NCI from Mox Bank Limited ($31 million), Trust Bank Singapore Ltd ($17 million) and Zodia Custody Limited ($1 million) 6 On 28 July 2023, the Group announced the buyback programme for a share buyback of its ordinary shares of $0.50 each. Nominal value of share purchases was $57 million, and the total consideration paid was $1,000 million and the buyback completed on 6 November 2023. The total number of shares purchased was 112,982,802, representing 3.90 per cent of the ordinary shares in issue as at the commencement of the buyback. The nominal value of the shares was transferred from the share capital to the capital redemption reserve account 7 All the amounts are net of tax 8 On 23 February 2024, the Group announced the buyback programme for a share buyback of its ordinary shares of $0.50 each. Nominal value of share purchases was $57 million, the total consideration paid was $1,000 million, and the buyback completed on 25 June 2024. The total number of shares purchased was 113,266,516, representing 4.25 per cent of the ordinary shares in issue. The nominal value of the shares was transferred from the share capital to the capital redemption reserve account 9 Includes $77 million loss to retained earnings related to Ghana hyperinflation 10 Movements primarily related to non-controlling interest from Mox Bank Limited ($8 million) and Trust Bank Singapore Ltd ($47 million) 11 Includes $147 million gain on sale of equity investment transferred to retained earnings partly offset by $76 million reversal of deferred tax liability 12 Includes $147 million gain on sale of equity investment in other comprehensive income reserve transferred to retained earnings partly offset by $13 million capital gain tax Note 25 includes a description of each reserve. The notes form an integral part of these financial statements. Page 71 Condensed consolidated interim cash flow statement For the six months ended 30 June 2024 Notes 6 months ended 30.06.24 $million 6 months ended 30.06.23 (Restated) $million Cash flows from operating activities: Profit before taxation 3,492 3,323 Adjustments for non-cash items and other adjustments included within income statement 31 1,730 1,518 Change in operating assets 31 (41,582) (8,306) Change in operating liabilities 31 20,466 26,466 Contributions to defined benefit schemes (19) (19) UK and overseas taxes paid (793) (633) Net cash (used in)/from operating activities (16,706) 22,349 Cash flows from investing activities: Internally generated Capitalised Software 16 (474) (513) Disposal of Internally generated Capitalised Software 16 5 - Purchase of property, plant and equipment 17 (76) (205) Disposal of property, plant and equipment 17 31 68 Disposal of held for sale property, plant and equipment 20 - 136 Acquisition of investment associates, and joint ventures, net of cash acquired 19 (4) (23) Disposal of investment in subsidiaries, associates and joint ventures, net of cash acquired 41 26 Purchase of investment securities (120,307) (140,689) Disposal and maturity of investment securities 125,925 150,779 Net cash from investing activities 5,141 9,579 Cash flows from financing activities: Treasury share sale 29 23 Cancellation of shares through share buyback (1,000) (736) Premises and equipment lease liability principal payment (105) (120) Issue of Additional Tier 1 capital, net of expenses 992 - Redemption of Tier 1 Capital 25 - (1,000) Interest paid on subordinated liabilities 31 (252) (300) Repayment of subordinated liabilities 31 (1,000) (2,000) Proceeds from issue of senior debts 31 7,698 7,072 Repayment of senior debts 31 (7,191) (2,715) Interest paid on senior debts 31 (548) (561) Net cash inflow from Non-controlling interest 47 70 Distributions and dividends paid to non-controlling interests, preference shareholders and AT1 securities (234) (260) Dividends paid to ordinary shareholders (551) (401) Net cash used in financing activities (2,115) (928) Net (decrease)/increase in cash and cash equivalents (13,680) 31,000 Cash and cash equivalents at beginning of the period 107,635 97,595 Effect of exchange rate movements on cash and cash equivalents (1,740) (1,452) Cash and cash equivalents at end of the period1,2 92,215 127,143 1 Comprises cash and balances at central banks $64,086 million (30 June 2023: $86,339 million), treasury bills and other eligible bills $3,873 million (30 June 2023: $6,063 million), loans and advances to banks $12,691 million (30 June 2023: $13,650 million), loans and advances to customers $20,611 million (30 June 2023 $27,680 million) investments $824 million (30 June 2023: $1,307 million) less restricted balances $9870 million (30 June 2023: $7,896 million) 2 Refer to note 31 for details on restatement Interest received was $14,575 million (30.06.23: $13,068 million), interest paid was $10,948 million (30.06.23: $7,898 million). Page 72 Contents - Notes to the financial statements Section Note Basis of preparation 1 Accounting policies Performance/return 2 Segmental information 3 Net interest income 4 Net fees and commission 5 Net trading income 6 Other operating income 7 Operating expenses 8 Credit impairment 9 Goodwill, property, plant and equipment and other impairment 10 Taxation 11 Dividends 12 Earnings per ordinary share Assets and liabilities held at fair value 13 Financial instruments 14 Derivative financial instruments Financial instruments held at amortised cost 15 Reverse repurchase and repurchase agreements including other similar lending and borrowing Other assets and investments 16 Goodwill and intangible assets 17 Property, plant and equipment 18 Other assets 19 Investments in associates and joint ventures 20 Assets held for sale and associated liabilities Funding, accruals, provisions, contingent liabilities and legal proceedings 21 Other liabilities 22 Contingent liabilities and commitments 23 Legal and regulatory matters Capital instruments, equity and reserves 24 Subordinated liabilities and other borrowed funds 25 Share capital, other equity instruments and reserves Employee benefits 26 Retirement benefit obligations Other disclosure matters 27 Related party transactions 28 Post balance sheet events 29 Corporate governance 30 Statutory accounts 31 Cash flow statement Page 73 Notes to the financial statements 1. Accounting policies Statement of compliance The Group's condensed consolidated interim financial statements consolidate those of Standard Chartered PLC (the Company) and its subsidiaries (together referred to as the Group) and equity account the Group's interests in associates and jointly controlled entities. These interim financial statements have been prepared in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority (FCA) and with UK-adopted IAS 34 Interim Financial Reporting and IAS 34 as adopted by the European Union (EU). They should be read in conjunction with the 2023 Annual Report, which was prepared in accordance with UK-adopted international accounting standards and International Financial Reporting Standards (IFRS) as adopted by the EU (EU IFRS). The following parts of the Risk review and Capital review form part of these financial statements: a) Risk review: Disclosures marked as 'reviewed' from the start of the Credit Risk section to the end of Other principal risks in the same section. b) Capital review: Tables marked as 'reviewed' from the start of 'CRD Capital base' to the end of 'Movement in total capital', excluding 'Total risk-weighted assets'. There were no new accounting standards or interpretations that had a material effect on these condensed consolidated interim financial statements Basis of preparation The condensed consolidated financial statements have been prepared on a going concern basis and under the historical cost convention, as modified by the revaluation of cash-settled share-based payments, fair value through other comprehensive income, and financial assets and liabilities (including derivatives) at fair value through profit or loss. The condensed consolidated financial statements are presented in United States dollars ($), being the presentation and functional currency of the Group, and all values are rounded to the nearest million dollars, except when otherwise indicated. The accounting policies that we applied for these interim condensed consolidated financial statements are consistent with those described on pages 367 to 460 of the Annual Report and Accounts 2023, as are the methods of computation. Significant accounting estimates and judgements In determining the carrying amounts of certain assets and liabilities, the Group makes assumptions of the effects of uncertain future events on those assets and liabilities at the balance sheet date. The Group's estimates and assumptions are based on historical experience and expectation of future events and are reviewed periodically. The significant judgements made by management in applying the Group's accounting policies and key sources of uncertainty were the same as those applied to the consolidated financial statements as at, and for, the year ended 31 December 2023. IFRS and Hong Kong accounting requirements As required by the Hong Kong Listing Rules, an explanation of the differences in accounting practices between UK-adopted IFRS and Hong Kong Financial Reporting Standards is required to be disclosed. There would be no significant differences had these accounts been prepared in accordance with Hong Kong Financial Reporting Standards. Standard Chartered PLC has fully complied with the new treasury share regime introduced under the revised Hong Kong Listing Rules from 11 June 2024 onwards and will continue to comply with the new regime. Comparatives Certain comparatives have been restated in line with current year disclosures. Details of these changes are set out in the relevant sections and notes below: ��� Condensed consolidated interim Cash flow statement ��� Note 4 Net fees and commissions ��� Note 31 Cash flow statement Page 74 Going concern These financial statements were approved by the Board of directors on 30 July 2024. The directors have made an assessment of the Group's ability to continue as a going concern. This assessment has been made having considered the current macroeconomic and geopolitical headwinds, including: ��� Review of the Group Strategy and Corporate Plan ��� An assessment of the actual performance to date, loan book quality, credit impairment, legal, regulatory and compliance matters, and the updated annual budget ��� Consideration of stress testing performed, including the Group Recovery Plan (RP) which include the application of stressed scenarios. Under the tests and through the range of scenarios, the results of these exercises and the RP demonstrate that the Group has sufficient capital and liquidity to continue as a going concern and meet minimum regulatory capital and liquidity requirements 1. Accounting policies continued��� ��� Analysis of the capital, funding and liquidity position of the Group, including the capital and leverage ratios, and ICAAP which summarises the Group's capital and risk assessment processes, assesses its capital requirements and the adequacy of resources to meet them. Further, funding and liquidity was considered in the context of the risk appetite metrics, including the LCR ratio and survival horizon and wholesale borrowing (external). ��� The Group's Internal Liquidity Adequacy Assessment Process (ILAAP), which considers the Group's liquidity position, its framework and whether sufficient liquidity resources are being maintained to meet liabilities as they fall due, was also reviewed ��� The level of debt in issue, including redemptions and issuances during the year, debt falling due for repayment in the next 12 months and further planned debt issuances, including the appetite in the market for the Group's debt ��� A detailed review of all principal and topical/emerging risks Based on the analysis performed, the directors confirm they are satisfied that the Group has adequate resources to continue in business for a period of at least 12 months from 30 July 2024. For this reason, the Group continues to adopt the going concern basis of accounting for preparing the financial statements. 2. Segmental information Basis of preparation The analysis reflects how the client segments and geographic regions are managed internally. This is described as the Management View (on an underlying basis) and is principally the location from which a client relationship is managed, which may differ from where it is financially booked and may be shared between businesses and/or regions. In certain instances this approach is not appropriate and a Financial View is disclosed, that is, the location in which the transaction or balance was booked. Typically, the Financial View is used in areas such as the Market and Liquidity Risk reviews where actual booking location is more important for an assessment. Segmental information is therefore on a Management View unless otherwise stated. Client segments The Group's segmental reporting is in accordance with IFRS 8 Operating Segments and is reported consistently with the internal performance framework and as presented to the Group's Management Team. Restructuring and other items excluded from underlying results The Group's reported IFRS performance is adjusted for certain items to arrive at alternative performance measures. These items include profits or losses of a capital nature, amounts consequent to investment transactions driven by strategic intent, other infrequent and/or exceptional transactions that are significant or material in the context of the Group's normal business earnings for the period and items which management and investors would ordinarily identify separately when assessing consistent performance period by period. The alternative performance measures are not within the scope of IFRS and not a substitute for IFRS measures. These adjustments are set out below. Net loss on businesses disposed of/ held for sale $189 million include $174 million, the sale of Zimbabwe primarily from the recycling of FX translation losses and $15 million loss in relation to a sale of a portfolio of Aviation loans. The Group is also reclassifying the movements in the Debit Valuation Adjustment (DVA) into restructuring and other items. Page 75 Reconciliations between underlying and reported results are set out in the tables below: 6 months ended 30.06.24 Underlying $million Restructuring $million Net loss on businesses disposed of/ held for sale�� $million Other items $million DVA $million Reported $million Operating income 9,958 48 (189) - (26) 9,791 Operating expenses (5,673) (283) - (100) - (6,056) Operating profit/(loss) before impairment losses and taxation 4,285 (235) (189) (100) (26) 3,735 Credit impairment (249) 9 - - - (240) Other impairment (143) (4) - - - (147) Profit from associates and joint ventures 64 80 - - - 144 Profit/(loss) before taxation 3,957 (150) (189) (100) (26) 3,492 1 Net loss on businesses disposal includes loss of $174million relating to Zimbabwe exit . 6 months ended 30.06.23 Underlying $million Restructuring $million Net gain on businesses disposed of/ held for sale $million Other items $million DVA $million Reported $million Operating income 8,951 215 - - (39) 9,127 Operating expenses (5,504) (164) - - - (5,668) Operating profit/(loss) before impairment losses and taxation 3,447 51 - - (39) 3,459 Credit impairment (172) 11 - - - (161) Other impairment (63) (14) - - - (77) Profit from associates and joint ventures 94 8 - - - 102 Profit/(loss) before taxation 3,306 56 - - (39) 3,323 Underlying performance by client segment 6 months ended 30.06.24 Corporate & Investment Banking $million Wealth & Retail Banking $million Ventures $million Central & other items $million Total $million Operating income 5,991 3,872 80 15 9,958 External 5,018 1,749 80 3,111 9,958 Inter-segment 973 2,123 - (3,096) - Operating expenses (2,921) (2,156) (230) (366) (5,673) Operating profit/(loss) before impairment losses and taxation 3,070 1,716 (150) (351) 4,285 Credit impairment 35 (282) (43) 41 (249) Other impairment (104) (27) - (12) (143) Profit from associates and joint ventures - - (6) 70 64 Underlying profit/(loss) before taxation 3,001 1,407 (199) (252) 3,957 Restructuring (59) (51) (1) (39) (150) DVA (26) - - - (26) Other items - (100) - (189) (289) Reported profit/(loss) before taxation 2,916 1,256 (200) (480) 3,492 Total assets 443,442 122,846 5,280 263,859 835,427 Of which: loans and advances to customers 190,298 120,277 1,110 24,022 335,707 loans and advances to customers 130,496 120,268 1,110 24,022 275,896 loans held at fair value through profit or loss (FVTPL)1 59,802 9 - - 59,811 Total liabilities 467,875 208,565 4,347 103,313 784,100 Of which: customer accounts1 315,767 204,154 4,046 8,295 532,262 1 Loans and advances to customers includes FVTPL and customer accounts includes FVTPL and repurchase agreements Page 76 6 months ended 30.06.23 Corporate & Investment Banking $million Wealth & Retail Banking $million Ventures $million Central & other items $million Total $million Operating income 5,823 3,556 89 (517) 8,951 External 4,569 2,154 89 2,139 8,951 Inter-segment 1,254 1,402 - (2,656) - Operating expenses (2,818) (2,075) (211) (400) (5,504) Operating profit/(loss) before impairment losses and taxation 3,005 1,481 (122) (917) 3,447 Credit impairment (69) (108) (23) 28 (172) Other impairment (21) - - (42) (63) Profit from associates and joint ventures - - (13) 107 94 Underlying profit/(loss) before taxation 2,915 1,373 (158) (824) 3,306 Restructuring 73 (16) (1) - 56 DVA (39) - - - (39) Reported profit/(loss) before taxation 2,949 1,357 (159) (824) 3,323 Total assets 401,001 129,660 3,076 304,974 838,711 Of which: loans and advances to customers 174,214 127,039 947 33,623 335,823 loans and advances to customers 128,548 127,020 947 33,622 290,137 loans held at fair value through profit or loss (FVTPL)1 45,666 19 - 1 45,686 Total liabilities 490,697 190,690 2,317 105,326 789,030 Of which: customer accounts1 333,584 185,741 2,072 8,394 529,791 1 Loans and advances to customers includes FVTPL and customer accounts includes FVTPL and repurchase agreements Operating income by client segment 6 months ended 30.06.24 Corporate & Investment Banking $million Wealth & Retail Banking $million Ventures $million Central & other items $million Total $million Underlying versus reported: Underlying operating income 5,991 3,872 80 15 9,958 Restructuring 28 14 - 6 48 DVA (26) - - - (26) Other items 1 - - - (189) (189) Reported operating income 5,993 3,886 80 (168) 9,791 Additional segmental income: Net interest income 1,272 2,539 45 (681) 3,175 Net fees and commission income 993 955 19 (46) 1,921 Net trading and other income1 3,728 392 16 5591 4,695 Reported operating income 5,993 3,886 80 (168) 9,791 1 Other items includes loss of $174million relating to Zimbabwe exit 6 months ended 30.06.23 Corporate & Investment Banking $million Wealth & Retail Banking $million Ventures $million Central & other items $million Total $million Underlying versus reported: Underlying operating income 5,823 3,556 89 (517) 8,951 Restructuring 187 23 - 5 215 DVA (39) - - - (39) Reported operating income 5,971 3,579 89 (512) 9,127 Additional segmental income: Net interest income 2,272 2,451 31 (770) 3,984 Net fees and commission income 861 816 26 (58) 1,645 Net trading and other income 2,838 312 32 316 3,498 Reported operating income 5,971 3,579 89 (512) 9,127 Page 77 6 months ended 30.06.24 Hong Kong $million Korea $million China $million Taiwan $million Singapore $million India $million UAE $million UK $million US $million Other $million Group $million Net interest income 350 342 201 81 277 309 187 (503) 205 1,726 3,175 Net fees and commission income 364 104 102 106 347 151 60 54 229 404 1,921 Net trading and other income 1,589 105 361 111 678 192 201 557 162 739 4,695 Operating income 2,303 551 664 298 1,302 652 448 108 596 2,869 9,791 6 months ended 30.06.23 Hong Kong $million Korea $million China $million Taiwan $million Singapore $million India $million UAE $million UK $million US $million Other $million Group $million Net interest income 1,103 366 271 73 547 331 201 (506) 100 1,498 3,984 Net fees and commission income 322 88 93 94 274 116 37 15 213 393 1,645 Net trading and other income 777 123 228 122 441 174 181 664 138 650 3,498 Operating income 2,202 577 592 289 1,262 621 419 173 451 2,541 9,127 3. Net interest income 6 months ended 30.06.24 $million 6 months ended 30.06.23 $million Balances at central banks 1,360 1,211 Loans and advances to banks 1,052 958 Loans and advances to customers 8,190 7,407 Debt securities 2,716 2,344 Other eligible bills 807 809 Accrued on impaired assets (discount unwind) 69 97 Interest income 14,194 12,826 Of which: financial instruments held at fair value through other comprehensive income 1,707 1,767 Deposits by banks 441 374 Customer accounts 8,361 6,489 Debt securities in issue 1,794 1,538 Subordinated liabilities and other borrowed funds 394 415 Interest expense on IFRS 16 lease liabilities 29 26 Interest expense 11,019 8,842 Net interest income 3,175 3,984 4. Net fees and commission 6 months ended 30.06.24 $million 6 months ended 30.06.23 $million Fees and commissions income 2,363 2,079 Of which: Financial instruments that are not fair valued through profit or loss 722 687 Trust and other fiduciary activities 305 265 Fees and commissions expense (442) (434) Of which: Financial instruments that are not fair valued through profit or loss (125) (145) Trust and other fiduciary activities (25) (25) Net fees and commission 1,921 1,645 Page 78 6 months ended 30.06.24 Corporate & Investment Banking $million Wealth & Retail Banking $million Ventures $million Central & other Items $million Total $million Transaction Services 704 13 - - 717 Payments and Liquidity 290 - - - 290 Securities & Prime Services 127 - - - 127 Trade & Working Capital 287 13 - - 300 Global Banking 504 - - - 504 Lending & Financial Solutions 336 - - - 336 Capital Market & Advisory 168 - - - 168 Global Markets 24 - - - 24 Macro Trading 7 - - - 7 Credit Trading 17 - - - 17 Valuation & Other Adj - - - - - Wealth solutions - 822 - - 822 Investment products - 456 - - 456 Bancassurance - 366 - - 366 CCPL & Other Unsecured Lending - 161 18 - 179 Deposits - 75 - - 75 Mortgages & Other Secured Lending - 46 - - 46 Treasury - - - (12) (12) Other Products - - 12 (4) 8 Fees and commission income 1,232 1,117 30 (16) 2,363 Fees and commission expense (239) (162) (11) (30) (442) Net fees and commission 993 955 19 (46) 1,921 6 months ended 30.06.23�� Corporate & Investment Banking $million Wealth & Retail Banking $million Ventures $million Central & other Items $million Total $million Transaction Services 722 12 - - 734 Payments and Liquidity 278 - - - 278 Securities & Prime Services 148 - - - 148 Trade & Working Capital 296 12 - - 308 Global Banking 331 (1) - - 330 Lending & Financial Solutions 243 (1) - - 242 Capital Market & Advisory 88 - - - 88 Global Markets 28 - - - 28 Macro Trading (7) - - - (7) Credit Trading 34 - - - 34 Valuation & Other Adj 1 - - - 1 Wealth solutions - 644 - - 644 Investment products - 332 - - 332 Bancassurance - 312 - - 312 CCPL & Other Unsecured Lending - 192 14 - 206 Deposits - 84 - - 84 Mortgages & Other Secured Lending - 30 - - 30 Treasury - - - (6) (6) Other Products - 1 24 4 29 Fees and commission income 1,081 962 38 (2) 2,079 Fees and commission expense (220) (146) (12) (56) (434) Net fees and commission 861 816 26 (58) 1,645 1 Products are now presented to reflect the RNS on Presentation of Financial Information issued on 2 April 2024. Prior periods have been restated and there is no change in total income Page 79 Upfront bancassurance consideration amounts are amortised on a straight-line basis over the contractual period to which the consideration relates. Deferred income on the balance sheet in respect of these activities is $446 million (30 June 2023: $507 million). Following renegotiation of the contract in 2023, the life of the contract was extended for a further 3 years. Accordingly, the income will be earned evenly over a longer period for the next 8 years (30 June 2023: 6 years). For the six months ended 30 June 2024, $28 million of fee income was released from deferred income (30 June 2023: $42 million). For the bancassurance contract with the annual performance bonus, based on progress so far and expectation of meeting the performance targets by year-end with a high probability, a pro-rata portion of the total performance fee, equal to $116 million of the fee has been recognised as fee income in the period. 5. Net trading income 6 months ended 30.06.24 $million 6 months ended 30.06.23 $million Net trading income 4,749 3,233 Significant items within net trading income include: Gains on instruments held for trading1 3,717 2,876 Gains on financial assets mandatorily at fair value through profit or loss 2,499 1,914 (Losses)/gains on financial assets designated at fair value through profit or loss (1) 4 Losses on financial liabilities designated at fair value through profit or loss (1,595) (1,642) 1 Includes $110 million gain (30.06.23: $29 million loss) from the translation of foreign currency monetary assets and liabilities 6. Other operating income 6 months ended 30.06.24 $million 6 months ended 30.06.23 $million Other operating income includes: Rental income from operating lease assets 20 246 Net loss on disposal of fair value through other comprehensive income debt instruments (90) (85) Net gain/(loss) on amortised cost financial assets 4 (20) Net (loss)/gain on sale of businesses (169)�� 28 Dividend income 4 10 Other 177�� 86 Other operating income (54) 265 1 Includes loss of $174 million from sale of subsidiary (SCB Zimbabwe Limited) of which $190 million relates to CTA loss. loss of $15 million on disposal of aviation business, offset by gain of $17 million on disposal of Shoal and Autumn life Pte (subsidiary) 2 Includes IAS 29 adjustment Ghana hyperinflationary impact ($106 million) 7. Operating expenses 6 months ended 30.06.24 $million 6 months ended 30.06.23 $million Staff costs: Wages and salaries 3,288 3,204 Social security costs 129 123 Other pension costs 223 214 Share-based payment costs 172 112 Other staff costs 524 505 4,336 4,158 Other staff costs include redundancy expenses of $115 million (30.06.23: $25 million). Further costs in this category include training, travel costs and other staff-related costs. Page 80 6 months ended 30.06.24 $million 6 months ended 30.06.23 $million Premises and equipment expenses: 177 208 General administrative expenses: 1,027 741 Depreciation and amortisation: Property, plant and equipment: Premises 148 158 Equipment 39 54 Operating lease assets - 27 Intangibles: Software 329 322 516 561 Total operating expenses 6,056 5,668 Operating expenses include research expenditure of $480 million (30.06.23: $472 million), which was recognised as an expense in the year. 8. Credit impairment 6 months ended 30.06.24 $million 6 months ended 30.06.23 $million Net credit impairment on loans and advances to banks and customers 256 225 Net credit impairment on debt securities�� (41) (37) Net credit impairment relating to financial guarantees and loan commitments 24 (37) Net credit impairment relating to other financial assets 1 10 Credit impairment charge/(release)1 240 161 1 Includes impairment release of $14 million (30.06.23: $1 million charge) on originated credit-impaired debt securities 9. Goodwill, property, plant and equipment and other impairment 6 months ended 30.06.24 $million 6 months ended 30.06.23 $million Impairment of property, plant and equipment (Note 17) - 2 Impairment of other intangible assets (Note 16) 148 67 Other (1) 8 Goodwill, property, plant and equipment and other impairment 147 77 10. Taxation The following table provides analysis of taxation charge in the period: 6 months ended 30.06.24 $million 6 months ended 30.06.23 $million The charge for taxation based upon the profit for the period comprises: Current tax: United Kingdom corporation tax at 25 per cent (2023: 23.5 per cent): Current tax charge on income for the period 10 2 Adjustments in respect of prior periods (including double tax relief) 2 - Foreign tax: Current tax charge on income for the period 993 892 Adjustments in respect of prior periods (including double tax relief) 27 (3) 1,032 891 Deferred tax: Origination/reversal of temporary differences 89 33 Adjustments in respect of prior periods (including double tax relief) 2 14 91 47 Tax on profits on ordinary activities 1,123 938 Effective tax rate 32.2% 28.2% Page 81 The tax charge for the period has been calculated by applying the effective rate of tax which is expected to apply for the year ending 31 December 2024 using rates substantively enacted at 30 June 2024. The rate has been calculated by estimating and applying an average annual effective income tax rate to each tax jurisdiction individually. The tax charge for the period of $1,123 million (30 June 2023: $938 million) on a profit before tax of $3,492 million (30 June 2023: $3,323 million) reflects the impact of non-deductible expenses, tax losses for which no deferred tax assets are recognised, non-creditable withholding taxes offset by countries with tax rates lower than the UK, the most significant of which includes Hong Kong and Singapore. Foreign tax includes current tax of $131 million (30 June 2023: $98 million) on the profits assessable in Hong Kong. Deferred tax includes origination or reversal of temporary differences of $27 million (30 June 2023: $29 million) provided at a rate of 16.5 per cent (30 June 2023: 16.5 per cent) on the profits assessable in Hong Kong. The Group falls within the Pillar Two global minimum tax rules which apply in the UK from 1 January 2024. The IAS 12 exception to recognise and disclose information about deferred tax assets and liabilities related to Pillar Two income taxes has been applied. The current tax charge for the period ended 30 June 2024 includes $10m in respect of Pillar Two income taxes (30 June 2023: $nil). Deferred tax comprised assets and liabilities as follows: 30.06.24 31.12.23 Total $million Asset $million Liability $million Total $million Asset $million Liability $million Deferred tax comprises: Accelerated tax depreciation (395) 15 (410) (424) 3 (427) Impairment provisions on loans and advances 282 239 43 286 282 4 Tax losses carried forward 71 53 18 97 49 48 Equity instruments at fair value through other comprehensive income assets (49) (7) (42) (144) (1) (143) Debt instruments at fair value through other comprehensive income assets 15 19 (4) 27 29 (2) Cash flow hedges 3 7 (4) (25) 12 (37) Own credit adjustment 6 6 - (71) (1) (70) Retirement benefit obligations 2 14 (12) 4 13 (9) Share-based payments 39 11 28 43 9 34 Other temporary differences 61 236 (175) 139 307 (168) 35 593 (558) (68) 702 (770) 11. Dividends Ordinary equity shares 6 months ended 30.06.24 6 months ended 31.12.23 6 months ended 30.06.23 Cents per share $million Cents per share $million Cents per share $million 2022 final dividend declared and paid during the period - - 14 401 2023 interim dividend declared and paid during the year - - 6 167 - - 2023 final dividend declared and paid during the period 21 551 - - - - The 2023 final dividend per share of 21 cents per ordinary share ($551 million) was paid to eligible shareholders on 17 May 2024, and is recognised in these interim accounts. Interim dividends on ordinary equity shares are recorded in the period in which they are declared and, in respect of the final dividend, have been approved by the shareholders 2024 recommended interim ordinary share dividend The 2024 interim dividend of 9 cents per ordinary share will be paid in pounds sterling, Hong Kong dollars or US dollars on 10 October 2024 to shareholders on the UK register of members at the close of business in the UK on 9 August 2024. Page 82 Preference shares and Additional Tier 1 securities Dividends on these preference shares and securities classified as equity are recorded in the period in which they are declared. 6 months ended 30.06.24 $million 6 months ended 31.12.23 $million 6 months ended 30.06.23 $million Non-cumulative redeemable preference shares: 7.014 per cent preference shares of $5 each 26 27 26 Floating rate preference shares of $5 each�� 27 27 23 53 54 49 Additional Tier 1 securities: fixed rate resetting perpetual subordinated contingent convertible securities 156 155 194 209 209 243 1. Floating rate is based on Secured Overnight Financing Rate (SOFR), average rate paid for floating preference shares is 7.24% (2023: 6.62%) 12. Earnings per ordinary share 6 months ended 30.06.24 $million 6 months ended 30.06.23 $million Profit for the period attributable to equity holders 2,369 2,385 Non-controlling interest 9 3 Dividend payable on preference shares and AT1 classified as equity (209) (243) Profit for the period attributable to ordinary shareholders 2,169 2,145 Items normalised: Restructuring 150 (56) Net loss on sale of businesses (Note 6) 189 - DVA 26 39 Other items�� 100 - Tax on normalised items (67) - Underlying profit 2,567 2,128 Basic - Weighted average number of shares (millions) 2,605 2,839 Diluted - Weighted average number of shares (millions) 2,669 2,902 Basic earnings per ordinary share (cents) 83.3 75.6 Diluted earnings per ordinary share (cents) 81.3 73.9 Underlying basic earnings per ordinary share (cents) 98.5 75.0 Underlying diluted earnings per ordinary share (cents) 96.2 73.3 1. Charge relating to Korea ELS The calculation of basic earnings per share is based on the profit attributable to equity holders of the parent and the basic weighted average number of shares excluding treasury shares held in employees benefit trust. When calculating diluted earnings per share, the weighted average number of shares in issue is adjusted for the effects of all expected dilutive potential ordinary shares held in respect of Standard Chartered PLC totalling 59 million (30.06.23: 56 million). The total number of share options outstanding, under schemes considered to be potentially dilutive, was 5 million (30.06.23: 7 million). These options have strike prices ranging from $3.96 to $7.43 of the total number of employee share options and share awards at 30 June 2024 there were nil share options and awards which were anti dilutive. The 234 million decrease (30.06.23: 175 million decrease) in the basic weighted average number of shares is primarily due to the impact of the share buyback programmes completed in the year. Page 83 13. Financial instruments Classification and measurement Assets Notes Assets at fair value Assets held at amortised cost $million Total $million Trading $million Derivatives held for hedging $million Non-trading mandatorily at fair value through profit or loss $million Designated at fair value through profit or loss $million Fair value through other comprehensive income $million Total financial assets at fair value $million Cash and balances at central banks�� - - - - - - 64,086 64,086 Financial assets held at fair value through profit or loss Loans and advances to banks2 2,188 - 5 - - 2,193 - 2,193 Loans and advances to customers2 6,657 - 220 - - 6,877 - 6,877 Reverse repurchase agreements and other similar secured lending 15 8,704 - 84,498 - - 93,202 - 93,202 Debt securities, additional tier one and other eligible bills 73,991 - 123 74 - 74,188 - 74,188 Equity shares 5,046 - 218 - - 5,264 - 5,264 Other assets 18 - - 1 - - 1 - 1 96,586 - 85,065 74 - 181,725 - 181,725 Derivative financial instruments 14 46,166 2,481 - - - 48,647 - 48,647 Loans and advances to banks2,3 - - - - - - 45,231 45,231 of which - reverse repurchase agreements and other similar secured lending 15 - - - - - - 3,991 3,991 Loans and advances to customers2 - - - - - - 275,896 275,896 of which - reverse repurchase agreements and other similar secured lending 15 - - - - - - 7,788 7,788 Investment securities Debt securities, additional tier one and other eligible bills - - - - 95,177 95,177 56,403 151,580 Equity shares - - - - 823 823 - 823 - - - - 96,000 96,000 56,403 152,403 Other assets 18 - - - - - - 42,206 42,206 Assets held for sale 20 - - - - - - 517 517 Total at 30 June 2024 142,752 2,481 85,065 74 96,000 326,372 484,339 810,711 1 Comprises cash held at central banks in restricted accounts of $9,870 million, or on demand, or placements which are contractually due to mature over-night only. Other placements with central banks are reported as part of Loans and advances to customers 2 Further analysed in Risk review and Capital review 3 Loans and advances to banks include amounts due on demand from banks other than central banks Page 84 Assets Notes Assets at fair value Assets held at amortised cost $million Total $million Trading $million Derivatives held for hedging $million Non-trading mandatorily at fair value through profit or loss $million Designated at fair value through profit or loss $million Fair value through other comprehensive income $million Total financial assets at fair value $million Cash and balances at central banks1 - - - - - - 69,905 69,905 Financial assets held at fair value through profit or loss Loans and advances to banks2 2,265 - - - - 2,265 - 2,265 Loans and advances to customers2 6,930 - 282 - - 7,212 - 7,212 Reverse repurchase agreements and other similar secured lending 15 9,997 - 71,850 - - 81,847 - 81,847 Debt securities, additional tier one and other eligible bills 52,776 - 98 78 - 52,952 - 52,952 Equity shares 2,721 - 219 - - 2,940 - 2,940 Other assets 18 - - 6 - - 6 - 6 74,689 - 72,455 78 - 147,222 - 147,222 Derivative financial instruments 14 48,333 2,101 - - - 50,434 - 50,434 Loans and advances to banks2,3 - - - - - - 44,977 44,977 of which - reverse repurchase agreements and other similar secured lending 15 - - - - - - 1,738 1,738 Loans and advances to customers2 - - - - - - 286,975 286,975 of which - reverse repurchase agreements and other similar secured lending 15 - - - - - - 13,996 13,996 Investment securities Debt securities, additional tier one and other eligible bills - - - - 103,328 103,328 56,935 160,263 Equity shares - - - - 992 992 - 992 - - - - 104,320 104,320 56,935 161,255 Other assets 18 - - - - - - 38,140 38,140 Assets held for sale 20 - - - - - - 701 701 Total at 31 December 2023 123,022 2,101 72,455 78 104,320 301,976 497,633 799,609 1 Comprises cash held at central banks in restricted accounts of $6,153 million, or on demand, or placements which are contractually due to mature over-night only. Other placements with central banks are reported as part of Loans and advances to customers 2 Further analysed in Risk review and Capital review 3 Loans and advances to banks include amounts due on demand from banks other than central banks Page 85 Liabilities Notes Liabilities at fair value Amortised cost $million Total $million Trading $million Derivatives held for hedging $million Designated at fair value through profit or loss $million Total financial liabilities at fair value $million Deposits by banks - - - - 28,087 28,087 Customer accounts - - - - 468,157 468,157 Financial liabilities held at fair value through profit or loss Deposits by banks - - 2,059 2,059 - 2,059 Customer accounts 12 - 19,838 19,850 - 19,850 Repurchase agreements and other similar secured borrowing 15 551 - 46,497 47,048 - 47,048 Debt securities in issue - - 12,815 12,815 - 12,815 Short positions 15,109 - - 15,109 - 15,109 Other liabilities - - 1 1 - 1 15,672 - 81,210 96,882 - 96,882 Derivative financial instruments 14 48,338 2,246 - 50,584 - 50,584 Repurchase agreements and other similar secured borrowing 15 - - - - 7,539 7,539 Debt securities in issue - - - - 65,199 65,199 Other liabilities 21 - - - - 46,901 46,901 Subordinated liabilities and other borrowed funds 24 - - - - 10,856 10,856 Liabilities included in disposal groups held for sale 20 - - - - 535 535 Total at 30 June 2024 64,010 2,246 81,210 147,466 627,274 774,740 Liabilities Notes Liabilities at fair value Amortised cost $million Total $million Trading $million Derivatives held for hedging $million Designated at fair value through profit or loss $million Total financial liabilities at fair value $million Deposits by banks - - - - 28,030 28,030 Customer accounts - - - - 469,418 469,418 Financial liabilities held at fair value through profit or loss Deposits by banks - - 1,894 1,894 - 1,894 Customer accounts 39 - 17,209 17,248 - 17,248 Repurchase agreements and other similar secured borrowing 15 1,660 - 39,623 41,283 - 41,283 Debt securities in issue - - 10,817 10,817 - 10,817 Short positions 11,846 - - 11,846 - 11,846 Other liabilities - - 8 8 - 8 13,545 - 69,551 83,096 - 83,096 Derivative financial instruments 14 52,747 3,314 - 56,061 - 56,061 Repurchase agreements and other similar secured borrowing 15 - - - - 12,258 12,258 Debt securities in issue - - - - 62,546 62,546 Other liabilities 21 - - - - 38,663 38,663 Subordinated liabilities and other borrowed funds 24 - - - - 12,036 12,036 Liabilities included in disposal groups held for sale 20 - - - - 726 726 Total at 31 December 2023 66,292 3,314 69,551 139,157 623,677 762,834 Financial liabilities designated at fair value through profit or loss 30.06.24 $million 31.12.23 $million Carrying balance aggregate fair value 81,211 69,551 Amount contractually obliged to repay at maturity 82,278 71,240 Difference between aggregate fair value and contractually obliged to repay at maturity (1,067) (1,689) Cumulative change in fair value accredited to credit risk difference (262) 156 The net fair value loss on financial liabilities designated at fair value through profit or loss was $1,595 million for the year (31 December 2023: net loss of $2,649 million). Further details of the Group's own credit adjustment (OCA) valuation technique is described later in this Note. Page 86 Valuation of financial instruments The Valuation Methodology function is responsible for independent price verification, oversight of fair value and appropriate value adjustments and escalation of valuation issues. Independent price verification is the process of determining that the valuations incorporated into the financial statements are validated independent of the business area responsible for the product. The Valuation Methodology function has oversight of the fair value adjustments to ensure the financial instruments are priced to exit. These are key controls in ensuring the material accuracy of the valuations incorporated in the financial statements. The market data used for independent price verification (IPV) may include data sourced from recent trade data involving external counterparties or third parties such as Bloomberg, Reuters, brokers and consensus pricing providers. The Valuation Methodology function performs an ongoing review of the market data sources that are used as part of the IPV and fair value processes which are formally documented on a semi-annual basis detailing the suitability of the market data used for price testing. IPV uses independently sourced data that is deemed most representative of the market the instruments trade in. To determine the quality of the market data inputs, factors such as independence, relevance, reliability, availability of multiple data sources and methodology employed by the pricing provider are taken into consideration. The Valuation and Benchmarks Committee (VBC) is the valuation governance forum consisting of representatives from Group Market Risk, Product Control, Valuation Methodology and the business, which meets monthly to discuss and approve the independent valuations of the inventory. For Principal Finance, the Investment Committee meeting is held on a quarterly basis to review investments and valuations. Significant accounting estimates and judgements The Group evaluates the significance of financial instruments and material accuracy of the valuations incorporated in the financial statements as they involve a high degree of judgement and estimation uncertainty in determining the carrying values of financial assets and liabilities at the balance sheet date. ��� Fair value of financial instruments is determined using valuation techniques and estimates (see below) which, to the extent possible, use market observable inputs, but in some cases use non-market observable inputs. Changes in the observability of significant valuation inputs can materially affect the fair values of financial instruments ��� When establishing the exit price of a financial instrument using a valuation technique, the Group estimates valuation adjustments in determining the fair value ��� In determining the valuation of financial instruments, the Group makes judgements on the amounts reserved to cater for model and valuation risks, which cover both Level 2 and Level 3 assets, and the significant valuation judgements in respect of Level 3 instruments Where the estimated measurement of fair value is more judgemental in respect of Level 3 assets, these are valued based on models that use a significant degree of non-market-based unobservable inputs. Valuation techniques Refer to the fair value hierarchy explanation - Level 1, 2 and 3 ��� Financial instruments held at fair value - Debt securities - asset-backed securities: Asset-backed securities are valued based on external prices obtained from consensus pricing providers, broker quotes, recent trades, arrangers' quotes, etc. Where an observable price is available for a given security, it is classified as Level 2. In instances where third-party prices are not available or reliable, the security is classified as Level 3. The fair value of Level 3 securities is estimated using market standard cash flow models with input parameter assumptions which include prepayment speeds, default rates, discount margins derived from comparable securities with similar vintage, collateral type, and credit ratings. - Debt securities in issue: These debt securities relate to structured notes issued by the Group. Where independent market data is available through pricing vendors and broker sources these positions are classified as Level 2. Where such liquid external prices are not available, valuations of these debt securities are implied using input parameters such as bond spreads and credit spreads, and are classified as Level 3. These input parameters are determined with reference to the same issuer (if available) or proxies from comparable issuers or assets. Page 87 - Derivatives: Derivative products are classified as Level 2 if the valuation of the product is based on input parameters which are observable from independent and reliable market data sources. Derivative products are classified as Level 3 if there are significant valuation input parameters which are unobservable in the market, such as products where the performance is linked to more than one underlying variable. Examples are foreign exchange basket options, equity options based on the performance of two or more underlying indices and interest rate products with quanto payouts. In most cases these unobservable correlation parameters cannot be implied from the market, and methods such as historical analysis and comparison with historical levels or other benchmark data must be employed - Equity shares - private equity: The majority of private equity unlisted investments are valued based on earning multiples - Price-to-Earnings (P/E) or enterprise value to earnings before income tax, depreciation and amortisation (EV/EBITDA) ratios - of comparable listed companies. The two primary inputs for the valuation of these investments are the actual or forecast earnings of the investee companies and earning multiples for the comparable listed companies. To ensure comparability between these unquoted investments and the comparable listed companies, appropriate adjustments are also applied (for example, liquidity and size) in the valuation. In circumstances where an investment does not have direct comparables or where the multiples for the comparable companies cannot be sourced from reliable external sources, alternative valuation techniques (for example, discounted cash flow model or net asset value (NAV) or option pricing model), which use predominantly unobservable inputs or Level 3 inputs, may be applied. Even though earning multiples for the comparable listed companies can be sourced from third-party sources (for example, Bloomberg), and those inputs can be deemed Level 2 inputs, all unlisted investments (excluding those where observable inputs are available, for example, over-the-counter (OTC) prices) are classified as Level 3 on the basis that the valuation methods involve judgements ranging from determining comparable companies to discount rates where the discounted cash flow method is applied - Loans and advances: These primarily include loans in the Bond and Loan Syndication business which were not fully syndicated as of the balance sheet date and other financing transactions, and loans and advances including reverse repurchase agreements that do not have SPPI cashflows or are managed on a fair value basis. These loans are generally bilateral in nature and, where available, their valuation is based on observable clean sales transactions prices or market observable spreads. If observable credit spreads are not available, proxy spreads based on comparables with similar credit grade, sector and region, are used. Where observable transaction prices, credit spreads and market standard proxy methods are available, these loans are classified as Level 2. Where there are no recent transactions or comparables, these loans are classified as Level 3 - Other debt securities: These debt securities include convertible bonds, corporate bonds, credit and structured notes. Where quoted prices are available through pricing vendors, brokers or observable trading activities from liquid markets, these are classified as Level 2 and valued using such quotes. Where there are significant valuation inputs which are unobservable in the market, due to illiquid trading or the complexity of the product, these are classified as Level 3. The valuations of these debt securities are implied using input parameters such as bond spreads and credit spreads. These input parameters are determined with reference to the same issuer (if available) or proxied from comparable issuers or assets ��� Financial instruments held at amortised cost The following sets out the Group's basis for establishing fair values of amortised cost financial instruments and their classification between Levels 1, 2 and 3. As certain categories of financial instruments are not actively traded, there is a significant level of management judgement involved in calculating the fair values: - Cash and balances at central banks: The fair value of cash and balances at central banks is their carrying amounts - Debt securities in issue, subordinated liabilities and other borrowed funds: The aggregate fair values are calculated based on quoted market prices. For those notes where quoted market prices are not available, a discounted cash flow model is used based on a current market related yield curve appropriate for the remaining term to maturity - Deposits and borrowings: The estimated fair value of deposits with no stated maturity is the amount repayable on demand. The estimated fair value of fixed interest-bearing deposits and other borrowings without quoted market prices is based on discounted cash flows using the prevailing market rates for debts with a similar Credit Risk and remaining maturity Page 88 - Investment securities: For investment securities that do not have directly observable market values, the Group utilises a number of valuation techniques to determine fair value. Where available, securities are valued using input proxies from the same or closely related underlying (for example, bond spreads from the same or closely related issuer) or input proxies from a different underlying (for example, a similar bond but using spreads for a particular sector and rating). Certain instruments cannot be proxies as set out above, and in such cases the positions are valued using non-market observable inputs. This includes those instruments held at amortised cost and predominantly relates to asset-backed securities. The fair value for such instruments is usually proxies from internal assessments of the underlying cash flows - Loans and advances to banks and customers: For loans and advances to banks, the fair value of floating rate placements and overnight deposits is their carrying amounts. The estimated fair value of fixed interest-bearing deposits is based on discounted cash flows using the prevailing money market rates for debts with a similar Credit Risk and remaining maturity. The Group's loans and advances to customers' portfolio is well diversified by geography and industry. Approximately a quarter of the portfolio re-prices within one month, and approximately half re-prices within 12 months. Loans and advances are presented net of provisions for impairment. The fair value of loans and advances to customers with a residual maturity of less than one year generally approximates the carrying value. The estimated fair value of loans and advances with a residual maturity of more than one year represents the discounted amount of future cash flows expected to be received, including assumptions relating to prepayment rates and Credit Risk. Expected cash flows are discounted at current market rates to determine fair value. The Group has a wide range of individual instruments within its loans and advances portfolio and as a result providing quantification of the key assumptions used to value such instruments is impractical - Other assets: Other assets comprise primarily cash collateral and trades pending settlement. The carrying amount of these financial instruments is considered to be a reasonable approximation of fair value as they are either short-term in nature or re-price to current market rates frequently Fair value adjustments When establishing the exit price of a financial instrument using a valuation technique, the Group considers adjustments to the modelled price which market participants would make when pricing that instrument. The main valuation adjustments (described further below) in determining fair value for financial assets and financial liabilities are as follows: 01.01.24 $million Movement during the year $million 30.06.24 $million 01.01.23 $million Movement during the year $million 31.12.23 $million Bid-offer valuation adjustment 115 3 118 118 (3) 115 Credit valuation adjustment 119 5 124 171 (52) 119 Debit valuation adjustment (129) 27 (102) (112) (17) (129) Model valuation adjustment 4 1 5 3 1 4 Funding valuation adjustment 33 (8) 25 46 (13) 33 Other fair value adjustments 25 3 28 23 2 25 Total 167 31 198 249 (82) 167 Income deferrals Day 1 and other deferrals 109 27 136 186 (77) 109 Total 109 27 136 186 (77) 109 Note: Brackets represent an asset and credit to the income statement ��� Bid-offer valuation adjustment: Generally, market parameters are marked on a mid-market basis in the revaluation systems, and a bid-offer valuation adjustment is required to quantify the expected cost of neutralising the business' positions through dealing away in the market, thereby bringing long positions to bid and short positions to offer. The methodology to calculate the bid-offer adjustment for a derivative portfolio involves netting between long and short positions and the grouping of risk by strike and tenor based on the hedging strategy where long positions are marked to bid and short positions marked to offer in the systems Page 89 ��� Credit valuation adjustment (CVA): The Group accounts for CVA against the fair value of derivative products. CVA is an adjustment to the fair value of the transactions to reflect the possibility that our counterparties may default and we may not receive the full market value of the outstanding transactions. It represents an estimate of the adjustment a market participant would include when deriving a purchase price to acquire our exposures. CVA is calculated for each subsidiary, and within each entity for each counterparty to which the entity has exposure and takes account of any collateral we may hold. The Group calculates the CVA by using estimates of future positive exposure, market-implied probability of default (PD) and recovery rates. Where market-implied data is not readily available, we use market-based proxies to estimate the PD. Wrong-way risk occurs when the exposure to a counterparty is adversely correlated with the credit quality of that counterparty, and the Group has implemented a model to capture this impact for key wrong-way exposures. The Group also captures the uncertainties associated with wrong-way risk in the Group's Prudential Valuation Adjustments framework ��� Debit valuation adjustment (DVA): The Group calculates DVA adjustments on its derivative liabilities to reflect changes in its own credit standing. The Group's DVA adjustments will increase if its credit standing worsens and conversely, decrease if its credit standing improves. For derivative liabilities, a DVA adjustment is determined by applying the Group's probability of default to the Group's negative expected exposure against the counterparty. The Group's probability of default and loss expected in the event of default is derived based on bond and CDS spreads associated with the Group's issuances and market standard recovery levels. The expected exposure is modelled based on the simulation of the underlying risk factors over the expected life of the deal. This simulation methodology incorporates the collateral posted by the Group and the effects of master netting agreements ��� Model valuation adjustment: Valuation models may have pricing deficiencies or limitations that require a valuation adjustment. These pricing deficiencies or limitations arise due to the choice, implementation and calibration of the pricing model ��� Funding valuation adjustment (FVA): The Group makes FVA adjustments against derivative products, including embedded derivatives. FVA reflects an estimate of the adjustment to its fair value that a market participant would make to incorporate funding costs or benefits that could arise in relation to the exposure. FVA is calculated by determining the net expected exposure at a counterparty level and then applying a funding rate to those exposures that reflect the market cost of funding. The FVA for uncollateralised (including partially collateralised) derivatives incorporates the estimated present value of the market funding cost or benefit associated with funding these transactions ��� Other fair value adjustments: The Group calculates the fair value on the interest rate callable products by calibrating to a set of market prices with differing maturity, expiry and strike of the trades ��� Day one and other deferrals: In certain circumstances the initial fair value is based on a valuation technique which differs to the transaction price at the time of initial recognition. However, these gains can only be recognised when the valuation technique used is based primarily on observable market data. In those cases where the initially recognised fair value is based on a valuation model that uses inputs which are not observable in the market, the difference between the transaction price and the valuation model is not recognised immediately in the income statement. The difference is amortised to the income statement until the inputs become observable, or the transaction matures or is terminated. Other deferrals primarily represent adjustments taken to reflect the specific terms and conditions of certain derivative contracts which affect the termination value at the measurement date In addition, the Group calculates own credit adjustment (OCA) on its issued debt designated at fair value, including structured notes, in order to reflect changes in its own credit standing. Issued debt is discounted utilising the spread at which similar instruments would be issued or bought back at the measurement date as this reflects the value from the perspective of a market participant who holds the identical item as an asset. OCA measures the difference between the fair value of issued debt as of reporting date and theoretical fair values of issued debt adjusted up or down for changes in own credit spreads from inception date to the measurement date. Under IFRS 9 the change in the OCA component is reported under other comprehensive income. The Group's OCA reserve will increase if its credit standing worsens in comparison with the inception of the trade and, conversely, decrease if its credit standing improves. The Group's OCA reserve will reverse over time as its liabilities mature. Page 90 Fair value hierarchy - financial instruments held at fair value The fair values of quoted financial assets and liabilities in active markets are based on current prices. A market is regarded as active if transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. Wherever possible, fair values have been calculated using unadjusted quoted market prices in active markets for identical instruments held by the Group. Where quoted market prices are not available, or are unreliable because of poor liquidity, fair values have been determined using valuation techniques which, to the extent possible, use market observable inputs, but in some cases use non-market observable inputs. Valuation techniques used include discounted cash flow analysis and pricing models and, where appropriate, comparison with instruments that have characteristics similar to those of the instruments held by the Group. Assets and liabilities carried at fair value or for which fair values are disclosed have been classified into three levels according to the observability of the significant inputs used to determine the fair values. Changes in the observability of significant valuation inputs during the reporting period may result in a transfer of assets and liabilities within the fair value hierarchy. The Group recognises transfers between levels of the fair value hierarchy when there is a significant change in either its principal market or the level of observability of the inputs to the valuation techniques as at the end of the reporting period. ��� Level 1: Fair value measurements are those derived from unadjusted quoted prices in active markets for identical assets or liabilities ��� Level 2: Fair value measurements are those with quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in inactive markets and financial instruments valued using models where all significant inputs are observable ��� Level 3: Fair value measurements are those where inputs which could have a significant effect on the instrument's valuation are not based on observable market data Page 91 The following tables show the classification of financial instruments held at fair value into the valuation hierarchy: Assets Level 1 $million Level 2 $million Level 3 $million Total $million Financial instruments held at fair value through profit or loss Loans and advances to banks - 2,157 36 2,193 Loans and advances to customers - 4,942 1,935 6,877 Reverse repurchase agreements and other similar secured lending - 90,592 2,610 93,202 Debt securities, additional tier one and other eligible bills 33,883 39,218 1,087 74,188 Of which: Issued by central banks & governments 28,083 12,425 - 40,508 Issued by corporates other than financial institutions1 12 4,146 260 4,418 Issued by financial institutions1 5,788 22,647 827 29,262 Equity shares 4,927 148 189 5,264 Derivative financial instruments 325 48,205 117 48,647 Of which: Foreign exchange 124 40,915 25 41,064 Interest rate 53 6,028 80 6,161 Credit - 386 9 395 Equity and stock index options - 180 3 183 Commodity 148 696 - 844 Investment securities Debt securities, additional tier one and other eligible bills 51,197 43,980 - 95,177 Of which: Issued by Central banks & Governments 41,648 19,484 - 61,132 Issued by corporates other than financial institutions�� - 500 - 500 Issued by financial institutions�� 9,549 23,996 - 33,545 Equity shares 47 1 775 823 Other Assets - - 1 1 Total financial assets at 30 June 2024 90,379 229,243 6,750 326,372 Liabilities Financial instruments held at fair value through profit or loss Deposits by banks - 1,660 399 2,059 Customer accounts - 18,121 1,729 19,850 Repurchase agreements and other similar secured borrowing - 47,048 - 47,048 Debt securities in issue - 10,676 2,139 12,815 Short positions 5,089 10,020 - 15,109 Derivative financial instruments 352 50,023 209 50,584 Of which: Foreign exchange 161 38,468 9 38,638 Interest rate 65 8,538 2 8,605 Credit - 1,660 178 1,838 Equity and stock index options - 163 20 183 Commodity 126 1,194 - 1,320 Other Liabilities - - 1 1 Total financial liabilities at 30 June 2024 5,441 137,548 4,477 147,466 1 Includes covered bonds of $5,062 million, securities issued by Multilateral Development Banks/International Organisations of $11,339 million and State-owned agencies and development banks of $16,878 million The fair value of financial assets and financial liabilities classified as Level 2 in the fair value hierarchy that are subject to complex modelling techniques is $802 million and $405 million respectively. There were no significant changes to valuation or levelling approaches during the period ended 30 June 2024. There were no significant transfers of financial assets and liabilities measured at fair value between Level 1 and Level 2 during the period ended 30 June 2024. Page 92 Assets Level 1 $million Level 2 $million Level 3 $million Total $million Financial instruments held at fair value through profit or loss Loans and advances to banks - 2,265 - 2,265 Loans and advances to customers - 5,252 1,960 7,212 Reverse repurchase agreements and other similar secured lending - 79,484 2,363 81,847 Debt securities, additional tier one and other eligible bills 27,055 24,635 1,262 52,952 Of which: Issued by central Banks & governments 23,465 6,557 - 30,022 Issued by corporates other than financial institutions1 4 4,062 346 4,412 Issued by financial institutions1 3,586 14,016 916 18,518 Equity shares 2,386 370 184 2,940 Derivative financial instruments 954 49,400 80 50,434 Of which: Foreign exchange 129 42,414 25 42,568 Interest rate 37 6,293 6 6,336 Credit - 438 47 485 Equity and stock index options - 73 2 75 Commodity 788 182 - 970 Investment securities Debt securities, additional tier one and other eligible bills 55,060 48,196 72 103,328 Of which: Issued by Central Banks & Governments 47,225 18,983 51 66,259 Issued by corporates other than financial institutions1 820 3,236 - 4,056 Issued by financial institutions1 7,015 25,977 21 33,013 Equity shares 199 6 787 992 Other Assets - - 6 6 Total financial assets at 31 December 2023 85,654 209,608 6,714 301,976 Liabilities Financial instruments held at fair value through profit or loss Deposits by banks - 1,560 334 1,894 Customer accounts - 15,970 1,278 17,248 Repurchase agreements and other similar secured borrowing - 41,283 - 41,283 Debt securities in issue - 9,776 1,041 10,817 Short positions 7,152 4,591 103 11,846 Derivative financial instruments 749 55,116 196 56,061 Of which: Foreign exchange 122 45,314 10 45,446 Interest rate 46 8,262 5 8,313 Credit - 945 162 1,107 Equity and stock index options - 147 19 166 Commodity 581 448 - 1,029 Other Liabilities - - 8 8 Total financial liabilities at 31 December 2023 7,901 128,296 2,960 139,157 1 Includes covered bonds of $7,509 million, securities issued by Multilateral Development Banks/International Organisations of $24,192 million, and State-owned agencies and development banks of $7,564 million The fair value of financial assets and financial liabilities classified as Level 2 in the fair value hierarchy that are subject to complex modelling techniques is $940 million and $288 million respectively. Page 93 Fair value hierarchy - financial instruments measured at amortised cost The following table shows the carrying amounts and incorporates the Group's estimate of fair values of those financial assets and liabilities not presented on the Group's balance sheet at fair value. These fair values may be different from the actual amount that will be received or paid on the settlement or maturity of the financial instrument. For certain instruments, the fair value may be determined using assumptions for which no observable prices are available. Carrying value $million Fair value Level 1 $million Level 2 $million Level 3 $million Total $million Assets Cash and balances at central banks�� 64,086 - 64,086 - 64,086 Loans and advances to banks 45,231 - 45,176 - 45,176 of which - reverse repurchase agreements and other similar secured lending 3,991 - 3,992 - 3,992 Loans and advances to customers 275,896 - 42,180 228,595 270,775 of which - reverse repurchase agreements and other similar secured lending 7,788 - 7,665 122 7,787 Investment securities�� 56,403 - 53,422 - 53,422 Other assets�� 42,206 - 42,206 - 42,206 Assets held for sale 517 3 474 40 517 At 30 June 2024 484,339 3 247,544 228,635 476,182 Liabilities Deposits by banks 28,087 - 28,140 - 28,140 Customer accounts 468,157 - 464,336 - 464,336 Repurchase agreements and other similar secured borrowing 7,539 - 7,585 - 7,585 Debt securities in issue 65,199 32,960 31,839 - 64,799 Subordinated liabilities and other borrowed funds 10,856 10,109 335 - 10,444 Other liabilities�� 46,901 - 46,901 - 46,901 Liabilities held for sale 535 51 484 - 535 At 30 June 2024 627,274 43,120 579,620 - 622,740 1 The carrying amount of these financial instruments is considered to be a reasonable approximation of fair value as they are short-term in nature or reprice to current market rates frequently 2 Includes Government bonds and Treasury bills of $21,475 million at 30 June 2024 Carrying value $million Fair value Level 1 $million Level 2 $million Level 3 $million Total $million Assets Cash and balances at central banks�� 69,905 - 69,905 - 69,905 Loans and advances to banks 44,977 - 44,921 - 44,921 of which - reverse repurchase agreements and other similar secured lending 1,738 - 1,738 - 1,738 Loans and advances to customers 286,975 - 53,472 226,211 279,683 of which - reverse repurchase agreements and other similar secured lending 13,996 - 13,827 169 13,996 Investment securities�� 56,935 - 54,419 33 54,452 Other assets�� 38,140 - 38,140 - 38,140 Assets held for sale 701 101 541 59 701 At 31 December 2023 497,633 101 261,398 226,303 487,802 Liabilities Deposits by banks 28,030 - 28,086 - 28,086 Customer accounts 469,418 - 460,224 - 460,224 Repurchase agreements and other similar secured borrowing 12,258 - 12,258 - 12,258 Debt securities in issue 62,546 31,255 30,859 - 62,114 Subordinated liabilities and other borrowed funds 12,036 11,119 336 - 11,455 Other liabilities�� 38,663 - 38,663 - 38,663 Liabilities held for sale 726 54 672 - 726 At 31 December 2023 623,677 42,428 571,098 - 613,526 1 The carrying amount of these financial instruments is considered to be a reasonable approximation of fair value as they are short-term in nature or reprice to current market rates frequently 2 Includes Government bonds and Treasury bills $19,422 million at 31 December 2023 Page 94 Fair value of financial instruments Level 3 Summary and significant unobservable inputs The following table presents the Group's primary Level 3 financial instruments which are held at fair value. The table also presents the valuation techniques used to measure the fair value of those financial instruments, the significant unobservable inputs, the range of values for those inputs and the weighted average of those inputs: Instrument Value as at 30 June 2024 Principal valuation technique Significant unobservable inputs Range1 Weighted average2 Assets $million Liabilities $million Loans and advances to banks 36 - Discounted cash flows Price/yield 33.6% - 100% 64.7% Loans and advances to customers 1,935 - Discounted cash flows Price/yield 0.1% - 100% 16.1% Reverse repurchase agreements and other similar secured lending 2,610 - Discounted cash flows Repo curve 2.7% - 7.7% 6.5% Price/yield 1.7% - 99.2% 4.9% Debt securities, additional tier one and other eligible securities 1,087 - Discounted cash flows Price/yield 3.7% - 45.0% 10.4% Recovery rate 0.01% - 16.8% 10.6% Government bonds and treasury bills - - Discounted cash flows Price/yield N/A N/A Equity shares (includes private equity investments) 964 - Comparable pricing/ yield EV/EBITDA multiples 13.0x-15.9x 14.3x EV/Revenue multiples 7.5x-7.5x 7.5x P/E multiples 13.3x- 44.6x 43.3x P/B multiples 0.3x-2.6x 1.7x P/S multiples 0.2x-1.3x 0.2x Liquidity discount 0.0%-29.9% 18.3% Discounted cash flows Discount rates 9.5%-20.5% 11.2% Option pricing model Equity value based on EV/Revenue multiples 6.3x-38.6x 24.2x Equity value based on EV/EBITDA multiples 2.6x-2.6x 2.6x Equity value based on volatility 28.5%-50.0% 28.7% Other Assets 1 - NAV N/A N/A N/A Derivative financial instruments of which: Foreign exchange 25 9 Option pricing model Foreign exchange option implied volatility 13.9% - 44.3% 33.3% Discounted cash flows Interest rate curves 3.3% - 34.8% 5.6% Foreign exchange curves 0.4% - 32.9% 6.3% Interest rate 80 2 Discounted cash flows Interest rate curves 3.3% - 6.81% 5.4% Option pricing model Bond option implied volatility 3.3% - 5.3% 4.6% Credit 9 178 Discounted cash flows Credit spreads 1.0% - 7.4% 1.2% Price/yield 2.0% - 11.2% 8.1% Option pricing model Bond option implied volatility 3.3% - 5.3% 4.6% Equity and stock index 3 20 Internal pricing model Equity-Equity correlation 46.4% - 100% 82.2% Equity-FX correlation (37.3)% - 55.3% 12.1% Deposits by banks - 399 Discounted cash flows Credit spreads 0.05% - 3.9% 1.4% Customer accounts - 1,729 Discounted cash flows Credit spreads 0.05% - 1.8% 0.9% Interest rate curves 2.2% - 5.3% 4.6% Price/yield 4.2% - 13.0% 6.8% Internal pricing model Equity-Equity correlation 46.4% - 100% 82.2% Equity-FX correlation (37.3)% - 55.3% 12.1% Option pricing model Bond option implied volatility 3.3% - 5.3% 4.6% Debt securities in issue - 2,139 Discounted cash flows Credit spreads 0.4% - 1.8% 1.4% Price/yield 0.2% - 18.8% 6.2% Interest rate curves 3.3% - 5.3% 4.6% Internal pricing model Equity-Equity correlation 46.4% - 100% 82.2% Equity-FX correlation (37.3)% - 55.3% 12.1% Bond option implied volatility 3.3% - 23.0% 4.7% Short positions - - Discounted cash flows N/A N/A N/A Other Liabilities - 1 Comparable pricing/yield EV/EBITDA multiples 5.5x - 6.2x 5.8x Total 6,750 4,477 1 The ranges of values shown in the above table represent the highest and lowest levels used in the valuation of the Group's Level 3 financial instruments as at 30 June 2024. The ranges of values used are reflective of the underlying characteristics of these Level 3 financial instruments based on the market conditions at the balance sheet date. However, these ranges of values may not represent the uncertainty in fair value measurements of the Group's Level 3 financial instruments 2 Weighted average for non-derivative financial instruments has been calculated by weighting inputs by the relative fair value. Weighted average for derivatives has been provided by weighting inputs by the risk relevant to that variable. N/A has been entered for the cases where weighted average is not a meaningful indicator Page 95 Instrument Value as at 31 December 2023 Principal valuation technique Significant unobservable inputs Range1 Weighted average2 Assets $million Liabilities $million Loans and advances to customers 1,960 - Discounted cash flows Price/yield 1.7% - 100% 12.0% Credit spreads 0.1% - 1.0% 0.6% Reverse repurchase agreements and other similar secured lending 2,363 - Discounted cash flows Repo curve 5.1% - 7.6% 6.3% Price/yield (2.7)% - 10.3% 6.0% Debt securities, additional tier one and other eligible securities 1,283 - Discounted cash flows Price/yield (14.0)% - 25.8% 10.1% Recovery rates 0.1% - 1.0% 0.2% Internal pricing model Equity-Equity correlation 44.1% - 100% 80.7% Equity-FX correlation (35.9)% - 45.5% 14.2% Government bonds and treasury bills 51 - Discounted cash flows Price/yield 17.7% - 21.8% 20.6% Equity shares (includes private equity investments) 971 - Comparable pricing/yield EV/EBITDA multiples 13.8x - 15.6x 14.9x EV/Revenue multiples 9.3x - 30.9x 15.8x P/E multiples 10.6x - 51.8x 45.7x P/B multiples 0.3x - 2.7x 1.6x P/S multiples 0.2x - 1.6x 0.3x Liquidity discount 7.5% - 20.0% 15.1% Discounted cash flows Discount rates 9.2% - 35.6% 17.0% Option pricing model Equity value based on EV/Revenue multiples 8.4x - 42.5x 27.5x Equity value based on EV/EBITDA multiples 3.1x - 3.1x 3.1x Equity value based on volatility 21.0% - 65.0% 30.1% Other Assets 6 - NAV N/A N/A N/A Derivative financial instruments of which: Foreign exchange 25 10 Option pricing model Foreign exchange option implied volatility 0.5% - 51% 31.8% Discounted cash flows Interest rate curves 3.6% - 5.8% 3.8% Foreign exchange curves 0.6% - 64.2% 12.8% Interest rate 6 5 Discounted cash flows Interest rate curves 3.6% - 8.6% 5.0% Credit 47 162 Discounted cash flows Credit spreads 1.0% - 1.0% 1.0% Price/yield 1.7% - 16.3% 8.6% Equity and stock index 2 19 Internal pricing model Equity-Equity correlation 44.1% - 100% 80.7% Equity-FX correlation (35.9)% - 45.5% 14.2% Deposits by banks - 334 Discounted cash flows Credit spreads 0.1% - 3.4% 1.9% Customer accounts - 1,278 Discounted cash flows Credit spreads 1.0% - 2.0% 1.2% Interest rate curves 2.9% - 8.6% 6.1% Price/yield 4.8% - 15.2% 9.9% Internal pricing model Equity-Equity correlation 44.1% - 100% 80.7% Equity-FX correlation (35.9)% - 45.5% 14.2% Debt securities in issue - 1,041 Discounted cash flows Credit spreads 0.3% - 1.6% 1.1% Price/yield 6.6% - 20.9% 17.9% Interest rate curves 2.9% - 5.3% 4.4% Internal pricing model Equity-Equity correlation 44.1% - 100% 80.7% Equity-FX correlation (35.9)% - 45.5% 14.2% Bond option implied volatility 2.9% - 5.3% 4.4% Short position - 103 Discounted cash flows Price/yield 7.1% - 7.1% 7.1% Other Liabilities - 8 Comparable pricing/yield EV/EBITDA multiples 5.8x - 11.2x 8.5x Total 6,714 2,960 1 The ranges of values shown in the above table represent the highest and lowest levels used in the valuation of the Group's Level 3 financial instruments as at 31 December 2023. The ranges of values used are reflective of the underlying characteristics of these Level 3 financial instruments based on the market conditions at the balance sheet date. However, these ranges of values may not represent the uncertainty in fair value measurements of the Group's Level 3 financial instruments 2 Weighted average for non-derivative financial instruments has been calculated by weighting inputs by the relative fair value. Weighted average for derivatives has been provided by weighting inputs by the risk relevant to that variable. N/A has been entered for the cases where weighted average is not a meaningful indicator Page 96 The following section describes the significant unobservable inputs identified in the valuation technique table: ��� Comparable price/yield is a valuation methodology in which the price of a comparable instrument is used to estimate the fair value where there are no direct observable prices. Yield is the interest rate that is used to discount the future cash flows in a discounted cash flow model. Valuation using comparable instruments can be done by calculating an implied yield (or spread over a liquid benchmark) from the price of a comparable instrument, then adjusting that yield (or spread) to derive a value for the instrument. The adjustment should account for relevant differences in the financial instruments such as maturity and/or credit quality. Alternatively, a price-to-price basis can be assumed between the comparable instrument and the instrument being valued in order to establish the value of the instrument (for example, deriving a fair value for a junior unsecured bond from the price of a senior secured bond). An increase in price, in isolation, would result in a favourable movement in the fair value of the asset. An increase in yield, in isolation, would result in an unfavourable movement in the fair value of the asset ��� Correlation is the measure of how movement in one variable influences the movement in another variable. An equity correlation is the correlation between two equity instruments while an interest rate correlation refers to the correlation between two swap rates ��� Credit spread represents the additional yield that a market participant would demand for taking exposure to the Credit Risk of an instrument ��� Discount rate refers to the rate of return used to convert expected cash flows into present value ��� Equity-FX correlation is the correlation between equity instrument and foreign exchange instrument ��� EV/EBITDA multiple is the ratio of Enterprise Value (EV) to Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA). EV is the aggregate market capitalisation and debt minus the cash and cash equivalents. An increase in EV/EBITDA multiple will result in a favourable movement in the fair value of the unlisted firm ��� EV/Revenue multiple is the ratio of Enterprise Value (EV) to Revenue. An increase in EV/Revenue multiple will result in a favourable movement in the fair value of the unlisted firm ��� Foreign exchange curves is the term structure for forward rates and swap rates between currency pairs over a specified period ��� Net asset value (NAV) is the value of an entity's assets after deducting any liabilities ��� Interest rate curves is the term structure of interest rates and measures of future interest rates at a particular point in time ��� Liquidity discounts in the valuation of unlisted investments are primarily applied to the valuation of unlisted firms' investments to reflect the fact that these stocks are not actively traded. An increase in liquidity discount will result in an unfavourable movement in the fair value of the unlisted firm ��� Price-Earnings (P/E) multiple is the ratio of the market value of the equity to the net income after tax. An increase in P/E multiple will result in a favourable movement in the fair value of the unlisted firm ��� Price-Book (P/B) multiple is the ratio of the market value of equity to the book value of equity. An increase in P/B multiple will result in a favourable movement in the fair value of the unlisted firm ��� Price-Sales (P/S) multiple is the ratio of the market value of equity to sales. An increase in P/S multiple will result in a favourable movement in the fair value of the unlisted firm ��� Recovery rates is the expectation of the rate of return resulting from the liquidation of a particular loan. As the probability of default increases for a given instrument, the valuation of that instrument will increasingly reflect its expected recovery level assuming default. An increase in the recovery rate, in isolation, would result in a favourable movement in the fair value of the loan ��� Repo curve is the term structure of repo rates on repos and reverse repos at a particular point in time ��� Volatility represents an estimate of how much a particular instrument, parameter or index will change in value over time. Generally, the higher the volatility, the more expensive the option will be Page 97 Level 3 movement tables - financial assets The table below analyses movements in Level 3 financial assets carried at fair value. Assets 6 months ended 30.06.24 Held at fair value through profit or loss Derivative financial instruments $million Investment securities Total $million Loans and advances to banks $million Loans and advances to customers $million Reverse repurchase agreements and other similar secured lending $million Debt securities, additional tier one and other eligible bills $million Equity shares $million Other Assets $million Debt securities, additional tier one and other eligible bills $million Equity shares $million At 01 January 2024 - 1,960 2,363 1,262 184 6 80 72 787 6,714 Total (losses)/gains recognised in income statement - (18) (85) 25 (1) (1) (36) - - (116) Net trading income - (18) (85) (6) 2 - (36) - - (143) Other operating income - - - 31 (3) (1) - - - 27 Total losses recognised in other comprehensive income (OCI) - - - - - - - (13) (31) (44) Fair value through OCI reserve - - - - - - - - (18) (18) Exchange difference - - - - - - - (13) (13) (26) Purchases 18 2,538 2,725 468 3 - 166 13 37 5,968 Sales (2) (2,631) (2,199) (668) (3) (4) (114) - (18) (5,639) Settlements (7) (14) (329) - - - (15) - - (365) Transfers out1 (13) (155) (5) - - - (2) (72) (1) (248) Transfers in2 40 255 140 - 6 - 38 - 1 480 At 30 June 2024 36 1,935 2,610 1,087 189 1 117 - 775 6,750 Total unrealised gains/(losses) recognised in the income statement, within net trading income, relating to change in fair value of assets held at 30 June 2024 - 1 1 11 12 - (10) - - 15 1 Transfers out include loans and advances, reverse repurchase agreements, derivative financial instruments, debt securities, additional tier one and other eligible bills and equity shares where the valuation parameters became observable during the period and were transferred to Level 1 and Level 2 2 Transfers in primarily relate to loans and advances, reverse repurchase agreements, equity shares and derivative financial instruments where the valuation parameters became unobservable during the period Page 98 Assets 6 months ended 30.06.23 Held at fair value through profit or loss Derivative financial instruments $million Investment securities Total $million Loans and advances to banks $million Loans and advances to customers $million Reverse repurchase agreements and other similar secured lending $million Debt securities, additional tier one and other eligible bills $million Equity shares $million Other Assets $million Debt securities, additional tier one and other eligible bills $million Equity shares $million At 01 January 2023 21 1,805 1,998 1,153 182 7 44 - 655 5,865 Total (losses)/gains recognised in income statement - (62) (12) (217) 1 - 13 - - (277) Net trading income - (62) (12) (217) - - 13 - - (278) Other operating income - - - - 1 - - - - 1 Total gains recognised in other comprehensive income (OCI) - - - - - - - 1 69 70 Fair value through OCI reserve - - - - - - - - 77 77 Exchange difference - - - - - - - 1 (8) (7) Purchases - 313 3,020 565 1 - 124 5 4 4,032 Sales - (481) (3,156) (282) (9) - (56) (10) - (3,994) Settlements - (221) (335) (310) - - (9) - - (875) Transfers out1 (21) (206) - (6) - - (3) (4) (39) (279) Transfers in2 - 75 - - - - - 59 1 135 At 30 June 2023 - 1,223 1,515 903 175 7 113 51 690 4,677 Total unrealised (losses)/gains recognised in the income statement, within net trading income, relating to change in fair value of assets held at 30 June 2023 - (10) - 14 (1) - (10) - - (7) 1 Transfers out include loans and advances, debt securities, additional tier one and other eligible bills, derivative financial instruments and equity shares where the valuation parameters became observable during the period and were transferred to Level 1 and Level 2 2 Transfers in primarily relate to loans and advances, debt securities, additional tier one and other eligible bills, and equity shares where the valuation parameters became unobservable during the period Page 99 Assets 6 months ended 31.12.23 Held at fair value through profit or loss Derivative financial instruments $million Investment securities Total $million Loans and advances to banks $million Loans and advances to customers $million Reverse repurchase agreements and other similar secured lending $million Debt securities, additional tier one and other eligible bills $million Equity shares $million Other Assets $million Debt securities, additional tier one and other eligible bills $million Equity shares $million At 01 July 2023 - 1,223 1,515 903 175 7 113 51 690 4,677 Total gains/(losses) recognised in income statement - 27 (95) (75) 3 (1) (1) - - (142) Net trading income - 27 (95) (87) 5 - (1) - - (151) Other operating income - - - 12 (2) (1) - - - 9 Total (losses)/gains recognised in other comprehensive income (OCI) - - - - - - - (2) 32 30 Fair value through OCI reserve - - - - - - - - 31 31 Exchange difference - - - - - - - (2) 1 (1) Purchases 22 1,471 2,882 517 7 - 65 16 57 5,037 Sales (22) (652) (786) (236) (1) - (59) (13) (5) (1,774) Settlements - (221) (1,153) 5 - - (16) - - (1,385) Transfers out1 - (19) - - - - (24) (12) 7 (48) Transfers in2 - 131 - 148 - - 2 32 6 319 At 31 December 2023 - 1,960 2,363 1,262 184 6 80 72 787 6,714 Total unrealised gains/(losses) recognised in the income statement, within net trading income, relating to change in fair value of assets held at 31 December 2023 - 7 3 (15) 5 - (2) - - (2) 1 Transfers out include loans and advances, debt securities, additional tier one and other eligible bills, derivative financial instruments and equity shares where the valuation parameters became observable during the period and were transferred to Level 1 and Level 2 2 Transfers in primarily relate to loans and advances, debt securities, additional tier one and other eligible bills, , derivative financial instruments and equity shares where the valuation parameters became unobservable during the period Page 100 Level 3 movement tables - financial liabilities Liabilities 6 months ended 30.06.24 Deposits by banks $million Customer accounts $million Debt securities in issue $million Derivative financial instruments $million Short positions $million Other liabilities $million Total $million At 01 January 2024 334 1,278 1,041 196 103 8 2,960 Total losses/(gains) recognised in income statement - net trading income 37 (4) 16 (12) - (7) 30 Issues 218 1,427 2,334 240 - - 4,219 Settlements (190) (990) (1,127) (217) - - (2,524) Transfers out1 - (20) (162) (7) (103) - (292) Transfers in2 - 38 37 9 - - 84 At 30 June 2024 399 1,729 2,139 209 - 1 4,477 Total unrealised losses/(gains) recognised in the income statement, within net trading income, relating to change in fair value of liabilities held at 30 June 2024 24 3 5 (4) - - 28 1 Transfers out primarily relate to bank deposits, debt securities in issue, short positions and derivative financial instruments where the valuation parameters became observable during the period and were transferred to Level 2 financial liabilities 2 Transfers in primarily relate to derivative financial instruments, customer accounts and debt securities in issue where the valuation parameters became unobservable during the period Liabilities 6 months ended 30.06.23 Deposits by banks $million Customer accounts $million Debt securities in issue $million Derivative financial instruments $million Short positions $million Other liabilities $million Total $million At 01 January 2023 288 972 451 121 40 6 1,878 Total (gains)/losses recognised in income statement - net trading income (9) 16 (5) 3 - 2 7 Issues 271 868 654 225 - - 2,018 Settlements (298) (989) (558) (165) (40) - (2,050) Transfers out1 - (5) (21) (13) - - (39) Transfers in2 - 18 - 2 - - 20 At 30 June 2023 252 880 521 173 - 8 1,834 Total unrealised (gains)/losses recognised in the income statement, within net trading income, relating to change in fair value of liabilities held at 30 June 2023 - (6) 3 (12) - - (15) 1 Transfers out primarily relate to customer accounts, debt securities in issue and derivative financial instruments where the valuation parameters became observable during the period and were transferred to Level 2 financial liabilities 2 Transfers in primarily relate to customer accounts and derivative financial instruments where the valuation parameters became unobservable during the period Liabilities 6 months ended 31.12.23 Deposits by banks $million Customer Accounts $million Debt securities in issue $million Derivative financial instruments $million Short positions $million Other Liabilities $million Total $million At 01 July 2023 252 880 521 173 - 8 1,834 Total losses/(gains) recognised in income statement - net trading income 16 (22) 44 (55) 3 1 (13) Issues 357 921 835 222 100 - 2,435 Settlements (287) (502) (660) (147) - - (1,596) Transfers out1 (4) (4) (64) 2 - (1) (71) Transfers in2 - 5 365 1 - - 371 At 31 December 2023 334 1,278 1,041 196 103 8 2,960 Total unrealised (gains)/losses recognised in the income statement, within net trading income, relating to change in fair value of liabilities held at 31 December 2023 - (15) 3 (35) - - (47) 1 Transfers out primarily relate to bank deposits, customer accounts, debt securities in issue, derivative financial instruments and other liabilities where the valuation parameters became observable during the period and were transferred to Level 2 financial liabilities 2 Transfers in primarily relate to customer accounts, debt securities in issue and derivative financial instruments where the valuation parameters became unobservable during the period Page 101 Sensitivities in respect of the fair values of Level 3 assets and liabilities Sensitivity analysis is performed on products with significant unobservable inputs. The Group applies a 10 per cent increase or decrease on the values of these unobservable inputs, to generate a range of reasonably possible alternative valuations. The percentage shift is determined by statistical analysis performed on a set of reference prices based on the composition of the Group's Level 3 inventory at the measurement date. Favourable and unfavourable changes (which show the balance adjusted for input change) are determined on the basis of changes in the value of the instrument as a result of varying the levels of the unobservable parameters. The Level 3 sensitivity analysis assumes a one-way market move and does not consider offsets for hedges. Fair value through profit or loss Fair value through other comprehensive income Net exposure $million Favourable changes $million Unfavourable changes $million Net exposure $million Favourable changes $million Unfavourable changes $million Financial instruments held at fair value Loans and advances 1,971 2,008 1,915 - - - Reverse repurchase agreements and other similar secured lending 2,610 2,663 2,557 - - - Debt securities, additional tier one and other eligible bills 1,087 1,138 1,035 - - - Equity shares 189 208 170 775 874 708 Other Assets 1 1 1 - - - Derivative financial instruments (92) (72) (113) - - - Customer accounts (1,729) (1,606) (1,852) - - - Deposits by banks (399) (399) (399) - - - Short positions - - - - - - Debt securities in issue (2,139) (2,082) (2,196) - - - Other Liabilities (1) (1) (1) - - - At 30 June 2024 1,498 1,858 1,117 775 874 708 Financial instruments held at fair value Loans and advances 1,960 1,985 1,918 - - - Reverse repurchase agreements and other similar secured lending 2,363 2,390 2,336 - - - Debt securities, additional tier one and other eligible bills 1,262 1,309 1,193 72 78 66 Equity shares 184 202 166 787 866 708 Other Assets 6 7 5 - - - Derivative financial instruments (116) (75) (157) - - - Customer accounts (1,278) (1,191) (1,365) - - - Deposits by banks (334) (334) (334) - - - Short positions (103) (101) (105) - - - Debt securities in issue (1,041) (966) (1,115) - - - Other Liabilities (8) (7) (9) - - - At 31 December 2023 2,895 3,219 2,533 859 944 774 The reasonably possible alternatives could have increased or decreased the fair values of financial instruments held at fair value through profit or loss and those classified as fair value through other comprehensive income by the amounts disclosed below. Financial instruments Fair value changes 30.06.24 $million 31.12.23 $million Fair value through profit or loss Possible increase 360 324 Possible decrease (381) (362) Fair value through other comprehensive income Possible increase 99 85 Possible decrease (67) (85) Page 102 14. Derivative financial instruments The tables below analyse the notional principal amounts and the positive and negative fair values of derivative financial instruments. Notional principal amounts are the amounts of principal underlying the contract at the reporting date. Derivatives 30.06.24 31.12.23 Notional principal amounts $million Assets $million Liabilities $million Notional principal amounts $million Assets $million Liabilities $million Foreign exchange derivative contracts: Forward foreign exchange contracts 4,438,922 28,145 25,301 3,628,067 30,897 32,601 Currency swaps and options 1,286,136 12,919 13,337 1,145,702 11,671 12,845 5,725,058 41,064 38,638 4,773,769 42,568 45,446 Interest rate derivative contracts: Swaps 5,445,462 21,371 23,368 4,841,616 53,735 55,241 Forward rate agreements and options 319,883 2,216 2,650 313,253 2,057 2,520 5,765,345 23,587 26,018 5,154,869 55,792 57,761 Exchange traded futures and options 512,905 55 68 325,051 39 47 Credit derivative contracts 264,892 395 1,838 281,130 485 1,107 Equity and stock index options 11,889 183 183 8,671 75 166 Commodity derivative contracts 174,007 844 1,320 117,436 970 1,029 Gross total derivatives 12,454,096 66,128 68,065 10,660,926 99,929 105,556 Offset�� - (17,481) (17,481) - (49,495) (49,495) Net total derivatives 12,454,096 48,647 50,584 10,660,926 50,434 56,061 1 In 2024, the Group migrated contracts from Collateralized to Market (CTM) to Settled to Market (STM) for house cleared contracts with London Clearing House The Group limits exposure to credit losses in the event of default by entering into master netting agreements with certain market counterparties. As required by IAS 32, exposures are only presented net in these accounts where they are subject to legal right of offset and intended to be settled net in the ordinary course of business. The Group applies balance sheet offsetting only in the instance where we are able to demonstrate legal enforceability of the right to offset (e.g. via legal opinion) and the ability and intention to settle on a net basis (e.g. via operational practice). The Group may enter into economic hedges that do not qualify for IAS 39 hedge accounting treatment, including derivatives such as interest rate swaps, interest rate futures and cross currency swaps to manage interest rate and currency risks of the Group. These derivatives are measured at fair value, with fair value changes recognised in net trading income: refer to Market Risk. Derivatives held for hedging The Group enters into derivative contracts for the purpose of hedging interest rate, currency and structural foreign exchange risks inherent in assets, liabilities and forecast transactions. The table below summarises the notional principal amounts and carrying values of derivatives designated in hedge accounting relationships at the reporting date. Included in the table above are derivatives held for hedging purposes as follows: 30.06.24 31.12.23 Notional principal amounts $million Assets $million Liabilities $million Notional principal amounts $million Assets $million Liabilities $million Derivatives designated as fair value hedges: Interest rate swaps 68,043 890 1,997 69,347 1,264 2,397 Currency swaps 580 9 7 115 10 6 68,623 899 2,004 69,462 1,274 2,403 Derivatives designated as cash flow hedges: Interest rate swaps 33,962 66 212 41,834 184 537 Forward foreign exchange contracts 6,315 666 - 12,071 420 183 Currency swaps 13,365 591 22 14,321 191 150 53,642 1,323 234 68,226 795 870 Derivatives designated as net investment hedges: Forward foreign exchange contracts 15,061 259 8 15,436 32 41 Total derivatives held for hedging 137,326 2,481 2,246 153,124 2,101 3,314 Page 103 15. Reverse repurchase and repurchase agreements including other similar lending and borrowing Reverse repurchase agreements and other similar secured lending 30.06.24 $million 31.12.23 $million Banks 44,259 32,286 Customers 60,722 65,295 104,981 97,581 Of which: Fair value through profit or loss 93,202 81,847 Banks 40,268 30,548 Customers 52,934 51,299 Held at amortised cost 11,779 15,734 Banks 3,991 1,738 Customers 7,788 13,996 Under reverse repurchase and securities borrowing arrangements, the Group obtains securities on terms which permit it to repledge or resell the securities to others. Amounts on such terms are: 30.06.24 $million 31.12.23 $million Securities and collateral received (at fair value) 108,948 101,935 Securities and collateral which can be repledged or sold (at fair value) 107,853 101,845 Amounts repledged/transferred to others for financing activities, to satisfy liabilities under sale and repurchase agreements (at fair value) 36,509 34,154 Repurchase agreements and other similar secured borrowing 30.06.24 $million 31.12.23 $million Banks 10,332 5,585 Customers 44,255 47,956 54,587 53,541 Of which: Fair value through profit or loss 47,048 41,283 Banks 9,430 4,658 Customers 37,618 36,625 Held at amortised cost 7,539 12,258 Banks 902 927 Customers 6,637 11,331 The tables below set out the financial assets provided as collateral for repurchase and other secured borrowing transactions: Collateral pledged against repurchase agreements 30.06.24 Fair value through profit or loss $million Fair value through other comprehensive income $million Amortised cost $million Off-balance sheet $million Total $million On-balance sheet Debt securities and other eligible bills 3,822 3,216 12,179 - 19,217 Off-balance sheet Repledged collateral received - - - 36,509 36,509 At 30 June 2024 3,822 3,216 12,179 36,509 55,726 Page 104 Collateral pledged against repurchase agreements 31.12.23 Fair value through profit or loss $million Fair value through other comprehensive income $million Amortised cost $million Off-balance sheet $million Total $million On-balance sheet Debt securities and other eligible bills 4,993 8,157 10,181 - 23,331 Off-balance sheet Repledged collateral received - - - 34,154 34,154 At 31 December 2023 4,993 8,157 10,181 34,154 57,485 16. Goodwill and intangible assets 30.06.24 31.12.23 Goodwill $million Acquired intangibles $million Computer software $million Total $million Goodwill $million Acquired intangibles $million Computer software $million Total $million Cost At 1 January 2,429 278 6,168 8,875 2,471 295 5,178 7,944 Exchange translation differences (35) (4) (95) (134) (24) (12) 21 (15) Additions - 1 473 474 - - 1,124 1,124 Disposals - - (5) (5) - - - - Impairment - - (149)�� (149) - - (151) (151) Amounts written off - (9) (15) (24) (18)�� (5)�� (4) (27) At 30 June/31 December 2,394 266 6,377 9,037 2,429 278 6,168 8,875 Provision for amortisation At 1 January - 265 2,396 2,661 - 276 1,799 2,075 Exchange translation differences - (5) (35) (40) - (12) 11 (1) Amortisation - - 329 329 - 1 625 626 Impairment charge - - (1)�� (1) - - (39) (39) Amounts written off - - (15) (15) - - - - At 30 June/31 December - 260 2,674 2,934 - 265 2,396 2,661 Net book value 2,394 6 3,703 6,103 2,429 13 3,772 6,214 1 Includes disposal of goodwill and other intangibles relating to aviation finance leasing business. These were classified as held for sale during 2023 and sold during the year 2 Includes $148 million impairment relating to software capitalised in previous years At 30 June 2024, accumulated goodwill impairment losses incurred from 1 January 2005 amounted to $3,331 million (31 December 2023: $3,331 million), of which nil was recognised in 2024 (31 December 2023: nil). The Group assessed the goodwill assigned to each of the Group's CGUs and determined that there are no indicators of impairment; therefore, estimates of the recoverable amounts for the CGUs were not calculated at 30 June 2024. Page 105 17. Property, plant and equipment 30.06.24 Premises $million Equipment $million Operating lease assets $million Leased premises assets $million Leased equipment assets $million Total $million Cost or valuation At 1 January 1,741 810 - 1,864 18 4,433 Exchange translation differences (37) (25) - (24) (1) (87) Additions1 31 45 - 96 - 172 Disposals and fully depreciated assets written off2 (24) (15) - (8) (1) (48) Transfers to assets held for sale (2) 3 - - - 1 As at 30 June 1,709 818 - 1,928 16 4,471 Depreciation Accumulated at 1 January 692 535 - 914 18 2,159 Exchange translation differences (19) (6) - (18) (7) (50) Charge for the year 39 37 - 109 2 187 Impairment charge (4) - - 4 - - Attributable to assets sold, transferred or written off2 (7) (15) - (7) - (29) Transfers to assets held for sale (1) 3 - - - 2 Accumulated at 30 June 700 554 - 1,002 13 2,269 Net book amount at 30 June 1,009 264 - 926 3 2,202 1 Refer to the cash flow statement under cash flows from investing activities section for the purchase of property, plant and equipment during the year of $76 million 2 Disposals for property, plant and equipment during the year of $31 million in the cash flow statement would include the gains and losses incurred as part of other operating income (Note 6) on disposal of assets during the year and the net book value disposed. 31.12.23 Premises $million Equipment $million Operating lease assets $million Leased premises assets $million Leased equipment assets $million Total $million Cost or valuation At 1 January 1,773 840 4,420 1,652 29 8,714 Exchange translation differences (27) (22) - (5) (3) (57) Additions 45 114 - 286 1 446 Disposals and fully depreciated assets written off (68) (122) (4,420)�� (69) (9) (4,688) Transfers to assets held for sale 18 - - - - 18 As at 31 December 1,741 810 - 1,864 18 4,433 Depreciation Accumulated at 1 January 678 575 1,185 730 24 3,192 Exchange translation differences (21) (17) 1 (25) (1) (63) Charge for the year 77 99 27 238 4 445 Impairment charge 3 - - 9 - 12 Attributable to assets sold, transferred or written off (47) (122) (1,213)�� (38) (9) (1,429) Transfers to assets held for sale 2 - - - - 2 Accumulated at 31 December 692 535 - 914 18 2,159 Net book amount at 31 December 1,049 275 - 950 - 2,274 1. Includes disposal of assets from aviation finance leasing business and sale of vessels. Page 106 18. Other assets Other assets include: 30.06.24 $million 31.12.23 $million Financial assets held at amortized cost (Note 13): Hong Kong SAR Government certificates of indebtedness (Note 21)�� 6,529 6,568 Cash collateral2 8,099 10,337 Acceptances and endorsements 5,781 5,326 Unsettled trades and other financial assets 21,797 15,909 42,206 38,140 Non-financial assets: Commodities and emissions certificates3 10,498 8,889 Other assets 312 565 53,016 47,594 1 The Hong Kong SAR Government certificates of indebtedness are subordinated to the claims of other parties in respect of bank notes issued 2 Cash collateral are margins placed to collateralize net derivative mark-to-market (MTM) positions 3 Physically held commodities and emission certificates are inventory that is carried at fair value less costs to sell, $5.7 billion (31 December 2023: $5.1 billion) are classified as Level 1 and $4.7 billion are classified as Level 2 (31 December 2023: $3.7 billion). For commodities, the fair value is derived from observable spot or short-term futures prices from relevant exchanges. 19. Investments in associates and joint ventures Share of profit from investment in associates and joint ventures comprises: 6 months ended 30.06.24 $million 6 months ended 30.06.23 $million Loss from Investment in Joint Ventures (3) (7) Profit from Investment in Associates 147 109 Total 144 102 Interests in associates and joint ventures 30.06.24 $million 31.12.23 $million As at 1 January 966 1,631 Exchange translation difference (17) 16 Additions1 14 64 Share of profits 144 141 Dividend received2 (30) (11) Impairment - (872) Share of FVOCI and Other reserves 9 (7) Other movements 2 4 As at 30 June/31 December 1,088 966 1 Includes non-cash consideration of $6.4 million (disposal of Autumn Life) from Vault 22 Solutions Holdings Ltd and $3.6 million (convertible notes) from Verified Impacts Holdings Pte Ltd 2 Include capital distribution from Ascenta IV The Group's principal associate are: Associate Nature of activities Main areas of operation Group interest in ordinary share capital % China Bohai Bank Banking China 16.26 CurrencyFair Limited Exchange Ireland Banking Ireland 43.42 The Group's ownership percentage in China Bohai Bank is 16.26%. Although the Group's investment in China Bohai Bank is less than 20 per cent, it is considered to be an associate because of the significant influence the Group is able to exercise over its management and financial and operating policies. This influence is exercised through Board representation and the provision of technical expertise to Bohai. The Group applies the equity method of accounting for investments in associates. Page 107 Bohai publishes their results after the Group. As it is impracticable for Bohai to prepare financial statements sooner, the Group recognises its share of Bohai's earnings on a three-month lag basis. Therefore, the Group recognised its share of Bohai's profits and movements in other comprehensive from 1 October 2023 through 31 March 2024 (six months of earnings) in the Group's consolidated statement of income and consolidated statement of comprehensive income for the period ended 30 June 2024, respectively. There have been no material events after 31 March 2024 which would require adjustments in respect of the share of Bohai's profits and movements in OCI recognised by the Group for the period ended on 30 June 2024. If the Group did not have significant influence over Bohai, the investment would be measured at fair value rather than the current carrying value, which is based on the application of the equity method as described in the accounting policy note. Impairment testing On 30 June 2024, the listed equity value of Bohai is below the carrying amount of the Group's investment in associate. As a result, the Group assessed the carrying value of its investment in Bohai for impairment and concluded that no impairment was required for the period ended 30 June 2024 ($nil for the period ended 30 June 2023; $1,458million of accumulated impairment as at 31 December 2023). The carrying value of the Group's investment in Bohai of $766 million (2023: $700 million) represents the higher of the value in use and fair value less costs to dispose. The financial forecasts used in the VIU calculation reflect Group management's best estimate of Bohai's future earnings, in line with current economic conditions and latest Bohai's reported results. Bohai 30.06.24 $million 31.12.23 $million VIU 766 700 Carrying amount1 766 700 Market capitalisation2 351 418 1 The Group's 16.26% share in the net assets less other equity instruments which the Group does not hold 2 Number of shares held by the Group multiplied by the quoted share price at period end Basis of recoverable amount The impairment test was performed by comparing the recoverable amount of Bohai, determined as the higher of VIU and fair value less costs to dispose, with its carrying amount. The value in use ('VIU') is calculated using a dividend discount model ('DDM'), which estimates the distributable future cashflows to the equity holders, after adjusting for regulatory capital requirements, for a 5-year period, after which a terminal value ('TV') is calculated based on the 'Gordon Growth' model. The key assumptions in the VIU are as follows: ��� Short to medium term projections are based on Group management's best estimates of future profits available to ordinary shareholders and have been determined with reference to the latest published financial results and historical performance of Bohai; ��� The projections use available information and include normalised performance over the forecast period, inclusive of: (i) asset growth assumptions based on the long-term GDP growth rate for Mainland China; (ii) ECL assumptions using Bohai's historical reported ECL, based on the proportion of ECL from loans and advances to customers and financial investments measured at amortised cost and FVOCI. This was further adjusted for banking industry challenges and property market uncertainties; (iii) Net Interest Margin (NIM) increases from 2025 with reference to third party market interest rate forecasts in China; (iv) Non-interest income estimated according to the latest available performance of Bohai and contribution of the constituent parts; and (v) Statutory tax rate of 25% was applied to the taxable profit of Bohai, after consideration of taxable and non-taxable elements, consistent with historical reported results; ��� The discount rate applied to these cash flows was estimated with reference to transaction and broker data in the local Chinese market, cross checked to the capital asset pricing model (CAPM), which includes a long-term risk-free rate, beta and company risk premium assumptions for Bohai; ��� A long-term GDP growth rate for Mainland China is used to extrapolate the expected short to medium term earnings to perpetuity to derive a terminal value; and Page 108 ��� Capital maintenance ratio consists of a capital haircut taken to estimate Bohai's target regulatory capital requirements over the forecast period. This haircut considers movements in risk weighted assets (RWA) projected based on the historical proportion of RWA to total assets and the total capital required (Core CET 1 and Minimum Core CET 1 ratios), including required retained earnings over time to meet the target capital ratios. RWA projection is adjusted to reflect management's best estimates for the impact of implementing Basel 3.1, effective 1 January 2024 in China. The VIU model was refined during 2024 to include a more granular forecasting assumptions for each period. While it is impracticable for the Group to estimate the impact on future periods, the key changes to the 2024 model are summarised as follows: ��� A statutory tax rate of 25% was applied to the taxable profit of Bohai, after consideration of taxable and non-taxable elements, consistent with historical reported results. In previous model, the calculation of the tax expenses was based on the reported effective tax rate as per published financial statements of Bohai; ��� Non-interest income was calculated by applying the historical average return on the respective components of the non-interest income, grown at long-term GDP rate for Mainland China, over the forecasted period. In the previous model, the non-interest income was projected based on the latest actual results reported by Bohai and grown according to long-term GDP rate. The key assumptions used in the VIU calculation: 30.06.24 per cent 31.12.23 per cent Pre-tax discount rate�� 12.59 13.68 Long term GDP growth rate 3.60 4.00 Total assets growth rate 3.60 4.00 RWA as percentage of total assets 64.28-65.85 63.87-67.06 Net interest margin 1.14-1.41 1.21-1.48 Net fee income growth rate 3.60 4.00 Expected credit losses as a percentage of customer loans 0.78-1.22 0.80-1.24 Expected credit losses as a percentage of financial investments measured at amortised cost and FVOCI 0.35 0.35-0.67 Tax expense�� 13.00-16.00 N/A Capital maintenance ratio3 8.34 8.28 1 Post-tax Discount rate of 11.0% was used in 2024 and 2023 models. The difference in pre-tax discount rates relates to changes in effective tax rate 2 The 30 June 2024 percentages represent the average of non-taxable income and non-deductible expenses, consistent with historical reported results. A statutory tax rate of 25% was applied to the taxable profit of Bohai, after consideration of taxable and non-taxable elements. For the 31 December 2023 VIU, the calculation of the tax expenses was based on the reported effective tax rate as per published financial statements of Bohai 3 Core CET 1 ratio reported by Bohai The table below discloses sensitivities to the key assumptions of Bohai, according to management's judgement of reasonably possible changes. Changes were applied to every cash flow year on an individual basis. The percentage change to the assumptions reflects the level at which management assess the reasonableness of the assumptions used and their impact on the Value in Use. Sensitivities key assumption change basis points Increase Headroom/ (Impairment) $ million Decrease Headroom/ (Impairment) $ million Discount Rate 100 (115) 160 Long term GDP growth rate1 100 125 (89) Total assets growth rate 100 30 (22) RWA as percentage of total assets 100 (35) 42 Net interest margin 10 405 (398) Net fee income 100 70 (61) Expected credit losses as a percentage of customer loans 10 (228) 235 Expected credit losses as a percentage of financial investments measured at amortised cost and FVOCI 10 (114) 121 Tax expense�� 300 45 (36) Capital maintenance ratio 50 (179) 187 1 Changes in long term GDP growth rate applied only to the calculation of the terminal value 2 Changes in tax expense applied only to both average percentages of non-taxable income and non-deductible expenses Page 109 The following table sets out the summarised financial statements of China Bohai Bank prior to the Group's share of the associate's profit being applied: 31.03.24 $million 31.03.23 $million Total assets 243,892 237,604 Total liabilities 227,393 221,897 Operating income1 1,862 1,942 Net profit1 441 638 Other comprehensive income1 49 (68) 1 This represents six months of earnings (1 October to 31 March) 20. Assets held for sale and associated liabilities Assets held for sale The financial assets reported below are classified under Level 1 $3 million (31 December 2023: $101 million), Level 2 $474 million (31 December 2023: $541 million) and Level 3 $40 million (31 December 2023: $59 million). Assets held for sale 30.06.24 $million 31.12.23 $million Financial assets held at amortised cost 517 701 Cash and balances at central banks 159 246 Loans and advances to banks 3 24 Loans and advances to customers 194 251 Debt securities held at amortised cost 161 180 Property, plant and equipment 61 59 Vessels 43 43 Others 18 16 Others 33 49 611 809 Liabilities held for sale The financial liabilities reported below are classified under Level 1 $51 million (31 December 2023: $54 million) and Level 2 $484 million (31 December 2023: $672 million). Liabilities held for sale 30.06.24 $million 31.12.23 $million Financial liabilities held at amortised cost 535 726 Deposits by banks - 3 Customer accounts 535 723 Other liabilities 30 51 Provisions for liabilities and charges 12 10 577 787 Page 110 21. Other liabilities 30.06.24 $million 31.12.23 $million Financial liabilities held at amortised cost (Note 13) Notes in circulation1 6,529 6,568 Acceptances and endorsements 5,784 5,386 Cash collateral2 11,285 8,440 Property leases 1,028 1,054 Equipment leases 9 4 Unsettled trades and other financial liabilities 22,266 17,211 46,901 38,663 Non-financial liabilities Cash-settled share-based payments 94 102 Other liabilities 445 456 47,440 39,221 1 Hong Kong currency notes in circulation of $6,529 million (31 December 2023: $6,568 million) that are secured by the Government of Hong Kong SAR certificates of indebtedness of the same amount included in other assets (Note 18) 2. Cash collateral are margins received against collateralize net derivative mark-to-market (MTM) positions 22. Contingent liabilities and commitments The table below shows the contract or underlying principal amounts of unmatured off-balance sheet transactions at the balance sheet date. The contract or underlying principal amounts indicate the volume of business outstanding and do not represent amounts at risk. 30.06.24 $million 31.12.23 $million Financial guarantees and other contingent liabilities Financial guarantees, trade credits and irrevocable letters of credit 86,094 74,414 86,094 74,414 Commitments Undrawn formal standby facilities, credit lines and other commitments to lend One year and over 75,382 78,356 Less than one year 29,950 33,092 Unconditionally cancellable 73,236 70,942 178,568 182,390 Capital Commitments Contracted capital expenditure approved by the directors but not provided for in these accounts 2 217 As set out in Note 23, the Group has contingent liabilities in respect of certain legal and regulatory matters. Page 111 23. Legal and regulatory matters The Group receives legal claims against it in a number of jurisdictions and is subject to regulatory and enforcement investigations and proceedings from time to time. Apart from the matters described below, the Group currently considers none of the ongoing claims, investigations or proceedings to be individually material. However, in light of the uncertainties involved in such matters there can be no assurance that the outcome of a particular matter or matters currently not considered to be material may not ultimately be material to the Group's results in a particular reporting period depending on, among other things, the amount of the loss resulting from the matter(s) and the results otherwise reported for such period. Since 2014, the Group has been named as a defendant in a series of lawsuits that have been filed in the United States District Courts for the Southern and Eastern Districts of New York against a number of banks on behalf of plaintiffs who are, or are relatives of, victims of attacks in Iraq, Afghanistan and Israel. The plaintiffs in each of these lawsuits have alleged that the defendant banks aided and abetted the unlawful conduct of parties with connections to terrorist organisations in breach of the United States Anti-Terrorism Act. None of these lawsuits specify the amount of damages claimed. The Group continues to defend these lawsuits. In January 2020, a shareholder derivative complaint was filed by the City of Philadelphia in New York State Court against 45 current and former directors and senior officers of the Group. It is alleged that the individuals breached their duties to the Group and caused a waste of corporate assets by permitting the conduct that gave rise to the costs and losses to the Group related to legacy conduct and control issues. In March 2021, an amended complaint was served in which Standard Chartered Bank and seven individuals were removed from the case. Standard Chartered PLC and Standard Chartered Holdings Limited remained as named "nominal defendants" in the complaint. In May 2021, Standard Chartered PLC filed a motion to dismiss the complaint. In February 2022, the New York State Court ruled in favour of Standard Chartered PLC's motion to dismiss the complaint. The plaintiffs are pursuing an appeal against the February 2022 ruling. A hearing date for the plaintiffs' appeal is awaited. Since October 2020, four lawsuits have been filed in the English High Court against Standard Chartered PLC on behalf of more than 200 shareholders in relation to alleged untrue and/or misleading statements and/or omissions in information published by Standard Chartered PLC in its rights issue prospectuses of 2008, 2010 and 2015 and/or public statements regarding the Group's historic sanctions, money laundering and financial crime compliance issues. These lawsuits have been brought under sections 90 and 90A of the Financial Services and Markets Act 2000. These lawsuits are at an early procedural stage and trial is due to start in late 2026. The claimants have alleged that their losses are in the region of ��1.56 billion (excluding any pre-judgment interest that may be awarded). In addition to having denied any and all liability, Standard Chartered PLC will contest claimants' alleged losses. Bernard Madoff's 2008 confession to running a Ponzi scheme through Bernard L. Madoff Investment Securities LLC (BMIS) gave rise to a number of lawsuits against the Group. BMIS and the Fairfield funds (which invested in BMIS) are in bankruptcy and liquidation, respectively. Between 2010 and 2012, five lawsuits were brought against the Group by the BMIS bankruptcy trustee and the Fairfield funds' liquidators, in each case seeking to recover funds paid to the Group's clients pursuant to redemption requests made prior to BMIS' bankruptcy filing. The total amount sought in these cases exceeds USD 300 million, excluding any pre-judgment interest that may be awarded. The four lawsuits commenced by the Fairfield funds' liquidators have been dismissed and the appeals of those dismissals by the funds' liquidators are ongoing. As has been reported in the press, a number of Korean banks, including Standard Chartered Bank Korea, have sold equity-linked securities ("ELS") to customers, the redemption values of which are determined by the performance of various stock indices. Standard Chartered Bank Korea sold relevant ELS to its customers with a notional value of approximately USD900m. Due to the performance of the Hang Seng China Enterprise Index, it is anticipated that several thousand Standard Chartered Bank Korea customers may redeem their ELS at a loss. The value of Standard Chartered Bank Korea customers' anticipated losses is subject to fluctuation as the ELS mature on various dates through 2026. Standard Chartered Bank Korea may be faced with claims by customers and its regulator, the Financial Supervisory Service, to cover part or all of those anticipated losses and also may face regulatory penalties. A provision is recorded on the balance sheet in respect of this matter. With the exception of the Korea ELS matter described above, the Group has concluded that the threshold for recording provisions pursuant to IAS 37 Provisions, Contingent Liabilities and Contingent Assets is not met with respect to the above matters; however, the outcomes of these matters are inherently uncertain and difficult to predict. Page 112 24. Subordinated liabilities and other borrowed funds 30.06.24 31.12.23 USD $million EUR $million GBP $million NPR $million Total $million USD $million EUR $million GBP $million NPR $million Total $million Fixed rate subordinated debt 7,431 2,546 861 18 10,856 8,524 2,602 892 18 12,036 Redemptions and repurchases during the period 2024 Standard Chartered PLC exercised its right to redeem USD 1 billion 5.2 per cent subordinated notes 2024. Redemptions and repurchases during the year 2023 Standard Chartered PLC exercised its right to redeem USD 2 billion 3.95 per cent subordinated notes 2023. Further to that outstanding balances of floating rate undated subordinate notes were redeemed during the year. Issuance during the period 2024 There was no issuance during the period. Issuance during the year 2023 Standard Chartered Bank Nepal Limited issued NPR 2.4 billion 10.3 per cent fixed rate dated subordinated notes due 2028. 25. Share capital, other equity instruments and reserves Number of ordinary shares millions Ordinary share capital1 $million Ordinary Share premium $million Preference Share premium2 $million Total share capital and share premium $million Other equity instruments $million At 1 January 2023 2,895 1,447 3,989 1,494 6,930 6,504 Cancellation of shares including share buyback (94) (47) - - (47) Additional Tier 1 equity redemption - - - - - (992) At 30 June 2023 2,801 1,400 3,989 1,494 6,883 5,512 Cancellation of shares including share buyback (136) (68) - - (68) - At 31 December 2023 2,665 1,332 3,989 1,494 6,815 5,512 Cancellation of shares including share buyback (113) (57) - - (57) Additional Tier 1 equity issuance - - - - - 992 At 30 June 2024 2,552 1,275 3,989 1,494 6,758 6,504 1 Issued and fully paid ordinary shares of 50 cents each 2 Includes preference share capital of $75,000 Share buyback On 23 February 2024, the Group announced the buyback programme for a share buyback of its ordinary shares of $0.50 each. Nominal value of share purchases was $57 million, the total consideration paid was $1,000 million, and the buyback completed on 25 June 2024. The total number of shares purchased was 113,266,516, representing 4.25 per cent of the ordinary shares in issue. The nominal value of the shares was transferred from the share capital to the capital redemption reserve account. The shares were purchased by Standard Chartered PLC on various exchanges not including the Hong Kong Stock Exchange, by private arrangement. Number of ordinary shares Highest price Paid �� Lowest price paid �� Average price paid per share �� Aggregate price paid �� Aggregate price paid $ February 2024 6,418,285 6.6920 6.3700 6.5039 41,743,905 52,831,654 March 2024 45,113,015 7.0000 6.4400 6.6765 301,197,187 383,771,653 April 2024 24,716,649 7.1300 6.3800 6.7727 167,398,467 209,475,694 May 2024 19,525,751 7.9540 6.9080 7.6883 150,119,738 189,885,098 June 2024 17,492,816 7.8840 7.1220 7.3676 128,879,487 164,035,854 Ordinary share capital In accordance with the Companies Act 2006 the Company does not have authorised share capital. The nominal value of each ordinary share is 50 cents. During the period nil shares were issued under employee share plans. Page 113 Preference share capital At 30 June 2024, the Company has 15,000 $5 non-cumulative redeemable preference shares in issue, with a premium of $99,995 making a paid up amount per preference share of $100,000. The preference shares are redeemable at the option of the Company and are classified in equity. The available profits of the Company are distributed to the holders of the issued preference shares in priority to payments made to holders of the ordinary shares and in priority to, or pari passu with, any payments to the holders of any other class of shares in issue. On a winding up, the assets of the Company are applied to the holders of the preference shares in priority to any payment to the ordinary shareholders and in priority to, or pari passu with, the holders of any other shares in issue, for an amount equal to any dividends payable (on approval of the Board) and the nominal value of the shares together with any premium as determined by the Board. The redeemable preference shares are redeemable at the paid up amount (which includes premium) at the option of the Company in accordance with the terms of the shares. The holders of the preference shares are not entitled to attend or vote at any general meeting except where any relevant dividend due is not paid in full or where a resolution is proposed varying the rights of the preference shares. Other equity instruments The table provides details of outstanding Fixed Rate Resetting Perpetual Subordinated Contingent Convertible AT1 securities issued by Standard Chartered PLC. The net proceeds from the issue of the Securities will be used for the general business purposes of the Group and to strengthen further the regulatory capital base of the Group. Issuance date Nominal value Proceeds net of issue costs Interest rate1 Coupon payment dates2 First reset dates3 Conversion price per ordinary share4 3 July 2019 SGD 750 million USD 552 million 5.375% 3 April, 3 October each year 3 October 2024 SGD 10.909 26 June 2020 USD 1,000 million USD 992 million 6% 26 January, 26 July each year 26 January 2026 USD 5.331 14 January 2021 USD 1,250 million USD 1,239 million 4.75% 14 January, 14 July each year 14 July 2031 USD 6.353 19 August 2021 USD 1,500 million USD 1,489 million 4.30% 19 February, 19 August each year 19 August 2028 USD 6.382 15 August 2022 USD 1,250 million USD 1,239 million 7.75% 15 February, 15 August each year 15 February 2028 USD 7.333 8 March 2024 USD 1,000 million USD 992 million 7.875% 8 March, 8 September each year 8 September 2030 USD 8.216 1 Interest rates for the period from (and including) the issue date to (but excluding) the first reset date 2 Interest payable semi-annually in arrears 3 Securities are resettable each date falling five years, or an integral multiple of five years, after the first reset date 4 Conversion price set at the time of pricing with reference to closing share price and any applicable discount The AT1 issuances above are primarily purchased by institutional investors. The principal terms of the AT1 securities are described below: ��� The securities are perpetual and redeemable, at the option of Standard Chartered PLC in whole but not in part, on the first interest reset date and each date falling five years after the first reset date ��� The securities are also redeemable for certain regulatory or tax reasons on any date at 100 per cent of their principal amount together with any accrued but unpaid interest up to (but excluding) the date fixed for redemption. Any redemption is subject to Standard Chartered PLC giving notice to the relevant regulator and the regulator granting permission to redeem ��� Interest payments on these securities will be accounted for as a dividend. ��� Interest on the securities is due and payable only at the sole and absolute discretion of Standard Chartered PLC, subject to certain additional restrictions set out in the terms and conditions. Accordingly, Standard Chartered PLC may at any time elect to cancel any interest payment (or part thereof) which would otherwise be payable on any interest payment date. ��� The securities convert into ordinary shares of Standard Chartered PLC, at a pre-determined price detailed in the table above, should the fully loaded Common Equity Tier 1 ratio of the Group fall below 7.0 per cent. Approximately 859 million ordinary shares would be required to satisfy the conversion of all the securities mentioned above The securities rank behind the claims against Standard Chartered PLC of (a) unsubordinated creditors, (b) which are expressed to be subordinated to the claims of unsubordinated creditors of Standard Chartered PLC but not further or otherwise; or (c) which are, or are expressed to be, junior to the claims of other creditors of Standard Chartered PLC, whether subordinated or unsubordinated, other than claims which rank, or are expressed to rank, pari passu with, or junior to, the claims of holders of the AT1 securities in a winding-up occurring prior to the conversion trigger. The net proceeds from the issue of the Securities will be used for the general business purposes of the Group and to strengthen further the regulatory capital base of the Group. Page 114 Reserves The constituents of the reserves are summarised as follows: ��� The capital reserve represents the exchange difference on redenomination of share capital and share premium from sterling to US dollars in 2001. The capital redemption reserve represents the nominal value of preference shares redeemed ��� The amounts in the "Capital and Merger Reserve" represents the premium arising on shares issued using a cash box financing structure, which required the Company to create a merger reserve under section 612 of the Companies Act 2006. Shares were issued using this structure in 2005 and 2006 to assist in the funding of Korea ($1.9 billion) and Taiwan ($1.2 billion) acquisitions, in 2008, 2010 and 2015 for the shares issued by way of a rights issue, primarily for capital maintenance requirements and for the shares issued in 2009 by way of an accelerated book build, the proceeds of which were used in the ordinary course of business of the Group. The funding raised by the 2008, 2010 and 2015 rights issues and 2009 share issue was fully retained within the Company. Of the 2015 funding, $1.5 billion was used to subscribe to additional equity in Standard Chartered Bank, a wholly owned subsidiary of the Company. Apart from the Korea, Taiwan and Standard Chartered Bank funding, the merger reserve is considered realised and distributable. ��� Own credit adjustment reserve represents the cumulative gains and losses on financial liabilities designated at fair value through profit or loss relating to own credit. Gains and losses on financial liabilities designated at fair value through profit or loss relating to own credit in the year have been taken through other comprehensive income into this reserve. On derecognition of applicable instruments the balance of any OCA will not be recycled to the income statement, but will be transferred within equity to retained earnings ��� Fair value through other comprehensive income (FVOCI) debt reserve represents the unrealised fair value gains and losses in respect of financial assets classified as FVOCI, net of expected credit losses and taxation. Gains and losses are deferred in this reserve and are reclassified to the income statement when the underlying asset is sold, matures or becomes impaired. ��� FVOCI equity reserve represents unrealised fair value gains and losses in respect of financial assets classified as FVOCI, net of taxation. Gains and losses are recorded in this reserve and never recycled to the income statement ��� Cash flow hedge reserve represents the effective portion of the gains and losses on derivatives that meet the criteria for these types of hedges. Gains and losses are deferred in this reserve and are reclassified to the income statement when the underlying hedged item affects profit and loss or when a forecast transaction is no longer expected to occur ��� Translation reserve represents the cumulative foreign exchange gains and losses on translation of the net investment of the Group in foreign operations. Since 1 January 2004, gains and losses are deferred to this reserve and are reclassified to the income statement when the underlying foreign operation is disposed. Gains and losses arising from derivatives used as hedges of net investments are netted against the foreign exchange gains and losses on translation of the net investment of the foreign operations ��� Retained earnings represents profits and other comprehensive income earned by the Group and Company in the current and prior periods, together with the after tax increase relating to equity-settled share options, less dividend distributions, own shares held (treasury shares) and share buybacks A substantial part of the Group's reserves is held in overseas subsidiary undertakings and branches, principally to support local operations or to comply with local regulations. The maintenance of local regulatory capital ratios could potentially restrict the amount of reserves which can be remitted. In addition, if these overseas reserves were to be remitted, further unprovided taxation liabilities might arise. As at 30 June 2024, the distributable reserves of Standard Chartered PLC (the Company) were $15.1 billion (31 December 2023: $14.7 billion). Distributable reserves of SC PLC were $15.1 billion, which are calculated from the Merger reserve and Retained Earnings with consideration for restricted items in line with sections 830 and 831 of the Companies Act 2006. Page 115 Own shares The 2004 Employee Benefit Trust (2004 Trust) is used in conjunction with the Group's employee share schemes and other employee share-based payments (such as upfront shares and salary shares). Computershare Trustees (Jersey) Limited is the trustee of the 2004 Trust. Group companies fund the 2004 Trust from time to time to enable the trustee to acquire ordinary shares in Standard Chartered PLC to satisfy these arrangements. Details of the shares purchased and held by the 2004 Trust are set out below. 2004 Trust 30.06.24 31.12.23 30.06.23 Shares purchased during the period 40,707 29,069,539 - Market price of shares purchased ($million) 0.35 237 - Shares held at the end of the period 1,863,677 28,095,542 3,541,529 Maximum number of shares held during the period 28,085,688 28,893,930 27,525,624 Except as disclosed, neither the Company nor any of its subsidiaries has bought, sold or redeemed any securities of the Company listed on The Stock Exchange of Hong Kong Limited during the period. Dividend waivers The trustees of the 2004 Trust, which holds ordinary shares in Standard Chartered PLC in connection with the operation of its employee share plans, waive any dividend on the balance of ordinary shares that have not been allocated to employees, except for 0.01p per share. 26. Retirement benefit obligations Retirement benefit obligations comprise: 30.06.24 $million 31.12.23 $million 30.06.23 $million Defined benefit plans obligation (138) (166) (110) Defined contribution plans obligation (19) (17) (16) Net obligation (157)�� (183) (126) 1 Includes $268 million retirement benefit schemes in deficit partly offset by $111 million retirement benefit schemes in surplus Retirement benefit charge comprises: 6 months ended 30.06.24 6 months ended 31.12.23 6 months ended 30.06.23 The pension cost for defined benefit plans was: Current service cost�� 24 27 23 Past service cost and curtailments - - 9 Gain on settlements - 2 - Interest income on pension plan assets (49) (49) (51) Interest on pension plan liabilities 51 51 54 Total charge to profit before deduction of tax 26 31 35 Losses/(returns) on plan assets excluding interest income�� 32 (82) 12 Losses/(gains) on liabilities (63) 164 (47) Total losses/(gains) recognised directly in statement of comprehensive income before tax (31) 82 (35) Deferred taxation 6 (15) 4 Total losses/(gains) after tax (25) 67 (31) 1 Includes administrative expenses paid out of plan assets of $1 million 2 The actual return on assets was a gain of $17 million The Group operates over 60 defined benefit plans across its geographies, many of which are closed to new entrants who now join defined contribution arrangements. The aim of all these plans is, as part of the Group's commitment to financial wellbeing for employees, to give employees the opportunity to save appropriately for retirement in a way that is consistent with local regulations, taxation requirements and market conditions. The defined benefit plans expose the Group to currency risk, interest rate risk, investment risk and actuarial risks such as longevity risk. Page 116 Material holdings of government and corporate bonds partially hedge movements in the liabilities resulting from interest rate and inflation changes. Setting aside movements from other drivers such as currency fluctuation, the increases in discount rates in most geographies over 2024 have led to lower liabilities. These have been partly offset by decreases in the value of bonds while H1 2024 has seen strong performance of growth assets such as equities and property, leading to a fall in the pension deficit reported. These movements are shown as actuarial gains and losses in the tables above. The disclosures required under IAS 19 have been calculated by independent qualified actuaries based on the most recent full actuarial valuations updated, where necessary, to 30 June 2024. 27. Related party transactions Directors and officers As at 30 June 2024, Standard Chartered Bank had in place a charge over $67 million (31 December 2023: $68 million) of cash assets in favour of the independent trustee of its employer financed retirement benefit scheme. There were no changes in the related party transactions described in the Annual Report 2023 that could have or have had a material effect on the financial position or performance of the Group in the period ended 30 June 2024. All related party transactions that have taken place in the period were similar in nature to those disclosed in Annual Report 2023. Associate and joint ventures The following transactions with related parties are on an arm's length basis: 30.06.24 $million 31.12.23 $million Assets Financial Assets held at FVTPL - 14 Derivative assets 9 12 Total assets 9 26 Liabilities Deposits 547 959 Other Liabilities - 2 Total liabilities 547 961 Loan commitments and other guarantees�� 14 113 1 The maximum loan commitments and other guarantees during the period were $14 million (31 December 2023: $113 million) 28. Post balance sheet events A share buyback for up to a maximum consideration of $1 .5billion has been declared by the directors after 30 June 2024. This will reduce the number of ordinary shares in issue by cancelling the repurchased shares The Board has recommended an interim ordinary dividend for the half year 2024 of 9 cents a share or $230 million 29. Corporate governance The directors confirm that, throughout the period, the Company has complied with the code provisions set out in the Corporate Governance Code contained in Appendix C1 of the Hong Kong Listing Rules. The directors also confirm that the announcement of these results has been reviewed by the Company's Audit Committee. The Company confirms that it has adopted a code of conduct regarding securities transactions by directors on terms no less exacting than the required standard set out in Appendix C3 of the Hong Kong Listing Rules and that, having made specific enquiry of all directors, the directors of the Company have complied with the required standards of the adopted code of conduct throughout the period. Details of the Group's corporate governance arrangements are set out in the Directors' Report within the 2023 Annual Report. As previously announced, the following changes to the composition of the Board have taken place since 31 December 2023. On 2 January 2024, Andy Halford retired from the Board and Diego De Giorgi was appointed as an Executive Director and Group Chief Financial Officer with effect from 3 January 2024. On 29 February 2024, Gay Huey Evans retired from the Board and as a member of the Board Risk Committee. Diane Jurgens was appointed to the Board as an Independent Non-Executive Director (INED) on 1 March 2024 and became a member of the Culture and Sustainability Committee. On 9 May 2024, Carlson Tong retired from the Board and as member of the Audit and Board Risk Committees. Biographies for each of the directors and a list of the committees' membership can be found at www.sc.com/ourpeople. Page 117 In compliance with Rule 13.51B(1) of the Hong Kong Listing Rules, the Company confirms that Maria Ramos, INED, retired from AngloGold Ashanti PLC as Chair of the board on 28 May 2024. 30. Statutory accounts The information in this Half Year Report is unaudited and does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006. This document was approved by the Board on 30 July 2024. The statutory accounts for the year ended 31 December 2023 have been audited and delivered to the Registrar of Companies in England and Wales. The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under sections 498(2) and 498(3) of the Companies Act 2006. 31. Cash flow statement Adjustment for non-cash items and other adjustments included within income statement 30.06.24 $million 30.06.23 $million Amortisation of discounts and premiums of investment securities 249 (219) Interest expense on subordinated liabilities 394 415 Interest expense on senior debt securities in issue 1,291 959 Other non-cash items (91) (168) Pension costs for defined benefit schemes 27 35 Share-based payment costs 172 112 Impairment losses on loans and advances and other credit risk provisions 240 161 Other impairment 147 77 Gain on disposal of property, plant and equipment (13) (32) Loss on disposal of FVOCI and AMCST financial assets 86 105 Depreciation and amortisation 516 561 Fair value changes taken to income statement (1,034) (357) Foreign Currency revaluation (110) (29) Profit from associates and joint ventures (144) (102) Total 1,730 1,518 Change in operating assets 30.06.24 $million 30.06.23 (Restated) $million Net decrease in derivative financial instruments 1,370 2,893 Net increase in debt securities, treasury bills and equity shares held at fair value through profit or loss1 (25,183) (11,254) Net (increase)/decrease in loans and advances to banks and customers1 (9,614) 7,043 Net increase in prepayments and accrued income (227) (205) Net increase in other assets (7,928) (6,783) Total (41,582) (8,306) 1 Increase in debt securities, treasury bills and equity shares held at fair value through profit or loss for 30.06.2023 has been restated by $28 million and the increase in loans and advances to banks and customers for 30.06.2023 has been restated by $(6,273) million Change in operating liabilities 30.06.24 $million 30.06.23 $million Net decrease in derivative financial instruments (5,059) (6,511) Net increase in deposits from banks, customer accounts, debt securities in issue, Hong Kong notes in circulation and short positions 17,512 23,238 (Decrease)/increase in accruals and deferred income (380) 437 Net increase in other liabilities 8,393 9,302 Total 20,466 26,466 Page 118 Changes in financing activities - subordinated & senior debts 30.06.24 $million 30.06.23 $million Subordinated debt (including accrued interest): Opening balance 12,216 13,929 Interest paid (252) (300) Repayment (1,000) (2,000) Foreign exchange movements (91) 109 Fair value changes (92) 38 Accrued Interest and Others 244 282 Closing balance 11,025 12,058 Senior debt (including accrued interest): Opening balance 41,350 32,288 Proceeds from the issue 7,698 7,072 Interest paid (548) (561) Repayment (7,191) (2,715) Foreign exchange movements (292) (158) Fair value changes (92) (98) Accrued Interest and Others 1,612 390 Closing balance 42,537 36,218 Cash and cash equivalents The Group's cash and cash equivalents balance for 30 June 2023 has been restated to increase the balance by $2,631 million as balances with central banks that met the cash and cash equivalents definition were originally included in loans and advances to customers ($27,680 million) but not included in cash and cash equivalents and there were balances included in cash and cash equivalents related to loans and advances to banks ($19,781 million), treasury bills and other eligible bills ($3,919 million) as well as Investments ($1,349 million) that did not meet the cash and cash equivalents definition. On the 30 June 2023 cash flow statement for Group, the change in operating assets has also been restated by $(6,245) million as a result of these changes. Page 119 Other supplementary information Supplementary financial information Insured and uninsured deposits SCB operates and provides services to customers across many countries and insured deposit is determined on the basis of limits enacted within local regulations 30.06.24 31.12.23 Bank deposits $million Customer accounts $million Bank deposits $million Customer accounts $million Insured deposits 23 67,611 10 66,753 Current accounts 9 15,237 9 15,767 Savings deposits - 27,472 - 27,376 Time deposits 14 24,799 1 23,517 Other deposits - 103 - 93 Uninsured deposits 40,455 464,651 35,500 467,868 Current accounts 21,613 147,169 20,969 150,559 Savings deposits - 88,097 - 91,425 Time deposits 7,775 184,152 8,295 176,977 Other deposits 11,067 45,233 6,236 48,907 Total 40,478 532,262 35,510 534,621 UK and non-UK deposits The following table summarises the split of Bank and Customer deposits into UK and Non-UK deposits for respective account lines based on the domicile or residence of the clients. 30.06.24 31.12.23 Bank deposits $million Customer accounts $million Bank deposits $million Customer accounts $million UK deposits 4,688 20,655 2,918 29,318 Current accounts 1,156 8,619 925 7,062 Savings deposits - 193 - 330 Time deposits 427 6,533 310 5,412 Other deposits 3,105 5,310 1,683 16,514 Non-UK deposits 35,790 511,607 32,592 505,303 Current accounts 20,466 153,787 20,053 159,264 Savings deposits - 115,376 - 118,471 Time deposits 7,362 202,418 7,986 195,082 Other deposits 7,962 40,026 4,553 32,486 Total 40,478 532,262 35,510 534,621 Contractual maturity of Loans, Investment securities and Deposits 30.06.2024 Loans and advances to banks $million Loans and advances to customers $million Investment securities - Treasury and other eligible Bills $million Investment securities - Debt securities $million Investment securities - Equity shares $million Bank deposits $million Customer accounts $million One year or less 74,652 182,601 40,572 57,980 - 34,033 474,613 Between one and five years 11,838 59,653 36 74,997 - 6,441 55,028 Between five and ten years 891 19,825 - 23,215 - 4 806 Between ten years and fifteen years 70 13,178 - 7,514 - - 1,287 More than fifteen years and undated 241 60,450 - 21,453 6,088 - 528 Total 87,692 335,707 40,608 185,159 6,088 40,478 532,262 Total Amortised cost and FVOCI exposures 45,231 275,896 Of which: Fixed interest rate exposures 37,835 155,260 Of which: Floating interest rate exposures 7,396 120,636 Page 120 31.12.2023 Loans and advances to banks $million Loans and advances to customers $million Investment securities - Treasury and other eligible Bills $million Investment securities - Debt securities $million Investment securities - Equity shares $million Bank deposits $million Customer accounts $million One year or less 72,717 197,125 38,877 59,023 - 31,333 485,909 Between one and five years 3,975 52,532 4 69,075 - 4,174 46,364 Between five and ten years 837 19,184 1 18,804 - 2 567 Between ten years and fifteen years 35 14,084 - 9,276 - - 1,341 More than fifteen years and undated 226 62,561 - 18,155 3,932 - 441 Total 77,790 345,486 38,882 174,333 3,932 35,509 534,622 Total Amortised cost and FVOCI exposures 44,977 286,975 Of which: Fixed interest rate exposures 38,505 168,697 Of which: Floating interest rate exposures 6,472 118,278 Maturity and yield of Debt securities, additional tier one and other eligible bills held at amortised One year or less Between one and five years Between five and ten years More than ten years Total $million Yield % $million Yield % $million Yield % $million Yield % $million Yield % Central and other government agencies - US 2,441 1.75 9,519 1.67 5,950 1.77 4,430 3.87 22,340 2.14 - UK 286 1.62 673 1.91 55 1.25 - - 1,014 1.79 - Other 4,244 2.69 10,575 2.71 1,954 3.33 24 7.39 16,797 2.78 Other debt securities 1,534 6.06 2,320 5.94 3,791 5.05 8,607 5.12 16,252 5.31 As at 30 June 2024 8,505 2.99 23,087 2.58 11,750 3.08 13,061 4.70 56,403 3.23 One year or less Between one and five years Between five and ten years More than ten years Total $million Yield % $million Yield % $million Yield % $million Yield % $million Yield % Central and other government agencies - US 1,861 1.39 9,171 1.61 5,799 1.67 4,524 3.89 21,355 2.09 - UK 39 2.75 85 1.06 101 0.67 - - 225 1.18 - Other 5,045 2.72 9,560 2.80 2,289 3.12 81 4.74 16,975 2.84 Other debt securities 2,487 6.45 2,658 5.37 2,262 5.44 10,973 5.13 18,380 5.38 As at 31 December 2023 9,432 3.44 21,474 2.61 10,451 2.79 15,578 4.77 56,935 3.37 The maturity distributions are presented in the above table on the basis of contractual maturity dates. The weighted average yield for each range of maturities is calculated by dividing the annualised interest income for the year by the book amount of debt securities at that date. Average balance sheets and yields Average balance sheets and yields For the purposes of calculating net interest margin the following adjustments are made: ��� Statutory net interest income is adjusted to remove interest expense on amortised cost liabilities used to provide funding to the Global Markets business ��� Financial instruments measured at fair value through profit or loss are classified as non-interest earning ��� Premiums on financial guarantees purchased to manage interest earning assets are treated as interest expense In the Group's view this results in a net interest margin that is more reflective of banking book performance. Page 121 The following tables set out the average balances and yields for the Group's assets and liabilities for the periods ended 30 June 2024 31 December 2023 and 30 June 2023 under the revised definition of net interest margin. For the purpose of these tables, average balances have been determined on the basis of daily balances, except for certain categories, for which balances have been determined less frequently. The Group does not believe that the information presented in these tables would be significantly different had such balances been determined on a daily basis. Average assets 6 months ended 30.06.24 Average non-interest earning balance $million Average interest earning balance $million Interest income $million Gross yield interest earning balance % Gross yield total balance % Cash and balances at central banks 10,244 59,865 1,360 4.57 3.90 Gross loans and advances to banks 39,425 41,801 1,052 5.06 2.60 Gross loans and advances to customers 56,445 285,940 8,259 5.81 4.85 Impairment provisions against loans and advances to banks and customers - (5,501) - - - Investment securities - Treasury and Other Eligible Bills 13,364 28,990 807 5.60 3.83 Investment securities - Debt Securities 53,058 132,693 2,716 4.12 2.94 Investment securities - Equity Shares 4,545 - - - - Property, plant and equipment and intangible assets 6,263 - - - - Prepayments, accrued income and other assets 120,866 - - - - Investment associates and joint ventures 1,052 - - - - Total average assets 305,262 543,788 14,194 5.25 3.36 6 months ended 31.12.23 Average non-interest earning balance $million Average interest earning balance $million Interest income $million Gross yield interest earning balance % Gross yield total balance % Cash and balances at central banks 10,138 72,136 1,622 4.46 3.96 Gross loans and advances to banks 36,110 45,606 1,136 4.94 2.80 Gross loans and advances to customers 53,180 297,757 8,194 5.46 4.70 Impairment provisions against loans and advances to banks and customers - (5,793) - - - Investment securities - Treasury and Other Eligible Bills 9,041 28,621 787 5.45 4.20 Investment securities - Debt Securities 33,551 130,622 2,661 4.04 3.26 Investment securities - Equity Shares 3,151 - - - - Property, plant and equipment and intangible assets 6,142 - - - - Prepayments, accrued income and other assets 129,624 - - - - Investment associates and joint ventures 1,466 - - - - Total average assets 282,403 568,949 14,400 5.02 3.40 6 months ended 30.06.23 Average non-interest earning balance $million Average interest earning balance $million Interest income $million Gross yield interest earning balance % Gross yield total balance % Cash and balances at central banks 10,799 63,057 1,211 3.87 3.31 Gross loans and advances to banks 33,352 42,692 958 4.53 2.54 Gross loans and advances to customers 57,325 305,444 7,504 4.95 4.17 Impairment provisions against loans and advances to banks and customers - (5,996) - - - Investment securities - Treasury and Other Eligible Bills 6,851 35,488 809 4.60 3.85 Investment securities - Debt Securities 26,211 135,464 2,344 3.49 2.92 Investment securities - Equity Shares 3,230 - - - - Property, plant and equipment and intangible assets 9,278 - - - - Prepayments, accrued income and other assets 125,751 - - - - Investment associates and joint ventures 1,781 - - - - Total average assets 274,578 576,149 12,826 4.49 3.04 Page 122 Average liabilities 6 months ended 30.06.24 Average non-interest bearing balance $million Average interest bearing balance $million Interest expense $million Rate paid interest bearing balance % Rate paid total balance % Deposits by banks 15,374 21,300 441 4.16 2.42 Customer accounts: - - - Current accounts 39,666 128,079 2,245 3.52 2.69 Savings deposits - 113,627 1,204 2.13 2.13 Time deposits 19,131 186,811 4,642 5.00 4.53 Other deposits 36,403 11,734 299 5.12 1.25 Debt securities in issue 11,642 64,678 1,794 5.58 4.73 Accruals, deferred income and other liabilities 138,564 - - - - Subordinated liabilities and other borrowed funds - 11,379 394 6.96 6.96 Non-controlling interests 389 - - - - Shareholders' funds 50,272 - - - - 311,442 537,608 11,019 4.12 1.30 Adjustment for trading book funding cost and others (1,816) Total average liabilities and shareholders' funds 311,442 537,608 9,203 3.44 1.08 6 months ended 31.12.23 Average non-interest bearing balance $million Average interest bearing balance $million Interest expense $million Rate paid interest bearing balance % Rate paid total balance % Deposits by banks 14,075 22,975 420 3.63 2.25 Customer accounts: Current accounts 39,993 123,011 2,044 3.30 2.49 Savings deposits - 111,593 1,087 1.93 1.93 Time deposits 16,188 185,482 4,276 4.57 4.21 Other deposits 39,148 10,018 424 8.40 1.71 Debt securities in issue 13,945 64,968 1,829 5.58 4.60 Accruals, deferred income and other liabilities 135,882 12,612 - - - Subordinated liabilities and other borrowed funds - 12,447 535 8.53 8.53 Non-controlling interests 370 - - - - Shareholders' funds 48,644 - - - - 308,246 543,106 10,615 3.88 2.47 Adjustment for trading book funding cost and others (992) Total average liabilities and shareholders' funds 308,246 543,106 9,623 3.51 2.24 Page 123 6 months ended 30.06.23 Average non-interest bearing balance $million Average interest bearing balance $million Interest expense $million Rate paid interest bearing balance % Rate paid total balance % Deposits by banks 14,395 25,176 374 3.00 1.91 Customer accounts: Current accounts 43,861 130,405 1,705 2.64 1.97 Savings deposits - 112,506 892 1.60 1.60 Time deposits 14,489 187,106 3,830 4.13 3.83 Other deposits 49,348 2,978 62 4.20 0.24 Debt securities in issue 10,546 66,201 1,538 4.68 4.04 Accruals, deferred income and other liabilities 130,519 1,029 26 5.10 0.04 Subordinated liabilities and other borrowed funds - 12,148 415 6.89 6.89 Non-controlling interests 320 - - - - Shareholders' funds 49,700 - - - - 313,178 537,549 8,842 3.32 1.04 Adjustment for trading book funding cost and others - - (786) - - Total average liabilities and shareholders' funds 313,178 537,549 8,056 3.02 0.95 Net interest margin 6 months ended 30.06.24 $million 6 months ended 31.12.23 $million 6 months ended 30.06.23 $million Interest income (reported) 14,194 14,400 12,826 Average interest earning assets 543,788 568,949 576,149 Gross yield (%) 5.25 5.02 4.49 Interest expense (reported) 11,019 10,615 8,842 Adjustment for trading book funding cost and others (1,816) (992) (786) Interest expense adjusted for trading book funding cost and others 9,203 9,623 8,056 Average interest-bearing liabilities 537,608 543,106 537,549 Rate paid (%) 3.44 3.51 3.02 Net yield (%) 1.81 1.51 1.47 Net interest income adjusted for trading book funding cost and others 4,991 4,777 4,770 Net interest margin (%) 1.85 1.67 1.67 Page 124 Additional items A. Our Fair Pay Charter Our Fair Pay Charter, introduced in 2018, sets out the principles we use to make remuneration decisions across the Group that are fair, transparent and competitive to support us in embedding a performance-oriented, inclusive and innovative culture and in delivering a differentiated employee experience. In 2023, we reviewed and refined our Fair Pay Charter to a set of four principles set out in the Group's Diversity, Equality and Inclusion Impact Report 2023. This report, available on our Group website, explains each principle and summarises how we are implementing them across the Group. B. Group share plans Discretionary share plans The 2021 Standard Chartered Share Plan (the '2021 Plan') was approved by shareholders in May 2021 and is the Group's main share plan, replacing the 2011 Standard Chartered Share Plan (the '2011 Plan') for new awards from June 2021. It is used to deliver various types of share awards to employees and former employees of the Group, including directors and former executive directors: ��� Long-term incentive plan (LTIP) awards are granted with vesting subject to performance measures that have previously included: relative total shareholder return (TSR); Return on Tangible Equity (RoTE) (with a Common Equity Tier 1 (CET1) underpin); and strategic and sustainability measures. Each measure is assessed independently over a three-year period. LTIP awards have an individual conduct gateway requirement that results in the award lapsing if not met. ��� Deferred shares are used to deliver: - the deferred portion of variable remuneration. These awards vest in instalments on anniversaries of the award date specified at the time of grant. This enables the Group to meet regulatory requirements relating to deferral levels, and is in line with market practice. - replacement buy-out awards to new joiners who forfeit awards on leaving their previous employers. These vest in the quarter following the date when the award would have vested at the previous employer. This enables the Group to meet regulatory requirements relating to buy-outs, and is in line with market practice. Under the 2021 Plan and 2011 Plan, no grant price is payable to receive an award. The remaining life of the 2021 Plan during which new awards can be made is seven years. The 2011 Plan has expired and no further awards can be granted under this plan. All-employee share plans The Standard Chartered 2023 Sharesave Plan was approved by shareholders in May 2023, replacing the Standard Chartered 2013 Sharesave Plan. Under the 2023 Sharesave Plan, employees may open a savings contract. Within a maturity period of six months after the third anniversary, employees may purchase ordinary shares in the Company at a discount of up to 20 per cent on the share price at the date of invitation. There are no performance measures attached to options granted under the 2023 Sharesave Plan and no grant price is payable to receive an option. In some countries in which the Group operates, it is not possible to deliver shares under the 2023 Sharesave Plan, typically due to securities laws and regulatory restrictions. In these countries, where possible, the Group offers an equivalent cash-based plan to its employees. Valuation of share awards Details of the valuation models used in determining the fair values of share awards granted under the Group's share plans are detailed in the Group's 2023 Annual Report. Page 125 Reconciliation of share award movements for the year to 30 June 2024 Discretonary1 Sharesave��� Weighted average Sharesave exercise price (��) LTIP Deferred shares Outstanding on 1 January 2024 10,947,382 47,068,204 16,902,217 4.49 Granted2, 3 2,320,481 25,075,381 - - Lapsed (1,730,292) (471,265) (613,810) 4.68 Vested/exercised (901,531) (18,131,269) (2,441,150) 3.16 Outstanding on 30 June 2024��� 10,636,040 53,541,051 13,847,257 4.72 Total number of securities available for issue under the plan 10,636,040 53,541,051 13,847,257 4.72 Percentage of the issued shares this represents as of 30 June 2024��� 0.42 2.10 0.54 Exercisable as of 30 June 2024 - 361,802 91,880 4.65 Range of exercise prices (��) - - 3.14 - 5.88 - Intrinsic value of vested but not exercised options ($ million) 0.00 3.27 0.29 - Weighted average contractual remaining life (years) 7.89 8.64 2.11 - Weighted average share price for awards exercised during the period (��) 6.57 6.57 6.76 - 1. Employees do not contribute towards the cost of these awards, which are covered under the rules of the 2011 Standard Chartered Share Plan for grants prior to May 2021, and under the rules of the 2021 Standard Chartered Share Plan for grants from June 2021 2. 2,315,422 (LTIP) granted on 12 March 2024; 5,059 (LTIP) granted as a notional dividend on 1 March 2024; 24,381,791 (deferred shares) granted on 11 March 2024; 229,896 (deferred shares) granted as a notional dividend on 1 March 2024; 463,694 (deferred shares) granted on 17 June 2024 3. No discretionary awards (LTIP or deferred/buy-out awards) have been granted in the form of options since June 2015. For historic awards granted as options and exercised in the period to 30 June 2024, the exercise price of deferred shares options was nil 4. All Sharesave awards are in the form of options. The exercise price of Sharesave options exercised was ��5.88 for options granted in 2023, ��4.23 for options granted in 2022, ��3.67 for options granted in 2021 and ��3.14 for options granted in 2020 5. No options or awards were cancelled in the period 6. The number of shares granted during this period, under all Standard Chartered PLC share plans, as a percentage of the average number of shares in issue during the period is 1.04 per cent C. Group Chairman and independent non-executive directors' interests in ordinary shares as at 30 June 2024 ��,�� Shares beneficially held as of 31 December 2023 Shares beneficially held as of 30 June 2024 Chairman J Vi��als 45,000 45,000 Independent non-executive directors S M Apte 2,000 2,000 D P Conner 10,000 10,000 G Huey Evans, CBE3 2,615 - J Hunt 2,000 2,000 D E Jurgens4 - 8,888 R A Lawther, CBE 2,000 2,000 M Ramos 2,000 2,000 P G Rivett 2,128 2,128 D Tang 2,000 2,000 C Tong5 2,000 - L Y Yueh 2,000 2,000 1. Independent non-executive directors are required to hold shares with a nominal value of $1,000. All the directors have met this requirement 2. The beneficial interests of directors and their related parties in the ordinary shares of the Company are set out above. The directors do not have any non-beneficial interests in the Company's shares. None of the directors used ordinary shares as collateral for any loans. No director had either i) an interest in the Company's preference shares or loan stocks of any subsidiary or associated undertaking of the Group or ii) any corporate interests in the Company's ordinary shares. All figures as of 30 June 2024 3. Gay Huey Evans, CBE, retired from the Board on 29 February 2024 4. Diane Jurgens was appointed to the Board on 1 March 2024 5. Carlson Tong retired from the Board on 9 May 2024 Page 126 D. Executive directors' interests in ordinary shares as at 30 June 2024 Scheme interests awarded, exercised and lapsed during the period Employees, including executive directors, are not permitted to engage in any personal investment strategies with regards to their Company shares, including hedging against the share price of Company shares. The main features of the outstanding shares and awards are summarised below: Award1 Performance measures Performance outcome Accrues notional dividends?2 2017-19 33% RoE 33% TSR 33% Strategic 38% Yes 2018-20 26% No 2019-21 33% RoTE 33% TSR 33% Strategic 23% 2020-22 36.8% 2021-23 30% RoTE 30% TSR 15% Sustainability 25% Strategic 57% 2022-24 To be assessed at the end of 2024 2023-25 To be assessed at the end of 2025 2024-26 30% RoTE 30% TSR 25% ESG 15% Other strategic To be assessed at the end of 2026 1. Awards are delivered in five equal tranches 2. 2017-19 LTIP award may receive dividend equivalent shares based on dividends declared between grant and vest. From 1 January 2017 remuneration regulations for European banks prohibited the award of dividend equivalent shares. Therefore, the number of shares awarded in respect of the LTIP awards granted after this date took into account the lack of dividend equivalents (calculated by reference to market consensus dividend yield) such that the overall value of the award was maintained The following table shows the changes in share interests. Date of grant Changes in interests from 1 January to 30 June 2024 Share award price (��) As at 1 January Awarded1 Dividends awarded2 Vested/ exercised3,4 Lapsed As at 30 June Performance period end Vesting date Bill Winters5 2017-19 LTIP 13 Mar 2017 7.450 45,049 - 6,127 51,176 - - 13 Mar 2020 13 Mar 2024 2018-20 LTIP 9 Mar 2018 7.782 28,178 - - 28,178 - - 9 Mar 2021 9 Mar 2024 28,179 - - - - 28,179 9 Mar 2025 2019-21 LTIP 11 Mar 2019 6.105 30,604 - - 30,604 - - 11 Mar 2022 11 Mar 2024 30,604 - - - - 30,604 11 Mar 2025 30,605 - - - - 30,605 11 Mar 2026 2020-22 LTIP 9 Mar 2020 5.196 59,282 - - 59,282 - - 9 Mar 2023 9 Mar 2024 59,282 - - - - 59,282 9 Mar 2025 59,282 - - - - 59,282 9 Mar 2026 59,282 - - - - 59,282 9 Mar 2027 2021-23 LTIP 15 Mar 2021 4.901 150,621 - - 85,853 64,768 - 15 Mar 2024 15 Mar 2024 150,621 - - - 64,768 85,853 15 Mar 2025 150,621 - - - 64,768 85,853 15 Mar 2026 150,621 - - - 64,768 85,853 15 Mar 2027 150,621 - - - 64,768 85,853 15 Mar 2028 2022-24 LTIP 14 Mar 2022 4.876 151,386 - - - - 151,386 14 Mar 2025 14 Mar 2025 151,386 - - - - 151,386 14 Mar 2026 151,386 - - - - 151,386 14 Mar 2027 151,386 - - - - 151,386 14 Mar 2028 151,388 - - - - 151,388 14 Mar 2029 2023-25 LTIP 13 Mar 2023 7.398 101,209 - - - - 101,209 13 Mar 2026 13 Mar 2026 101,209 - - - - 101,209 13 Mar 2027 101,209 - - - - 101,209 13 Mar 2028 101,209 - - - - 101,209 13 Mar 2029 101,209 - - - - 101,209 13 Mar 2030 2024-26 LTIP 12 Mar 2024 6.600 - 123,275 - - - 123,275 12 Mar 2027 12 Mar 2027 - 123,275 - - - 123,275 12 Mar 2028 - 123,275 - - - 123,275 12 Mar 2029 - 123,275 - - - 123,275 12 Mar 2030 - 123,278 - - - 123,278 12 Mar 2031 Page 127 Date of grant Changes in interests from 1 January to 30 June 2024 Share award price (��) As at 1 January Awarded1 Dividends awarded2 Vested/ exercised3,4 Lapsed As at 30 June Performance period end Vesting date Andy Halford5 2017-19 LTIP 13 Mar 2017 7.450 27,890 - 3,796 31,686 - - 13 Mar 2020 13 Mar 2024 2018-20 LTIP 9 Mar 2018 7.782 17,448 - - 17,448 - - 9 Mar 2021 9 Mar 2024 17,448 - - - - 17,448 9 Mar 2025 2019-21 LTIP 11 Mar 2019 6.105 19,571 - - 19,571 - - 11 Mar 2022 11 Mar 2024 19,571 - - - - 19,571 11 Mar 2025 19,572 - - - - 19,572 11 Mar 2026 2020-22 LTIP 9 Mar 2020 5.196 36,791 - - 36,791 - - 9 Mar 2023 9 Mar 2024 36,791 - - - - 36,791 9 Mar 2025 36,791 - - - - 36,791 9 Mar 2026 36,791 - - - - 36,791 9 Mar 2027 2021-23 LTIP 15 Mar 2021 4.901 96,283 - - 54,881 41,402 - 15 Mar 2024 15 Mar 2024 96,283 - - - 41,402 54,881 15 Mar 2025 96,283 - - - 41,402 54,881 15 Mar 2026 96,283 - - - 41,402 54,881 15 Mar 2027 96,283 - - - 41,402 54,881 15 Mar 2028 2022-24 LTIP 14 Mar 2022 4.876 96,772 - - - - 96,772 14 Mar 2025 14 Mar 2025 96,772 - - - - 96,772 14 Mar 2026 96,772 - - - - 96,772 14 Mar 2027 96,772 - - - - 96,772 14 Mar 2028 96,773 - - - - 96,773 14 Mar 2029 2023-25 LTIP 13 Mar 2023 7.398 64,700 - - - - 64,700 13 Mar 2026 13 Mar 2026 64,700 - - - - 64,700 13 Mar 2027 64,700 - - - - 64,700 13 Mar 2028 64,700 - - - - 64,700 13 Mar 2029 64,702 - - - - 64,702 13 Mar 2030 2023 Deferred Shares6 11 Mar 2024 6.558 - 10,315 - - - 10,315 N/A 11 Mar 2027 - 10,315 - - - 10,315 11 Mar 2028 - 10,315 - - - 10,315 11 Mar 2029 - 10,315 - - - 10,315 11 Mar 2030 - 10,319 - - - 10,319 11 Mar 2031 2022 Sharesave7,8 4.230 2,127 - - - - 2,127 N/A 1 Feb 2026 Diego De Giorgi5 2024-26 LTIP 12 Mar 2024 6.600 - 80,812 - - - 80,812 12 Mar 2027 12 Mar 2027 - 80,812 - - - 80,812 12 Mar 2028 - 80,812 - - - 80,812 12 Mar 2029 - 80,812 - - - 80,812 12 Mar 2030 - 80,814 - - - 80,814 12 Mar 2031 1. For the 2024-26 LTIP awards granted to Bill and Diego on 12 March 2024, the values granted were: Bill: ��3.3 million; Diego: ��2.2 million. The number of shares awarded in respect of the LTIP took into account the lack of dividend equivalents (calculated by reference to market consensus dividend yield) such that the overall value of the award was maintained. Performance measures apply to 2024-26 LTIP awards. The closing price on the day before grant was ��6.600. 2. Dividend equivalent shares may be awarded on vesting for awards granted prior to 1 January 2018. On 31 March 2020, Standard Chartered announced that in response to the request from the PRA and as a consequence of the unprecedented challenges facing the world due to the COVID-19 pandemic, the Board decided to withdraw the recommendation to pay a final dividend for 2019. Dividend equivalent shares allocated to the 2017-19 awards vesting in 2024 did not include any shares relating to the cancelled dividend. 3. Shares (before tax) were delivered to Bill and Andy from the vesting element of LTIP awards. The closing share price on the day before the shares were delivered were as follows: ��� 13 March 2024: Shares in respect of the 2017-19 LTIP. Previous day closing share price: ��6.698 ��� 11 March 2024: Shares in respect of the 2018-20 LTIP, 2019-21 LTIP and 2020-22 LTIP. Previous day closing share price: ��6.558 ��� 19 March 2024: Shares in respect of the 2021-23 LTIP. Previous day closing share price: ��6.502 4. The weighted average closing price for awards exercised during the period were: Bill: ��6.567; Andy: ��6.566 5. The unvested LTIP awards held by Bill, Andy and Diego are conditional rights. They do not have to pay towards these awards. Under these awards, shares are delivered on vesting or as soon as practicable thereafter. 6. As detailed in our 2023 Annual Report and Accounts, due to Andy Halford's upcoming retirement he did not receive an LTIP award in 2024 and therefore, to meet regulatory deferral requirements in respect of 2023, part of his annual incentive was delivered in deferred shares. 7. Andy chose to participate in the 2022 Sharesave invitation. This unvested option was granted on 28 November 2022 under the 2013 Plan - to exercise this option, Andy has to pay an exercise price of ��4.23 per share, which has been discounted by 20 per cent. 8. The vesting date relates to the end of the savings contract and the start of the six-month exercise window. As at 30 June 2024, none of the directors had registered an interest or short position in the shares, underlying shares or debentures of the Company or any of its associated corporations that was required to be recorded pursuant to section 352 of the Securities and Futures Ordinance, or as otherwise notified to the Company and The Stock Exchange of Hong Kong Limited pursuant to the Model Code for Securities Transactions by Directors of Listed Issuers. Page 128 Shareholdings and share interests The following table summarises the executive directors' shareholdings and share interests. Shares held beneficially1,2,3 Unvested share awards not subject to performance measures (net of tax)4,5 Total shares counting towards shareholding requirement Shareholding requirement Salary3 Value of shares counting towards shareholding requirement as a percentage of salary1 Unvested share awards subject to performance measures (before tax) Bill Winters 2,911,070 323,640 3,234,710 250% salary ��2,517,000 920% 1,879,355 Andy Halford 981,249 232,172 1,213,421 200% salary ��1,609,000 540% 807,363 Diego De Giorgi 70,445 - 70,445 200% salary ��1,650,000 31% 404,062 1. All figures are as of 30 June 2024 unless stated otherwise. The closing share price on 30 June 2024 was ��7.16. No director had either: (i) an interest in Standard Chartered PLC's preference shares or loan stocks of any subsidiary or associated undertaking of the Group; or (ii) any corporate interested in Standard Chartered PLC's ordinary shares 2. The beneficial interests of directors and connected persons in the ordinary shares of the Company are set out above. The executive directors do not have any non-beneficial interest in the Company's shares. Neither of the executive directors used ordinary shares as collateral for any loans 3. The salary and shares held beneficially include shares awarded to deliver the executive directors' salary shares 4. 57 per cent of the 2021-23 LTIP award is no longer subject to performance measures due to achievement against RoTE and strategic measures 5. As Bill , Andy and Diego are UK taxpayers: zero per cent tax is assumed to apply to Sharesave (as Sharesave is a UK tax qualified share plan) and 47 per cent tax is assumed to apply to other unvested share awards (marginal combined PAYE rate of income tax at 45 per cent and employee National Insurance contributions at 2 per cent) - rates may change E. Share price information The middle market price of an ordinary share at the close of business on 30 June 2024 was 716.0 pence. The share price range during the first half of 2024 was 573.9 pence to 785.9 pence (based on the closing middle market prices). F. Substantial shareholders The Company and its shareholders have been granted partial exemption from the disclosure requirements under Part XV of the Securities and Futures Ordinance (SFO). As a result of this exemption, shareholders no longer have an obligation under Part XV of the SFO (other than Divisions 5, 11 and 12 thereof) to notify the Company of substantial shareholding interests, and the Company is no longer required to maintain a register of interests of substantial shareholders under section 336 of the SFO. The Company is, however, required to file with The Stock Exchange of Hong Kong Limited any disclosure of interests made in the UK. G. Code for Financial Reporting Disclosures The UK Finance Code for Financial Reporting Disclosure sets out five disclosure principles together with supporting guidance. The principles are that UK banks will: provide high-quality, meaningful and decision-useful disclosures; review and enhance their financial instrument disclosures for key areas of interest; keep under review and commit to ongoing re-evaluation and enhancement of financial instrument disclosures for key areas of interest, acknowledging the importance of good practice recommendations and similar guidance issued from time to time by relevant regulators and standard-setters and assessing the applicability and relevance of such guidance to disclosures; seek to enhance the comparability of financial statement disclosures across the UK banking sector; and clearly differentiate in their annual reports between information that is audited and information that is unaudited. The Group's interim financial statements for the six months ended 30 June 2024 have been prepared in accordance with the code's principles. H. Employees The details regarding our remuneration policies, bonus schemes and training schemes have not materially changed from our 2023 Annual Report and Accounts and we will be updating on these in our 2024 Annual Report. I. Employee headcount The following table summarises the number of employees within the Group: Business1 Support services2 Total3,4 At 30 June 2024 29,811 53,635 83,446 At 31 December 2023 29,929 55,078 85,007 1. Business is defined as employees directly under the remit of the businesses 2. Support services include employees who support businesses' operations or investments where costs are fully recharged to the businesses. Decrease in support services in H1 2024 is mainly due to decrease in technology and operations support resources, as tighter hiring controls are in place and we continue to review our workforce composition and skills. 3. Excludes 811 employees (headcount) from Digital Ventures entities (TasConnect, Zodia Markets, Zodia Custody, Appro, Audax, Solv India, Solv Kenya, Solv Ghana, Solv Malaysia, Letsbloom, MyZoi and TAWIFresh) 4. Includes employees operating in discontinued/restructured businesses Page 129 Shareholder information Dividend and interest payment dates Ordinary shares 2024 interim dividend (cash only) Results and dividend announced 30 July 2024 Ex-dividend date 8 (UK) 7 (HK) August 2024 Record date 9 August 2024 Last date to amend currency election instructions for cash dividend* 16 September 2024 Dividend payment date 10 October 2024 * in either US dollars, sterling or Hong Kong dollars 2024 final dividend (provisional only) Results and dividend announcement date 21 February 2025 Preference shares Second half-yearly dividend 7 3/ 8 per cent non-cumulative irredeemable preference shares of ��1 each 1 October 2024 8 �� per cent non-cumulative irredeemable preference shares of ��1 each 1 October 2024 6.409 per cent non-cumulative preference shares of $5 each 30 July 2024 and 30 October 2024 7.014 per cent non-cumulative preference shares of $5 each 30 July 2024 Previous dividend payments (unadjusted for the impact of the 2015/2010/2008 Rights Issues) Dividend and financial year Payment date Dividend per ordinary share Cost of one new ordinary share under share dividend scheme Interim 2008 9 October 2008 25.67c/13.96133p/HK$1.995046 ��14.00/$26.0148 Final 2008 15 May 2009 42.32c/28.4693p/HK$3.279597 ��8.342/$11.7405 Interim 2009 8 October 2009 21.23c/13.25177p/HK$1.645304 ��13.876/$22.799 Final 2009 13 May 2010 44.80c/29.54233p/HK$3.478306 ��17.351/$26.252 Interim 2010 5 October 2010 23.35c/14.71618p/HK$1.811274/INR0.9841241 ��17.394/$27.190 Final 2010 11 May 2011 46.65c/28.272513p/HK$3.623404/INR1.99751701 ��15.994/$25.649 Interim 2011 7 October 2011 24.75c/15.81958125p/HK$1.928909813/INR1.137971251 ��14.127/$23.140 Final 2011 15 May 2012 51.25c/31.63032125p/HK$3.9776083375/INR2.66670151 ��15.723/$24.634 Interim 2012 11 October 2012 27.23c/16.799630190p/HK$2.111362463/INR1.3498039501 ��13.417/$21.041 Final 2012 14 May 2013 56.77c/36.5649893p/HK$4.4048756997/INR2.9762835751 ��17.40/$26.28792 Interim 2013 17 October 2013 28.80c/17.8880256p/HK$2.233204992/INR1.68131 ��15.362/$24.07379 Final 2013 14 May 2014 57.20c/33.9211444p/HK$4.43464736/INR3.3546261 ��11.949/$19.815 Interim 2014 20 October 2014 28.80c/17.891107200p/HK$2.2340016000/INR1.6718425601 ��12.151/$20.207 Final 2014 14 May 2015 57.20c/37.16485p/HK$4.43329/INR3.5140591 ��9.797/$14.374 Interim 2015 19 October 2015 14.40c/9.3979152p/HK$1.115985456/INR0.861393721 ��8.5226/$13.34383 Final 2015 No dividend declared N/A N/A Interim 2016 No dividend declared N/A N/A Final 2016 No dividend declared N/A N/A Interim 2017 No dividend declared N/A N/A Final 2017 17 May 2018 11.00c/7.88046p/HK$0.86293/INR0.6536433401 ��7.7600/$10.83451 Interim 2018 22 October 2018 6.00c/4.59747p/HK$0.46978/INR0.36961751 ��6.7104/$8.51952 Final 2018 16 May 2019 15.00c/11.569905p/HK$1.176260/INR0.9576916501 N/A Interim 2019 21 October 2019 7.00c/5.676776p/HK$0.548723/INR0.4250286001 N/A Final 2019 Dividend withdrawn N/A N/A Interim 2020 No dividend declared N/A N/A Final 2020 25 February 2021 9.00c/6.472413p/HK$0.698501 N/A Interim 2021 22 October 2021 3.00c/2.204877p/HK$0.233592 N/A Final 2021 12 May 2022 9.00c/6.894144p/HK$0.705772 N/A Interim 2022 14 October 2022 4.00c/3.675912p/HK$0.313887 N/A Final 2022 11 May 2023 14.00c/11.249168p/HK$1.09803 N/A Interim 2023 13 October 2023 6.00c/4.910412p/HK$0.469085 N/A Final 2023 17 May 2024 21.00c/16.773519p/HK$1.641434 N/A 1 The INR dividend was per Indian Depository Receipt. In March 2020, the Group announced the termination of the IDR programme. The IDR programme was formally delisted from the BSE Limited (formerly the Bombay Stock Exchange) and National Stock Exchange of India Limited with effect from 22 July 2020 Further details regarding dividends can be found on our website at www.sc.com/shareholders Page 130 ShareCare ShareCare is available to shareholders on the Company's UK register who have a UK address and bank account. It allows you to hold your Standard Chartered PLC shares in a nominee account. Your shares will be held in electronic form so you will no longer have to worry about keeping your share certificates safe. If you join ShareCare, you will still be invited to attend the Company's AGM and you will receive any dividend paid at the same time as everyone else. ShareCare is free to join and there are no annual fees to pay. If you would like to receive more information, please visit our website at www.sc.com/shareholders or contact the shareholder helpline on 0370 702 0138. Donating shares to ShareGift Shareholders who have a small number of shares often find it uneconomical to sell them. An alternative is to consider donating them to the charity ShareGift (registered charity 1052686), which collects donations of unwanted shares until there are enough to sell and uses the proceeds to support UK charities. There is no implication for capital gains tax (no gain or loss) when you donate shares to charity, and UK taxpayers may be able to claim income tax relief on the value of their donation. Further information can be obtained from the Company's registrars or from ShareGift on 020 7930 3737 or from www.sharegift.org. Bankers' Automated Clearing System (BACS) Dividends can be paid straight into your bank or building society account. Please register online at www.investorcentre.co.uk or contact our registrar for a mandate form. Registrars and shareholder enquiries If you have any enquiries relating to your shareholding and you hold your shares on the UK register, please contact our registrar at www.investorcentre.co.uk and click on the 'ASK A QUESTION' link at the bottom of the page. Alternatively, please contact Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol, BS99 6ZZ or call the shareholder helpline number on 0370 702 0138. If you hold your shares on the Hong Kong branch register and you have enquiries, please contact Computershare Hong Kong Investor Services Limited, 17M Floor, Hopewell Centre, 183 Queen's Road East, Wan Chai, Hong Kong. You can check your shareholding at: www.computershare.com/hk/investors. Chinese translation If you would like a Chinese version of this Half Year Report, please contact: Computershare Hong Kong Investor Services Limited at 17M Floor, Hopewell Centre, 183 Queen's Road East, Wan Chai, Hong Kong. ������������������������������������������������������������������������������,������:���������������������������183���������������17M������ Shareholders on the Hong Kong branch register who have asked to receive corporate communications in either Chinese or English can change this election by contacting Computershare. If there is a dispute between any translation and the English version of this Half Year Report, the English text shall prevail. Electronic communications If you hold your shares on the UK register and in future you would like to receive the Half Year Report electronically rather than by post, please register online at: www.investorcentre.co.uk. Then click on 'register now' and follow the instructions. You will need to have your shareholder or ShareCare reference number to hand. You can find this on your share certificate or ShareCare statement. Once you have registered and confirmed your email communication preference, you will receive future notifications via email enabling you to submit your proxy vote online. In addition, as a member of Investor Centre, you will be able to manage your shareholding online and change your bank mandate or address information. Page 131 Important notices Forward-looking statements This document may contain 'forward-looking statements' that are based upon current expectations or beliefs, as well as statements formulated with assumptions about future events. These forward-looking statements can be identified by the fact they do not relate only to historical or current facts. Forward-looking statements often use words such as 'may', 'could', 'will', 'expect', 'intend', 'estimate', 'anticipate', 'believe', 'plan', 'seek', 'aim', 'continue' or other words of similar meaning. By their very nature, forward-looking statements are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results, and the Group's plans and objectives, to differ materially from those expressed or implied in the forward-looking statements. Readers should not place reliance on, and are cautioned about relying on, any forward-looking statements. There are several factors that could cause actual results to differ materially from those expressed or implied in forward-looking statements. The factors that could cause actual results to differ materially from those described in the forward-looking statements include (but are not limited to): changes in global, political, economic, business, competitive; market forces or conditions, or in future exchange and interest rates; changes in environmental, geopolitical, social or physical risks; legislative, regulatory and policy developments; the development of standards and interpretations; the ability of the Group, together with governments and other stakeholders, to measure, manage, and mitigate the impacts of climate change and broader sustainability-related issues effectively; risks arising out of health crises and pandemics; risks of cyberattacks, data, information or security breaches or technology failures involving the Group; changes in tax rates, future business combinations or dispositions; and other factors specific to the Group, including those identified in the financial statements of the Group. Any forward-looking statements contained in this document are based on past or current trends and/or activities of the Group and should not be taken as a representation that such trends or activities will continue in the future. No statement In this document is intended to be, nor should be interpreted as, a profit forecast or to imply that the earnings of the Group for the current year or future years will necessarily match or exceed the historical or published earnings of the Group. Each forward-looking statement speaks only as of the date of the particular statement. Except as required by any applicable laws or regulations, the Group expressly disclaims any obligation to revise or update any forward-looking statement contained within this document, regardless of whether those statements are affected as a result of new information, future events or otherwise. Please refer to the Annual Report, this document, and the financial statements of the Group for a discussion of certain of the risks and factors that could adversely impact the Group's actual results, and its plans and objectives, to differ materially from those expressed or implied in any forward-looking statements. Financial instruments Nothing in this document shall constitute, in any jurisdiction, an offer or solicitation to sell or purchase any securities or other financial instruments, nor shall it constitute a recommendation or advice in respect of any securities or other financial instruments or any other matter. Caution regarding climate and environment-related information Some of the climate and environment-related information in this document is subject to certain limitations, and therefore the reader should treat the information provided, as well as conclusions, projections and assumptions drawn from such information, with caution. The information may be limited due to a number of factors, which include (but are not limited to): a lack of reliable data; a lack of standardisation of data; and future uncertainty. The information includes externally sourced data that may not have been verified. Furthermore, some of the data, models and methodologies used to create the information are subject to adjustment that is beyond our control, and the information is subject to change without notice. This disclaimer does not apply to the Group's condensed consolidated interim financial statements and notes as set out in Note 1 - Statement of compliance. Page 132 Glossary Absolute financed emissions A measurement of our attributed share of our clients greenhouse gas emissions. AT1 or Additional Tier 1 capital Additional Tier 1 capital consists of instruments other than Common Equity Tier 1 that meet the Capital Requirements Regulation (as it forms part of UK domestic law) criteria for inclusion in Tier 1 capital. Additional value adjustment See Prudent valuation adjustment. Advanced Internal Rating Based (AIRB) approach The AIRB approach under the Basel framework is used to calculate credit risk capital based on the Group's own estimates of prudential parameters. Alternative performance measures A financial measure of historical or future financial performance, financial position, or cash flows, other than a financial measure defined or specified in the applicable financial reporting framework. ASEAN Association of South East Asian Nations (ASEAN) which includes the Group's operations in Brunei, Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam. AUM or Assets under management Total market value of assets such as deposits, securities and funds held by the Group on behalf of the clients. Basel II The capital adequacy framework issued by the Basel Committee on Banking Supervision (BCBS) in June 2006 in the form of the International Convergence of Capital Measurement and Capital Standards. Basel III The global regulatory standards on bank capital adequacy and liquidity, originally issued in December 2010 and updated in June 2011. In December 2017, the BCBS published a document setting out the finalisation of the Basel III framework. The latest requirements issued in December 2017 will be implemented from 2022. BCBS or Basel Committee on Banking Supervision A forum on banking supervisory matters which develops global supervisory standards for the banking industry. Its members are officials from 45 central banks or prudential supervisors from 27 countries and territories. Basic earnings per share (EPS) Represents earnings divided by the basic weighted average number of shares. Basis point (bps) One hundredth of a per cent (0.01 per cent); 100 basis points is 1 per cent. CRD or Capital Requirements Directive A capital adequacy legislative package adopted by the PRA. CRD comprises the Capital Requirements Directive and the UK onshored Capital Requirements Regulation (CRR). The package implements the Basel III framework together with transitional arrangements for some of its requirements. CRD IV came into force on 1 January 2014. The EU CRR II and CRD V amending the existing package came into force in June 2019 with most changes starting to apply from 28 June 2021. Only those parts of the EU CRR II that applied on or before 31 December 2020, when the UK was a member of the EU, have been implemented. The PRA recently finalised the UK's version of the CRR II for implementation on 1 January 2022. Page 133 Capital-lite income Income derived from products with low RWA consumption or products which are non-funding in nature. Capital resources Sum of Tier 1 and Tier 2 capital after regulatory adjustments. CGU or Cash-generating unit The smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. Cash shortfall The difference between the cash flows that are due in accordance with the contractual terms of the instrument and the cash flows that the Group expects to receive over the contractual life of the instrument. Clawback An amount an individual is required to pay back to the Group, which has to be returned to the Group under certain circumstances. Commercial real estate Includes office buildings, industrial property, medical centres, hotels, malls, retail stores, shopping centres, farm land, multi-family housing buildings, warehouses, garages, and industrial properties. Commercial real estate loans are those backed by a package of commercial real estate assets. CET1 or Common Equity Tier 1 capital Common Equity Tier 1 capital consists of the common shares issued by the Group and related share premium, retained earnings, accumulated other comprehensive income and other disclosed reserves, eligible non-controlling interests and regulatory adjustments required in the calculation of Common Equity Tier 1. CET1 ratio A measure of the Group's CET1 capital as a percentage of risk-weighted assets. Contractual maturity Contractual maturity refers to the final payment date of a loan or other financial instrument, at which point all the remaining outstanding principal and interest is due to be paid. Countercyclical capital buffer The countercyclical capital buffer (CCyB) is part of a set of macroprudential instruments, designed to help counter procyclicality in the financial system. CCyB as defined in the Basel III standard provides for an additional capital requirement of up to 2.5 per cent of risk-weighted assets in a given jurisdiction. The Bank of England's Financial Policy Committee has the power to set the CCyB rate for the United Kingdom. Each bank must calculate its 'institution-specific' CCyB rate, defined as the weighted average of the CCyB rates in effect across the jurisdictions in which it has credit exposures. The institution-specific CCyB rate is then applied to a bank's total risk-weighted assets. Counterparty credit risk The risk that a counterparty defaults before satisfying its obligations under a derivative, a securities financing transaction (SFT) or a similar contract. CCF or Credit conversion factor An estimate of the amount the Group expects a customer to have drawn further on a facility limit at the point of default. This is either prescribed by CRR or modelled by the bank. Page 134 CDS or Credit default swaps A credit derivative is an arrangement whereby the credit risk of an asset (the reference asset) is transferred from the buyer to the seller of protection. A credit default swap is a contract where the protection seller receives premium or interest-related payments in return for contracting to make payments to the protection buyer upon a defined credit event. Credit events normally include bankruptcy, payment default on a reference asset or assets, or downgrades by a rating agency. Credit institutions An institution whose business is to receive deposits or other repayable funds from the public and to grant credits for its own account. Credit risk mitigation Credit risk mitigation is a process to mitigate potential credit losses from any given account, customer or portfolio by using a range of tools such as collateral, netting agreements, credit insurance, credit derivatives and guarantees. CVA or Credit valuation adjustments An adjustment to the fair value of derivative contracts that reflects the possibility that the counterparty may default such that the Group would not receive the full market value of the contracts. Customer accounts Money deposited by all individuals and companies which are not credit institutions including securities sold under repurchase agreement (see repo/reverse repo). Such funds are recorded as liabilities in the Group's balance sheet under customer accounts. Days past due One or more days that interest and/or principal payments are overdue based on the contractual terms. DVA or Debit valuation adjustment An adjustment to the fair value of derivative contracts that reflects the possibility that the Group may default and not pay the full market value of contracts. Debt securities Debt securities are assets on the Group's balance sheet and represent certificates of indebtedness of credit institutions, public bodies or other undertakings excluding those issued by central banks. Debt securities in issue Debt securities in issue are transferable certificates of indebtedness of the Group to the bearer of the certificate. These are liabilities of the Group and include certificates of deposits. Deferred tax asset Income taxes recoverable in future periods in respect of deductible temporary differences between the accounting and tax base of an asset or liability that will result in tax deductible amounts in future periods, the carry-forward of tax losses or the carry-forward of unused tax credits. Deferred tax liability Income taxes payable in future periods in respect of taxable temporary differences between the accounting and tax base of an asset or liability that will result in taxable amounts in future periods. Default Financial assets in default represent those that are at least 90 days past due in respect of principal or interest and/or where the assets are otherwise considered to be unlikely to pay, including those that are credit-impaired. Defined benefit obligation The present value of expected future payments required to settle the obligations of a defined benefit scheme resulting from employee service. Page 135 Defined benefit scheme Pension or other post-retirement benefit scheme other than a defined contribution scheme. Defined contribution scheme A pension or other post-retirement benefit scheme where the employer's obligation is limited to its contributions to the fund. Delinquency A debt or other financial obligation is considered to be in a state of delinquency when payments are overdue. Loans and advances are considered to be delinquent when consecutive payments are missed. Also known as arrears. Deposits by banks Deposits by banks comprise amounts owed to other domestic or foreign credit institutions by the Group including securities sold under repo. Diluted earnings per share (EPS) Represents earnings divided by the weighted average number of shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares. Dividend per share Represents the entitlement of each shareholder in the share of the profits of the Company. Calculated in the lowest unit of currency in which the shares are quoted. Early alert, purely and non-purely precautionary A borrower's account which exhibits risks or potential weaknesses of a material nature requiring closer monitoring, supervision, or attention by management. Weaknesses in such a borrower's account, if left uncorrected, could result in deterioration of repayment prospects and the likelihood of being downgraded to credit grade 12 or worse. When an account is on early alert, it is classified as either purely precautionary or non-purely precautionary. A purely precautionary account is one that exhibits early alert characteristics, but these do not present any imminent credit concern. If the symptoms present an imminent credit concern, an account will be considered for classification as non-purely precautionary. Effective tax rate The tax on profit/ (losses) on ordinary activities as a percentage of profit/ (loss) on ordinary activities before taxation. Encumbered assets On-balance sheet assets pledged or used as collateral in respect of certain of the Group's liabilities. EU or European Union The European Union (EU) is a political and economic union of 27 member states that are located primarily in Europe. Eurozone Represents the 19 EU countries that have adopted the euro as their common currency. ECL or Expected credit loss Represents the present value of expected cash shortfalls over the residual term of a financial asset, undrawn commitment or financial guarantee. Expected loss The Group measure of anticipated loss for exposures captured under an internal ratings-based credit risk approach for capital adequacy calculations. It is measured as the Group-modelled view of anticipated loss based on probability of default, loss given default and exposure at default, with a one-year time horizon. Exposures Credit exposures represent the amount lent to a customer, together with any undrawn commitments. Page 136 EAD or Exposure at default The estimation of the extent to which the Group may be exposed to a customer or counterparty in the event of, and at the time of, that counterparty's default. At default, the customer may not have drawn the loan fully or may already have repaid some of the principal, so that exposure is typically less than the approved loan limit. ECAI or External Credit Assessment Institution External credit ratings are used to assign risk-weights under the standardised approach for sovereigns, corporates and institutions. The external ratings are from credit rating agencies that are registered or certified in accordance with the credit rating agencies regulation or from a central bank issuing credit ratings which is exempt from the application of this regulation. ESG Environmental, Social and Governance. FCA or Financial Conduct Authority The Financial Conduct Authority regulates the conduct of financial firms and, for certain firms, prudential standards in the UK. It has a strategic objective to ensure that the relevant markets function well. Forbearance Forbearance takes place when a concession is made to the contractual terms of a loan in response to an obligor's financial difficulties. The Group classifies such modified loans as either 'Forborne - not impaired loans' or 'Loans subject to forbearance - impaired'. Once a loan is categorised as either of these, it will remain in one of these two categories until the loan matures or satisfies the 'curing' conditions described in Note 8 to the financial statements. Forborne - not impaired loans Loans where the contractual terms have been modified due to financial difficulties of the borrower, but the loan is not considered to be impaired. See 'Forbearance'. Funded/unfunded exposures Exposures where the notional amount of the transaction is funded or unfunded. Represents exposures where a commitment to provide future funding is made but funds have been released/ not released. FVA or Funding valuation adjustments FVA reflects an adjustment to fair value in respect of derivative contracts that reflects the funding costs that the market participant would incorporate when determining an exit price. G-SIBs or Global Systemically Important Banks Global banking financial institutions whose size, complexity and systemic interconnectedness mean that their distress or failure would cause significant disruption to the wider financial system and economic activity. The list of G-SIBs is assessed under a framework established by the FSB and the BCBS. In the UK, the G-SIB framework is implemented via the CRD and G-SIBs are referred to as Global Systemically Important Institutions (G-SIIs). G-SIB buffer A CET1 capital buffer which results from designation as a G-SIB. The G-SIB buffer is between 1 per cent and 3.5 per cent, depending on the allocation to one of five buckets based on the annual scoring. In the UK, the G-SIB buffer is implemented via the CRD as Global Systemically Important Institutions (G-SII) buffer requirement. Green and Sustainable Product Framework Sets out underlying eligible qualifying themes and activities that may be considered ESG .This has been developed with the support of external experts, has been informed by industry and supervisory principles and standards such as the Green Bond Principles and EU Taxonomy for sustainable activities. Page 137 Hong Kong regional hub Standard Chartered Bank (Hong Kong) Limited and its subsidiaries including the primary operating entities in China, Korea and Taiwan. Standard Chartered PLC is the ultimate parent company of Standard Chartered Bank (Hong Kong) Limited. Interest rate risk The risk of an adverse impact on the Group's income statement due to changes in interest rates. IRB or internal ratings-based approach Risk-weighting methodology in accordance with the Basel Capital Accord where capital requirements are based on a firm's own estimates of prudential parameters. Internal model approach The approach used to calculate market risk capital and RWA with an internal market risk model approved by the PRA under the terms of CRD/CRR. IAS or International Accounting Standard A standard that forms part of the International Financial Reporting Standards framework. IASB or International Accounting Standards Board An independent standard-setting body responsible for the development and publication of IFRS, and approving interpretations of IFRS standards that are recommended by the IFRS Interpretations Committee (IFRIC). IFRS or International Financial Reporting Standards A set of international accounting standards developed and issued by the International Accounting Standards Board, consisting of principles-based guidance contained within IFRSs and IASs. All companies that have issued publicly traded securities in the EU are required to prepare annual and interim reports under IFRS and IAS standards that have been endorsed by the EU. IFRIC The IFRS Interpretations Committee supports the IASB in providing authoritative guidance on the accounting treatment of issues not specifically dealt with by existing IFRSs and IASs. Investment grade A debt security, treasury bill or similar instrument with a credit rating measured by external agencies of AAA to BBB. Leverage ratio A ratio introduced under CRD IV that compares Tier 1 capital to total exposures, including certain exposures held off-balance sheet as adjusted by stipulated credit conversion factors. Intended to be a simple, non-risk-based backstop measure. Liquidation portfolio A portfolio of assets which is beyond our current risk appetite metrics and is held for liquidation. LCR or Liquidity coverage ratio The ratio of the stock of high-quality liquid assets to expected net cash outflows over the following 30 days. High-quality liquid assets should be unencumbered, liquid in markets during a time of stress and, ideally, be central bank eligible. Loan exposure Loans and advances to customers reported on the balance sheet held at amortised cost or FVOCI, non-cancellable credit commitments and cancellable credit commitments for credit cards and overdraft facilities. Page 138 Loans and advances to customers This represents lending made under bilateral agreements with customers entered into in the normal course of business and is based on the legal form of the instrument. Loans and advances to banks Amounts loaned to credit institutions including securities bought under Reverse repo. LTV or loan-to-value ratio A calculation which expresses the amount of a first mortgage lien as a percentage of the total appraised value of real property. The loan-to-value ratio is used in determining the appropriate level of risk for the loan and therefore the correct price of the loan to the borrower. Loans past due Loans on which payments have been due for up to a maximum of 90 days including those on which partial payments are being made. Loans subject to forbearance - impaired Loans where the terms have been renegotiated on terms not consistent with current market levels due to financial difficulties of the borrower. Loans in this category are necessarily impaired. See 'Forbearance'. Loss rate Uses an adjusted gross charge-off rate, developed using monthly write-off and recoveries over the preceding 12 months and total outstanding balances. LGD or Loss given default The percentage of an exposure that a lender expects to lose in the event of obligor default. Low returning clients See 'Perennial sub-optimal clients'. Malus An arrangement that permits the Group to prevent vesting of all or part of the amount of an unvested variable remuneration award, due to a specific crystallised risk, behaviour, conduct or adverse performance outcome. Master netting agreement An agreement between two counterparties that have multiple derivative contracts with each other that provides for the net settlement of all contracts through a single payment, in a single currency, in the event of default on, or termination of, any one contract. Mezzanine capital Financing that combines debt and equity characteristics. For example, a loan that also confers some profit participation to the lender. MREL or minimum requirement for own funds and eligible liabilities A requirement under the Bank Recovery and Resolution Directive for EU resolution authorities to set a minimum requirement for own funds and eligible liabilities for banks, implementing the FSB's Total Loss Absorbing Capacity (TLAC) standard. MREL is intended to ensure that there is sufficient equity and specific types of liabilities to facilitate an orderly resolution that minimises any impact on financial stability and ensures the continuity of critical functions and avoids exposing taxpayers to loss. Net asset value (NAV) per share Ratio of net assets (total assets less total liabilities) to the number of ordinary shares outstanding at the end of a reporting period. Page 139 Net nominal The aggregate of loans and advances to customers/loans and advances to banks after impairment provisions, restricted balances with central banks, derivatives (net of master netting agreements), investment debt and equity securities, and letters of credit and guarantees. Net zero The commitment to reaching net zero carbon emissions from our operations by 2025 and from our financing by 2050. NII or Net interest income The difference between interest received on assets and interest paid on liabilities. NSFR or Net stable funding ratio The ratio of available stable funding to required stable funding over a one-year time horizon, assuming a stressed scenario. It is a longer-term liquidity measure designed to restrain the amount of wholesale borrowing and encourage stable funding over a one-year time horizon. NPLs or non-performing loans An NPL is any loan that is more than 90 days past due or is otherwise individually impaired. This excludes Retail loans renegotiated at or after 90 days past due, but on which there has been no default in interest or principal payments for more than 180 days since renegotiation, and against which no loss of principal is expected. Non-linearity Non-linearity of expected credit loss occurs when the average of expected credit loss for a portfolio is higher than the base case (median) due to the fact that bad economic environment could have a larger impact on ECL calculation than good economic environment. Normalised items See 'Underlying/Normalised'. Operating expenses Staff and premises costs, general and administrative expenses, depreciation and amortisation. Underlying operating expenses exclude expenses as described in 'Underlying earnings'. A reconciliation between underlying and statutory earnings is contained in Note 2 to the financial statements. Operating income or operating profit Net interest, net fee and net trading income, as well as other operating income. Underlying operating income represents the income line items above, on an underlying basis. See 'Underlying earnings'. OTC or Over-the-counter derivatives A bilateral transaction (e.g. derivatives) that is not exchange traded and that is valued using valuation models. OCA or Own credit adjustment An adjustment to the Group's issued debt designated at fair value through profit or loss that reflects the possibility that the Group may default and not pay the full market value of the contracts. Perennial sub-optimal clients Clients that have returned below 3% return on risk-weighted assets for the last three years Physical risks The risk of increased extreme weather events including flood, drought and sea level rise. Pillar 1 The first pillar of the three pillars of the Basel framework which provides the approach to calculation of the minimum capital requirements for credit, market and operational risk. Minimum capital requirements are 8 per cent of the Group's risk-weighted assets. Page 140 Pillar 2 The second pillar of the three pillars of the Basel framework which requires banks to undertake a comprehensive assessment of their risks and to determine the appropriate amounts of capital to be held against these risks where other suitable mitigants are not available. Pillar 3 The third pillar of the three pillars of the Basel framework which aims to provide a consistent and comprehensive disclosure framework that enhances comparability between banks and further promotes improvements in risk practices. Priority Banking Priority Banking customers are individuals who have met certain criteria for deposits, AUM, mortgage loans or monthly payroll. Criteria varies by country. Private equity investments Equity securities in operating companies generally not quoted on a public exchange. Investment in private equity often involves the investment of capital in private companies. Capital for private equity investment is raised by retail or institutional investors and used to fund investment strategies such as leveraged buyouts, venture capital, growth capital, distressed investments and mezzanine capital. PD or Probability of default PD is an internal estimate for each borrower grade of the likelihood that an obligor will default on an obligation over a given time horizon. Probability weighted Obtained by considering the values the metric can assume, weighted by the probability of each value occurring. Profit (loss) attributable to ordinary shareholders Profit (loss) for the year after non-controlling interests and dividends declared in respect of preference shares classified as equity. PVA or Prudent valuation adjustment An adjustment to CET1 capital to reflect the difference between fair value and prudent value positions, where the application of prudence results in a lower absolute carrying value than recognised in the financial statements. PRA or Prudential Regulation Authority The Prudential Regulation Authority is the statutory body responsible for the prudential supervision of banks, building societies, credit unions, insurers and a small number of significant investment firms in the UK. The PRA is a part of the Bank of England. Revenue-based carbon intensity A measurement of the quantity of greenhouse gases emitted by our clients per USD of their revenue. Regulatory consolidation The regulatory consolidation of Standard Chartered PLC differs from the statutory consolidation in that it includes Ascenta IV, Olea Global group, Partior Pte. Ltd., SBI Zodia Custody Co. Ltd, Seychelles International Mercantile Banking Corporation Limited., and all of the legal entities in the CurrencyFair group on a proportionate consolidation basis. These entities are considered associates for statutory accounting purposes. Page 141 The regulatory consolidation further excludes the following entities, which are consolidated for statutory accounting purposes; Audax Financial Technology Pte. Ltd, Furaha Finserve Uganda Limited, Huma.Eco Pte. Ltd., Inveco Pte. Ltd., Karstenza B.V, Letsbloom Pte. Ltd, Letsbloom India Private Limited, Pegasus Dealmaking Pte. Ltd., SCV Research and Development Pte. Ltd., SCV Research and Development Pvt. Ltd., Solv Sdn. Bhd., Solv Vietnam Company Limited, Solvezy Technology Kenya Ltd, Standard Chartered Assurance Limited, Standard Chartered Isle of Man Limited, Standard Chartered Botswana Education Trust, Standard Chartered Bancassurance Intermediary Limited, Standard Chartered Bank Insurance Agency (Proprietary) Limited, Standard Chartered Research and Technology India Private Limited, Standard Chartered Trading (Shanghai) Limited, TASConnect (Hong Kong) Private Limited, Tawi Fresh Kenya Limited. Repo/reverse repo A repurchase agreement or repo is a short-term funding agreement, which allows a borrower to sell a financial asset, such as asset-backed securities or government bonds as collateral for cash. As part of the agreement the borrower agrees to repurchase the security at some later date, usually less than 30 days, repaying the proceeds of the loan. For the party on the other end of the transaction (buying the security and agreeing to sell in the future), it is a reverse repurchase agreement or reverse repo. Residential mortgage A loan to purchase a residential property which is then used as collateral to guarantee repayment of the loan. The borrower gives the lender a lien against the property, and the lender can foreclose on the property if the borrower does not repay the loan per the agreed terms. Also known as a home loan. RoRWA or Return on risk-weighted assets Profit before tax for year as a percentage of RWA. Profit may be statutory or underlying and is specified where used. See 'RWA' and 'Underlying earnings'. RWA or Risk-weighted assets A measure of a bank's assets adjusted for their associated risks, expressed as a percentage of an exposure value in accordance with the applicable standardised or IRB approach provisions. Risks-not-in-VaR (RNIV) A framework for identifying and quantifying marginal types of market risk that are not captured in the Value at Risk (VaR) measure for any reason, such as being a far-tail risk or the necessary historical market data not being available. Roll rate Uses a matrix that gives average loan migration rate from delinquency states from period to period. A matrix multiplication is then performed to generate the final PDs by delinquency bucket over different time horizons. Scope 1 emissions Arise from the consumption of energy from direct sources during the use of property occupied by the Group. On-site combustion of fuels such as diesel, liquefied petroleum gas and natural gas is recorded using meters or, where metering is not available, collated from fuel vendor invoices. Emissions from the combustion of fuel in Group-operated transportation devices, as well as fugitive emissions, are excluded as being immaterial. Scope 2 emissions Arise from the consumption of indirect sources of energy during the use of property occupied by the Group. Energy generated off-site in the form of purchased electricity, heat, steam or cooling is collected as kilowatt hours consumed using meters or, where metering is not available, collated from vendor invoices. For leased properties we include all indirect and direct sources of energy consumed by building services (amongst other activities) within the space occupied by the Group. This can include base building services under landlord control but over which we typically hold a reasonable degree of influence. All data centre facilities with conditioning systems and hardware remaining under the operational control of the Group are included in the reporting. This does not include energy used at outsourced data centre facilities which are captured under Scope 3. Page 142 Scope 3 emissions Occur as a consequence of the Group's activities but arising from sources not controlled by the Group. Business air travel data is collected as person kilometres travelled by seating class by employees of the Group. Data are drawn from country operations that have processes in place to gather accurate employee air travel data from travel management companies. Flights are categorised as short, medium or long haul trips. Emissions from other potential Scope 3 sources such as electricity transmission and distribution line losses are not currently accounted for on the basis that they cannot be calculated with an acceptable level of reliability or consistency. The Group does however capture Scope 3 emissions from outsourced data centres managed by third parties. Secured (fully and partially) A secured loan is a loan in which the borrower pledges an asset as collateral for a loan which, in the event that the borrower defaults, the Group is able to take possession of. All secured loans are considered fully secured if the fair value of the collateral is equal to or greater than the loan at the time of origination. All other secured loans are considered to be partly secured. Securitisation Securitisation is a process by which credit exposures are aggregated into a pool, which is used to back new securities. Under traditional securitisation transactions, assets are sold to a structured entity which then issues new securities to investors at different levels of seniority (credit tranching). This allows the credit quality of the assets to be separated from the credit rating of the originating institution and transfers risk to external investors in a way that meets their risk appetite. Under synthetic securitisation transactions, the transfer of risk is achieved by the use of credit derivatives or guarantees, and the exposures being securitised remain exposures of the originating institution. Senior debt Debt that takes priority over other unsecured or otherwise more 'junior' debt owed by the issuer. Senior debt has greater seniority in the issuer's capital structure than subordinated debt. In the event the issuer goes bankrupt, senior debt theoretically must be repaid before other creditors receive any payment. SICR or Significant increase in credit risk Assessed by comparing the risk of default of an exposure at the reporting date to the risk of default at origination (after considering the passage of time). Solo The solo regulatory group as defined in the Prudential Regulation Authority waiver letter dated 10 August 2020 differs from Standard Chartered Bank Company in that it includes the full consolidation of nine subsidiaries, namely Standard Chartered Holdings (International) B.V., Standard Chartered MB Holdings B.V., Standard Chartered UK Holdings Limited, Standard Chartered Grindlays PTY Limited, SCMB Overseas Limited, Standard Chartered Capital Management (Jersey) LLC, Cerulean Investments L.P., SC Ventures Innovation Investment L.P. and SC Ventures G.P. Limited. Sovereign exposures Exposures to central governments and central government departments, central banks and entities owned or guaranteed by the aforementioned. Sovereign exposures, as defined by the European Banking Authority, include only exposures to central governments. Stage 1 Assets have not experienced a significant increase in credit risk since origination and impairment recognised on the basis of 12 months expected credit losses. Stage 2 Assets have experienced a significant increase in credit risk since origination and impairment is recognised on the basis of lifetime expected credit losses. Stage 3 Assets that are in default and considered credit-impaired (non-performing loans). Page 143 Standardised approach In relation to credit risk, a method for calculating credit risk capital requirements using External Credit Assessment Institutions (ECAI) ratings and supervisory risk weights. In relation to operational risk, a method of calculating the operational capital requirement by the application of a supervisory defined percentage charge to the gross income of eight specified business lines. Structured note An investment tool which pays a return linked to the value or level of a specified asset or index and sometimes offers capital protection if the value declines. Structured notes can be linked to equities, interest rates, funds, commodities and foreign currency. Subordinated liabilities Liabilities which, in the event of insolvency or liquidation of the issuer, are subordinated to the claims of depositors and other creditors of the issuer. Sustainability Aspirations A series of targets and metrics by which we aim to promote social and economic development, and deliver sustainable outcomes in the areas in which we can make the most material contribution to the delivery of the UN Sustainable Development Goals. Sustainable Finance assets Assets from clients whose activities are aligned with the Green and Sustainable Product Framework and/or from transactions for which the use of proceeds will be utilised directly to contribute towards eligible themes and activities set out within the Green and Sustainable Product Framework. Sustainable Finance revenue Revenue from clients whose activities are aligned with the Green and Sustainable Product Framework and/or from transactions for which proceeds will be utilised directly to contribute towards eligible themes and activities set out within the Green and Sustainable Product Framework and/or from approved 'labelled' transactions such as any transaction referred to as "green", "social", "sustainable", "SDG (sustainable development goal) aligned", "ESG", "transition", "COVID-19 facility" or "COVID-19 response" which have been approved by the Sustainable Finance Governance Committee. Tier 1 capital The sum of Common Equity Tier 1 capital and Additional Tier 1 capital. Tier 1 capital ratio Tier 1 capital as a percentage of risk-weighted assets. Tier 2 capital Tier 2 capital comprises qualifying subordinated liabilities and related share premium accounts. TLAC or Total loss absorbing capacity An international standard for TLAC issued by the FSB, which requires G-SIBs to have sufficient loss-absorbing and recapitalisation capacity available in resolution, to minimise impacts on financial stability, maintain the continuity of critical functions and avoid exposing public funds to loss. Transition risks The risk of changes to market dynamics or sectoral economics due to governments' response to climate change. UK bank levy A levy that applies to certain UK banks and the UK operations of foreign banks. The levy is payable each year based on a percentage of the chargeable equities and liabilities on the Group's UK tax resident entities' balance sheets. Key exclusions from chargeable equities and liabilities include Tier 1 capital, insured or guaranteed retail deposits, repos secured on certain sovereign debt and liabilities subject to netting. Page 144 Unbiased Not overly optimistic or pessimistic, represents information that is not slanted, weighted, emphasised, de-emphasised or otherwise manipulated to increase the probability that the financial information will be received favourably or unfavourably by users. Unlikely to pay Indications of unlikeliness to pay shall include placing the credit obligation on non-accrued status; the recognition of a specific credit adjustment resulting from a significant perceived decline in credit quality subsequent to the Group taking on the exposure; selling the credit obligation at a material credit-related economic loss; the Group consenting to a distressed restructuring of the credit obligation where this is likely to result in a diminished financial obligation caused by the material forgiveness, or postponement, of principal, interest or, where relevant fees; filing for the obligor's bankruptcy or a similar order in respect of an obligor's credit obligation to the Group; the obligor has sought or has been placed in bankruptcy or similar protection where this would avoid or delay repayment of a credit obligation to the Group. VaR or Value at Risk A quantitative measure of market risk estimating the potential loss that will not be exceeded in a set time period at a set statistical confidence level. ViU or Value-in-Use The present value of the future expected cash flows expected to be derived from an asset or CGU. Write-downs After an advance has been identified as impaired and is subject to an impairment provision, the stage may be reached whereby it is concluded that there is no realistic prospect of further recovery. Write-downs will occur when, and to the extent that, the whole or part of a debt is considered irrecoverable. XVA The term used to incorporate credit, debit and funding valuation adjustments to the fair value of derivative financial instruments. See 'CVA', 'DVA' and 'FVA'. Page 145 CONTACT INFORMATION Global headquarters Standard Chartered Group 1 Basinghall Avenue London, EC2V 5DD United Kingdom telephone: +44 (0)20 7885 8888 facsimile: +44 (0)20 7885 9999 Shareholder enquiries ShareCare information website: sc.com/shareholders helpline: +44 (0)370 702 0138 ShareGift information website: ShareGift.org helpline: +44 (0)20 7930 3737 Registrar information UK Computershare Investor Services PLC The Pavilions Bridgwater Road Bristol, BS99 6ZZ helpline: +44 (0)370 702 0138 Hong Kong Computershare Hong Kong Investor Services Limited 17M Floor, Hopewell Centre 183 Queen's Road East Wan Chai Hong Kong website: computershare.com/hk/investors Chinese translation Computershare Hong Kong Investor Services Limited 17M Floor, Hopewell Centre 183 Queen's Road East Wan Chai Hong Kong Register for electronic communications website: investorcentre.co.uk For further information, please contact: Manus Costello, Global Head of Investor Relations +44 (0) 20 7885 0017 LSE Stock code: STAN.LN HKSE Stock code: 02888 Page 146 This information is provided by RNS, the news service of the London Stock Exchange. 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